What Does As-Is Condition Mean When Buying a Home?

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Picture this: you’ve found a nearly perfect home, save for a couple of problems. Perhaps you’d like the seller to repair the leaky roof or make a few other key repairs that you’d rather not deal with yourself. There’s just one problem: the home is listed for sale “as is.”

What does this mean? In home sale negotiations, there is usually some wiggle room to convince the seller to make certain repairs as a precondition for the sale. But in an as-is home, you’re buying the home in its current condition.

Not Always a Bad Sign

Before you panic, keep in mind that this doesn’t necessarily mean the home is in bad shape. There are a number of reasons why a seller may stipulate that the property be sold “as is.” Firstly, they may simply lack the time or the money to make the necessary repairs, says Joseph Richer, the registrar of the Real Estate Council of Ontario, on RECO’s website. For example, perhaps he or she is selling the house on behalf of an aging parent.

Another reason why someone may opt to sell a home “as is” is if they are unfamiliar with the property’s condition, says Richer. This could happen in the case of a foreclosure sale, where the bank puts the house on the market because the owner is not able to make the mortgage payments. The lender is often not familiar with what state the home is in and is unlikely to foot the bill for any renovations that need to be done. Another context where the seller may not be aware of the home’s condition is an estate sale – for example, the children of a deceased parent selling the parent’s home in order to divvy up the estate amongst surviving beneficiaries.

The Seller is Still Accountable

Realtors note that selling a property “as is” doesn’t completely let the seller off the hook. “There are certain disclosures that would need to happen if any major flaws are known,” says Ara Mamourian of Toronto-based brokerage Spring Realty.

As with any home purchase, the only way to be certain of its condition is to conduct a thorough home inspection. A qualified home inspector, engineer or contractor should be able to identify any major problems with the property – for instance with the foundation or the electrical, plumbing or air conditioning/heating systems.

“Do not bring all your family and friends to a home inspection,” says Arty Basinski of Real Estate By Bike.com.

“Everyone thinks they’re an expert and will start pointing out the most mundane problems to seem intelligent … leaving the buyer frazzled and backing out of a deal for the stupidest reasons.”

Usually you don’t need an inspection for a Toronto condo, says Basinski. But if the unit is listed for sale “as is,” you may need to bring an inspector in to do due diligence and find out why, he says.

Work With Your Legal Team

Richer recommends asking your real estate agent or lawyer to include a clause in your offer that stipulates the deal is contingent upon satisfactory inspection results. That will allow you to walk away if the inspection uncovers any major issues that you aren’t willing to deal with.

Another thing to keep in mind is that a “sold as is” home may not be as easy to insure as a typical home, says Richer. However, a satisfactory home inspection result may put insurers at ease. Richer suggests checking with your insurance broker to make sure you’ll be able to get the insurance you need.

 Related Read: Home Insurance Claims – 4 Traps and How to Deal with Them

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