Buying a home as-is can be enticing. For those who’ve been struggling to get into the market, the price point can be more affordable. For others looking to buy when housing supply is low, it can present a viable avenue to explore. However, it’s important to bear in mind the decision to buy a home as-is works for some, but not for all.
Buying a home as-is means “the homeowner is selling the home in its current condition, and will make no repairs or improvements, before or after closing,” says Nick Kyte, a REALTOR® and salesperson in Ottawa, Ontario. “Essentially, what you see is what you get, but what you don’t see is also what you get.”
When the correct steps are taken, buying a home this way could be a calculated and worthwhile risk that pays off, but not everyone will have the same experience, because “the seller isn’t warranting anything about the home and they are not going to be making any fixes or repairs,” adds sales agent Jessica Kee, a REALTOR® at Right At Home Realty in Toronto, Ontario.
Buying a home as-is comes with its own unique set of benefits and challenges, some of which we’ve outlined below.
When buying as-is could be a good idea
There are several reasons why the property may be sold as-is.
“Homes sold in as-is condition don’t necessarily mean they’re faulty,” explains Kee. “Sellers may want to sell a home as-is because they want a smoother transaction with less hassle, or they may be a beneficiary selling the home as an estate sale and are in no position to warrant anything as they’ve never even lived in the home before.
“As-is properties offer opportunities to buyers,” Kyte adds, “and some of the pros include the price because it allows a buyer to enter the market they may not have been able to otherwise. Timelines are also appealing as the majority of these properties are vacant and prefer a quick closing, allowing the buyer the opportunity to acquire the property relatively quickly. For those who are handy and have contacts to assist in the renovations, this could be a chance to increase the value of the property and look to refinance and engage in the next project or investment, with the equity.”
Additional circumstances where buying as-is could be the best move could also include when a buyer is in a multiple offer situation and they really want to win, knowing their plans are to gut and fully renovate the property. In that case, having the seller warrant any repairs or guarantee everything is in working condition is unnecessary,” highlights Kee.
There are specific instances when an as-is sale is advantageous, but knowing exactly what’s being bought is crucial. The only way for the buyer to ensure they’re “in the know” is by setting up a home inspection so there aren’t any avoidable surprises down the line.
When buying as-is might not be a good fit
“It’s actually a very wise decision to have a home inspection done so there’s a clear understanding of exactly what the buyer is getting into. Knowing what repairs are required upfront, as well as the cost, is a must.“ advises Kee. As-is properties tend to have an attractive price point, but that doesn’t mean potential buyers should blindly launch themselves at the opportunity. Refurbishments can add up and become costly, especially if upgrades have to be made at a structural level.
“The cons, and I cannot stress it enough, would be not having the property inspected prior to an offer being made or during the conditional period and closing on the property only to find out there are an array of deficiencies and major issues,” says Kyte. The responsibility would fall on the new owner to fix any defects.
“The mindset of the buyer is also very important,” explains Kyte. “If they’re not handy, tackling DIY projects that could jeopardize their safety and that of others around them could end up costing more money in the long run if or when professionals need to be brought in to rectify the problem.”
Is buying a home as-is for you?
“As they say, there’s a home for everyone, but not every home is the one,” Kyte says. Despite the compelling price point, buying a home as-is can become a financial burden, but it’s certainly not all doom and gloom when it comes to these types of properties. Secure an inspection and build a clear understanding of the work and costs of what the purchase will entail.
Work with your REALTOR® to find out your personal boundaries when it comes to taking risks and, if you find an as-is property you’re interested in, have them research why the seller has listed it that way. For some, it may be worth the potential payoff. For others, the stress and headache could be big deterrents. Your REALTOR® can help determine what’s best for your situation and make sure you land in a home you love.
The article above is for information purposes and is not financial or legal advice or a substitute for financial or legal counsel.