When I work with first time home buyers, they will often ask to see Foreclosure properties or rehab properties because they “don’t mind doing a little carpet and paint”. Buyers know that they might get more for their money if they buy a home that has been acquired by a bank or simply needs some TLC. Most of these homes are offered “AS IS” and depending on the type of loan the buyer has secured, may not be approved for a home loan on a rehab property. A bank may not see it as a good risk to loan money on a home that needs work. Often these homes are purchased with cash by an individual or investor who has the ability, manpower and cash reserves to fix them up.
My job is to analyze the situation and assist buyers in making good selections then negotiate the best terms and price for my client. If, for example, the couple purchasing are employed full time with six month old triplets, a toddler and a 15 year old, I would not encourage them to buy a “great deal” home that has amazing square footage but would require gutting and remodel. Timing is everything!
Buying an AS IS property can be a good idea if you’ve done your homework. Make sure you know what the house would be worth in good condition. If possible, find out if any insurance claims have been made on the property. Your insurance agent may be able to help. Have inspections done by a reputable inspector. (Ask me for my referrals, I recommend only the best!) Read your contract and know how much time you have to “review and inspect” the property before accepting the property in it’s condition. Remember, the actual price you are paying is the price of the property PLUS any and all repairs needed. Sometimes, that is more than the property is worth.