RE Q&A: ‘As-Is’ Contract OK for Flipped Home?


A prospective buyer of a renovated home worries that an “as-is” contract may release the seller from not-yet-discovered problems. Should they sign it?

FORT LAUDERDALE, Fla. – Question: We are looking to purchase our new home from a real estate renovator who bought it last year and fixed it up. The contract has a lengthy, one-sided addendum making the sale “as-is” and releasing them from any issues with the renovations, including compliance with the building code.

Should I sign it? – Gregg

Answer: Probably not unless you get a long time to check things out and ensure all the work was completed correctly.

Many real estate investors will purchase a distressed home and fix it up to sell it at a profit. Sometimes, everything is on the up and up, and the buyer gets a renovated home at a favorable price. However, some of these lack the skill or the motivation to do a good job and end up cutting corners.

Every buyer of a newly renovated home needs to be extra diligent to ensure all the work is done correctly.

Hiring a talented home inspector is always important – but it is crucial in this situation.

Remember that a home inspector is a “generalist.” If a problem is found, they recommend you follow up with a properly licensed specialist, such as a roofer, plumber or electrician. You should follow this advice and get more detailed reports to ensure the house is in great condition.

You will also need to make sure that the proper permits were pulled and closed out after the city approves the work. Many cities have this information online, while you must go to the building department for others.

You must take all of these extra precautions to protect yourself due to the contract terms you mentioned.

Also, most renovators own these investment properties in companies they create solely for this property, closing the company after the sale. This makes it hard to sue and collect from your seller even if they breach the seller-centric contract.

Finally, remember to factor in the additional risk and cost of this additional effort in your purchase price offer.

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