What is an "AS IS" Sale?

If you ask five people what it means to sell a property "AS IS", then you'll probably get five different answers. Even within the real estate industry, the term "AS IS" gets used differently by loan agents, underwriters, and agents. So what does it really mean when a Buyer makes an "AS IS" offer or accepts an "AS IS" counter offer? For a lender or underwriter, this means that no repairs of any kind need to be made by a Seller and no inspection reports need to be furnished by the Seller to satisfy the terms of the contract. This is typically the way investors purchase properties that would otherwise need repairs to be completed in order to close escrow. For a Seller, an "AS IS" offer means that they are not obligated to make any repairs for the Buyer. Sellers still need to make all disclosures including all material facts about the property to the Buyer. Buyers can have any and all inspections they deem of importance on the property even though it is being purchased "AS IS". Here's where it gets tricky. Some Sellers have the notion that since it is "AS IS" that the Buyer must complete the purchase no matter what they find during these inspections. Sellers also expect that Buyers will not even think of asking for any repairs on an "AS IS" purchase. Both these notions are not correct. If a Buyer finds conditions they deem unacceptable during the inspection process, they can cancel the contract to purchase with cause or ask the Seller to perform repairs to that unacceptable condition. So then what good does it do to have an "AS IS" clause in the contract if the Buyer can still ask for repairs? The "AS IS" clause actually benefits the Seller, because it releaves them of any obligation to make the requested repairs. But Sellers have to realize that if they do refuse to make any repairs, the Buyer may elect to cancel the purchase agreement. In actuality, in California, with the exception of wood destroying pest repairs, all purhase agreements are "AS IS" agreements unless the Buyer asks at the time they make the offer for the Seller to take corrective actions on known conditions. An example of this would be asking a Seller to clean or replace soiled or worn carpeting or to provide a two year roof certification. I recommend that any homeowner serious about selling their home hire their own termite and home inspector so that they are aware of any dificiencies in the property before they accept an offer from a Buyer. This way the Seller can anticipate the costs of repairs that potential Buyers may request the Seller make to the property. Sellers are obligated to furnishes copies of any such inspection reports to Buyers once a contract has been ratified. Some agents, myself included, recommend making the reports available to prospective purchasers before they even make an offer. In this way, you can weed out the prospects who find the conditions unacceptable from the outset.