Caveat Emptor -- that's Latin for "buyer beware."
In today's real estate market, with the prevalence of foreclosures and short sales, I would caution that this phrase should read differently. Since I don't speak Latin nor know anybody else who does (even though I graduated from law school and there are even more Latin terms in law than there are in real estate), I'll write it in English.
Today's phrase is:
BUYER BE VERY AWARE!
When you're buying a home, unless it's from a friend or family member, it is very unlikely that you know the seller of the home. However, when you are purchasing a foreclosure home, you do know the seller! It's Freddie Mac, Fannie Mae, Wells Fargo, Bank of America, or some other well-known banking institution.
Banks are not in the business of selling real estate, but due to the foreclosure crisis, many of them have a large inventory of homes on the market. Unlike a traditional seller, the banks do not know the condition of the property they are selling, and in most cases nobody from the bank has ever stepped foot in the house you're looking to purchase.
Banks are selling these foreclosure properties, "As Is."
While banks use their own addendums (or additional documentation for the real estate contract), the standard Regional Sales Contract for Northern Virginia and D.C. contains the following definition of "As Is":
"The Seller makes no representation or warranty, express or implied, as to the condition of the Property or any equiment or system contained therin. The Seller will have no obligation to make repairs to the electrical, plumbing, heating, air conditioning, or any other mechanical system, equipment or fixture."
In addition, this clause allows the seller to waive the following normal requirements:
- Property delivered free and clear of trash and debris
- Clauses pertaining to termites
- Clauses pertaining to Private Well and/or Private Sewage Systems
- Clauses pertaining to compliance with city, state or county regulations
- Clauses pertaining to compliance with Property Owner's or Condominium Owner's Assocations.
Let me emphasize again, if you're buying an "As Is" Property:
BUYER BE VERY AWARE!
However, this does not mean that you are blindly buying a home without taking any precautions.
Although you are purchasing a property "As Is" you still need to know what the definition of "As is" is (with deference to former President Bill Clinton's grand jury testimony).
You should always have a home inspection especially on a bank owned property! Even though the banks won't necessarily fix anything or give any credit off the price for necessary repairs, at least you'll know what you're getting into with the purchase of the home.
The home inspection will enable you to find out the exact "As Is" condition of the property. Once you are satisfied with the present condition is when you proceed with the purchase. If not, make sure the contract says that you can cancel the deal based upon the home inspection. VERY IMPORTANT!
Even if you're not buying an "As Is" foreclosure property, I always recommend a home inspection.
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