Author Topic: Buying/Selling "As Is"  (Read 2426 times)

Workinghard

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Buying/Selling "As Is"
« on: July 09, 2014, 04:39:40 PM »
We just found out permits were not pulled on different things: AC, sunroom, solar heat system for our pool, and the pool cage. Subsequently we were told it would not pass inspection and we would have to sell as-is unless we wanted to pull permits and make changes. When we get ready to sell, it will be pristine. Dog will be gone, windows sparkling, tile has been regrouted in two bathrooms that we aren't using, yard will be mulched, etc.

Do you think we should spend the money for permits or let it go? I guess if it was as-is that would take care of the roof which is 17 years old. However, the roof had been inspected and we got an insurance discount due to it being in good shape.

Daisy

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Re: Buying/Selling "As Is"
« Reply #1 on: July 09, 2014, 04:47:39 PM »
I bought a house last year and am selling my old house this year, and it seems like everyone is going "as is". At least as far as I can tell. My agent suggested it.

My old house had a garage conversion and several potential buyers asked about the permits. This was done way before I moved in. It seemed to have turned some people away. Well, I dug into the records and sure enough, the permits were pulled on the renovations. So now I can use that in the negotations and don't have to worry about the inspections.

I guess you run the risk of a lower selling price by selling "as is" as the buyer can be taking a risk buying a place that doesn't meet building codes. Also, if something comes out in an inspection the buyer still has the right to retreat from the contract.

So it depends on the issues with the permits. If you think they are serious enough, you may not get any offers. I lost two interested buyers until I produced the evidence. You may decide to either make the changes to bring your house to code or risk a lower selling price.

At my new place, I found some mold after moving in and had to take care of it.
« Last Edit: July 09, 2014, 06:11:10 PM by Daisy »

fixer-upper

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Re: Buying/Selling "As Is"
« Reply #2 on: July 09, 2014, 05:29:48 PM »
I'd price it low, and state that offers will be considered after X many days.  If there are a few close offers, make a call for best and final offer, the same way banks do on foreclosures.


Daisy

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Re: Buying/Selling "As Is"
« Reply #3 on: July 09, 2014, 05:34:40 PM »
Even with as-is, I believe the buyer still has the right to an inspection. So any issues with the house will come out in that.

I was a little annoyed at my agent because she had me make some cosmetic changes to make the place look nicer. But then when it came time to do comparables to my place, she said everyone looks at the price per square foot. She brought me some comparables that just weren't really comparables to my place. The other places were either falling apart externally or internally, under foreclosure and buyers couldn't even enter the place, or on a street with a lot of traffic. So she had me make those improvements to make the place more sellable, then tells me the buyers are all comparing on price per square foot.

I wouldn't make any major changes like kitchen and bathroom upgrades as I don't think you will necessarily get a 1-for-1 payback on that. But if there are issues with permits, as a buyer I would be very scared and would demand a lower price.

I wouldn't come right out and divulge all of the issues with the house. I'd let the inspection find these. But if you have a serious issue that many buyers don't want to bother with, then I really do think you will lose out on some potential buyers that compare your house to the others at the same price.
« Last Edit: July 09, 2014, 05:37:26 PM by Daisy »

Another Reader

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Re: Buying/Selling "As Is"
« Reply #4 on: July 09, 2014, 06:04:41 PM »
If you know for sure that permits were not obtained, you will likely have to disclose that.  The MLS contract paperwork in most states/cities has a seller property disclosure statement that addresses work done on the property and permits.  You can disclose and sell as is, if you like.  However, unless non-permitted work is the rule, you will lose a lot of buyers that don't want the headache and those that will buy "as is" will want a lower price.  Often, lenders will not lend on a property if there is unpermitted work that turns up.  That can make a sale next to impossible if most buyers are financed.

If you are going to use an agent, ask the agent what the effect on value is if the permit status of the items is not known.  You will get a feel for how these issues are regarded in your market.  Also, an experienced agent will know how much it will cost and how difficult it will be to get permits after the fact.

Workinghard

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Re: Buying/Selling "As Is"
« Reply #5 on: July 10, 2014, 11:43:55 AM »
Thanks everyone for the replies. We're going to contact some of the companies that are still around and talk to them about the permits as they should have been pulled. From an ethical viewpoint, we'll fix the mess as we're not trying to deceive or dump on the next owners.