Just Like The Song, Sellers Say "Take Me As I Am": Buying "As-Is"

Bob Dylan said "Take me as I am, or let me go..."

How applicable this statement is in this housing market. Here are some things you should know about buying anything "as-is"...

 

1. What kinds of properties are usually sold "as-is"?

Almost every short sale and/or bank-owned property I have seen has been sold "as-is." The banks make no representations about the house or any of the mechanical, electrical, or structural systems of the property or the appliances (if any) of the house. Also, many estate sales or older homes can be sold "as-is," and with the common occurrence of it these days, is happening more frequently.

2. Why would something be sold "as-is"?

Well first of all, every buyer out there should know that banks look out for THEMSELVES, first, foremost, and only. By declaring a property to be sold "as-is" they release themselves from any liability of having to abide by our regional sales contract that says that all systems must be in NORMAL WORKING ORDER at the time of settlement. Take it or leave it. "take me as I am, or let me go..." for another buyer!

3. Can we still do a home inspection?

That depends. I always, ALWAYS recommend my buyers do a home inspection. If it's the biggest investment of your life, you should go into the union with the most information possible, right? So sometimes they'll tell you that a home inspection may be done "for information purposes only." Many times, this allows you to retain the right to make the contract contingent on a home inspection...so if the report comes back with more than you bargained for, you have the absolute right to void the contract and get your deposit back. 

4. Well, can't we TRY for money from a bank or seller?

Of course you can. The worst case scenario - they say no. Then you're right back where you started. I have however seen banks grant some money to a buyer depending on their requests (one of my buyers once got $2k towards a new furnace!)....the asset manager is driven 100% by their bottom line. Getting any money, whatsoever from a bank or seller is the exception, it is definitely NOT the rule.

5. What if I am doing an FHA or VA loan and there are red flags on the appraisal?

Before I answer this question, let me say: I am NOT a lender, underwriter, appraiser, or have any affiliation or inside information about the processing of a government backed loan. However, that said, most banks realize that FHA loans are the most common right now...and they also have a higher standard for appraisals. Things like water damage, mold, code violations, etc will be red flags on an appraisal, and will most likely be a "Lender Required Repair." That term is important!!! In order for your loan to be approved and funded, any lender required repair will have to be completed PRIOR to closing, otherwise, it'll be no-go. Hopefully the seller will comply with these requests, and you can proceed to settlement. However, if they are not willing to complete the repairs, you can void the contract.

 

Each situation is different...there's always a learning curve with real estate!! That's why it's important to use a) someone you trust, and b) someone knowledgeable to serve you and your interests to the best of their abilities. Also, just because something is being sold "as-is" doesn't mean it's a lemon...that's why a home inspection is important! Feel free to contact me with any other questions!

Observations from a Weekend Open House: Buyers Know More Than We Think!

Yesterday, I held a great listing on 934 N. Daniel St in Arlington, VA. It's located in a great neighborhood of single family homes called Lyon Park. Close to the Clarendon metro, close to the major highways leading to Tysons Corner as well as downtown D.C. Currently there are 11 properties listed in the neighborhood, with 3 under contract. In our market, you can count on a few open houses every weekend, regardless of how long the property has been listed.

The house I held open, has been on the market for 25 days, still listed at the original list price of $699,900, and is a 2 bedroom, 1 bath updated bungalow. After 25 days and 3 open houses, it's amazing that I still got 21 groups through a 1-4pm open. I am continuously blown away by the questions buyers are asking...

-How long has it been on the market?
-Have there been any price reductions?
-Does it have A/C....no? Well then it's $XX over priced
-I saw a window from the outside, is there an attic or just storage/crawl space?
-The listing on Main Street has an extra bathroom and bedroom, and a bigger kitchen....but it's priced only $15k higher than yours....what do you think of that listing and your price?

The other amazing thing about this buyers market, is that they've seen EVERYTHING that's held open. They're comparing listings on their own and know what they're capable of getting at different prices ranges. Since my personal goal each month is to do 3 open houses, and I mostly work the North Arlington area - I tend to see some of the same groups of people come to each open. It reinforces the need to KNOW YOUR MARKET and know your competition. I try to go to most of the Arlington Brokers Opens and see the new listings coming on for sale. You have to be able to talk apples to apples with your open house traffic...because some of them will know more than you if you don't.

The other thing about proactive buyers that go to see these opens is that they don't like the B.S., they don't need hand-holding...they just want the facts. I like this, I want to buy this...what do I need to do next? That's when they need you, the expert. But you have to show them you're the expert first....

My First Foreclosure Auction in Arlington!

On Friday, I had the exciting opportunity to go to a foreclosure auction on a property in Arlington, VA that my client was bidding on! We had written an offer on the property when it was on the market, but the bank foreclosed when he didn't accept it. I had no idea what to expect, so let me retell my experience for those of you who are curious!

1. Let's clarify what a "foreclosure" means: the terminology gets thrown around a lot, but a "foreclosure" is actually when the property is up for auction! If no individual buys it at the auction, technically the bank buys it! When the property comes back on the market through a Realtor (R) after the auction process, it's actually a bank-owned property, or Real Estate Owned (REO) - not a foreclosure as we commonly call it.

2. What the expect when you have nothing to expect! Be prepared for a very fast talking man in a suit representing the Trustee (in most cases an attorney's office). He'll read through the public statement, then tell you the opening bid on the property. He'll ask for bids...if you bid, be prepared to show him your deposit. Most ads will say "minimum X% or $X, whichever is the lowest of the 2." It'll be a cashier's check made payable to the trustee. He'll say "going once....going twice....sold for $xxx." Then you usually sign a one-page contract (which is advertised as your right to preview before the auction, but if you can ever get a live human being on the phone from one of these attorney's office...please share your secret!!)

3. I won?! Now What? Now, they give you a 15-day close period....and you're buying it subject to any other liens on the property. DO A TITLE SEARCH!! You want to know what you're getting yourself into! You need to know if the 1st, 2nd, etc. lien holder is foreclosing. This is CRUCIAL! It'll impact your top bid price tremendously, if you're buying the property subject to an additional $100,000 lien!

Also, another note...don't be intimated!! This particular auction had about 20 bystanders, and only 2 real bidders. The 3rd bidder bowed out after his opening bid! Go with confidence!

And..dress warmly!! They're held on the courthouse steps (usually) in RAIN OR SHINE!!!

FHA Wikipedia - Great Resource for First Time Home Buyers!

Part of the reason I love working with first-time homebuyers is getting to teach them things about the process. I know with the constant changing guidelines (be it lending, Northern Virginia Association of Realtors paperwork changes, etc) I learn something constantly! I think you have to in order to grow...so this is why I love sharing new resources for the ever eager home buyer.

For questions like, what does PMI stand for? What does LTV mean? How about FHA? :) The Federal Housing Administration (FHA) came up with a Wikipedia site of their own: check it out here.

For home buying process questions, give me a call! I'm always happy to help :)