“AS-IS” CONTRACTS AND WHAT IT MEANS IN FLORIDA REAL ESTATE
It is interesting how many versions there are for what “as-is” really means. Buyers rarely understand it and I have found that many agents don’t either.
I have also learned that a lot of it, is customary for different regions to create their own “as-is” definitions, so let's take a look at Florida Real Estate…
In the old days when a listing was labeled “as-is” you could assume that it meant that the Florida Property had lots of problems...it was almost like putting a buyer on notice that it was a “fixer”.
Today it is no longer like that…
The Florida Real Estate Market
Florida has a very healthy Real Estate market and for many years has been predominantly a “Sellers Market”. This is still case with the Tampa Bay market. That means that there are a lot of willing buyers wanting to buy a limited supply of inventory...that translates into an advantage for the home seller.
If there were a limited number of buyers with an overabundance of homes for sale and sellers were willing to deeply negotiate, it would be a “Buyers Market”. In a “Buyers Market” the buyer is the king.
Sellers Market in Florida
Today the market is “hot hot hot” and that is no secret. There are multiple offers on most properties and sellers are taking advantage of it.
Most sellers want to pick and choose the offer that is the most likely to close without any requests for maintenance fixes from them...therefore they want the offer to be on an “as is” contract.
There are 2 main contracts in Florida Real Estate
- One is a regular contract that has a repair clause. It can obligate the seller to do any necessary repairs up to a % of the purchase price or a flat fee dollar amount.
- The second type of contract is an “as is” contract which is putting the buyer on notice that the seller does not want to fix anything and wants to sell the house “as it is”.
- Each party is obligated to what terms are in the signed contract.
Today, almost all seller properties on the market have a request that all offers be on an “as is” contract. It is being requested as a convenience to the seller and not as a warning that there is something wrong with the property.
WRONG Beliefs of what “as is” means:
WRONG: The buyer cannot do home inspections.
WRONG: The seller will never do any repairs.
WRONG: Buyer has no other options.
WRONG: If the buyer's offer is accepted, they must buy the property as it is with its deficiencies.
Home Inspections as a contingency in the contract
If the buyer does not have an inspection contingency, their hands are tied for their options.
However, if the home inspections are a contingency in the buyers contract that gives the buyer more options after inspections:
- Buyer can renegotiate the contract with the seller and lower the price or get a credit towards closing costs.
- Buyer can have the seller make some repairs.
- Buyer may decide that they no longer want to purchase the property…and can walk away with their escrow deposit.
ALL THE RENEGOTIATIONS MUST BE COMPLETED DURING THE ALLOTTED HOME INSPECTION PERIOD FOR THE BUYERS DUE DILIGENCE (usually within 7-10 days after a mutually accepted contract).
Remember: While an “as-is” contract means the seller doesn't want to do any repairs, that does not mean that they won’t. Call or Text 727-202-9130, if you are in the market for a Tampa Bay property.