Many Silicon Valley home sellers want to sell their homes As Is. In the case of short sales, it is likely that the sale will be As Is, and with foreclosed or bank-owned properties, you can be fairly sure that it will be an As Is sale.
But what does that mean, exactly?
As Is means that the home will be conveyed to the buyer at the end of the transaction in the same general condition it was in on the day that the buyers wrote the offer. If the roof has leaks, the crawl space is full of termites, and the appliances do not work, that is how it will be on the day escrow closes.
What it does not mean is that the seller can let the property condition deteriorate. The seller must continue to maintain the home and land in the same general condition. So if the lawn was green and well trimmed, the seller cannot suddenly let the grass die and neglect to mow it. If a baseball breaks a window after the buyer and seller have a ratified contract, the seller must repair it. The condition will not have to be better, but it should not be worse, either, than on the day the buyer and seller agreed on the price and terms of the sale.
What do Silicon Valley home buyers and sellers think of the As Is clause? Ask and you will usually get very different impressions.
Silicon Valley home sellers may feel that the home is in good enough condition and they do not want to have to run around doing repairs in order to close escrow at the end of the sale period. They want guarantees going into the deal that they are not going to be surprised with a lot of demands to improve the home. They view that as coming straight out of their proceeds.
In other words, they know that if there are surprises, their net will be less, not more. Buyers never investigate the property and say, ˜gee, its in such great shape I will pay more than I initially promised! No, the sales price is usually the most the sellers will be able to get, and any further negotiations are going to be downward from there.
Silicon Valley home buyers will not be thrilled with a seller’s request for an As Is sale when there are no pre-sale inspections or if those inspections revealed a lot of problems, or even a lot of unknown further inspections. However, if the seller did the inspections and then made needed repairs, buyers will usually accept an As Is Sale. Buyers do not like surprises either. In fact, surprises are what usually kill home sales!
An As Is sale can work in Silicon Valley real estate sales as long as there is transparency and the sense of risk is minimized. It is crucial for sellers to have good pre-sale inspections before selling As Is. And it is just as important for buyers to be fully pre-approved so that sellers know they are not wasting their time with a buyer who may not really be qualified.
When both buyers and sellers do their work upfront and come to the negotiations truly prepared, the chances for a completed transaction rise, and so do the odds of everyone feeling like it was a ‘win win’ situation in the end.