Many Silicon Valley home sellers want to sell their homes “as is” (or “as-is”). And most homes in today’s market are. But what does that mean, exactly?
Does it mean that the seller has made no repairs or renovations before listing the home? Or that they do not have to disclose if something is broken to a potential buyer? No.
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 means is that the seller cannot let the property condition deteriorate during the course of the escrow.
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 entered into contract, the seller must repair it. The condition will not have to be better, but it should not be worse than it was on the day the buyer and seller agreed on the price and terms of the sale.
While the contracts most agents use in Santa Clara County and nearby today have “as is” as the default sales agreement, that doesn’t mean all sales are as is.
Surprises Kill Home Sales
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 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, which they often view as coming straight out of their proceeds.
In other words, sellers know that if there are surprises, their net will be less not more. Buyers will never investigate a property and say, “wow, its in such great shape I will pay more than I initially promised!” No, the contracted sales price is usually the top dollar the sellers will be able to get, and any further negotiations are going to be downward from there.
However Silicon Valley home buyers don’t like surpirses either.
Buyers will not be eager to accomodate a seller’s request for an as is sale if there are no pre-sale inspections, or if inspections revealed a lot of major problems, or even if they call for many further inspections of unknown conditions. If the seller did the inspections, and especially if they made needed repairs, buyers will usually be willing to write an as is sale.
Surprises are what usually kill home sales!
Make an As Is Sale Work
As is sales can work in Silicon Valley, no matter what the real estate market is like, as long as there is transparency and the sense of risk to either party is minimized early on. It’s also why whether you’re selling a home that was newly built this year or one that’s mostly land-value, it is crucial for sellers to have good pre-sale inspections before listing any residential property.
And it is just as important for buyers to be fully pre-approved, and to have their agent contact the listing agent before writing, so that sellers know they are not wasting their time with a buyer who may not really be qualified or flake out!
When both buyers and sellers do their work upfront and come to the negotiations truly prepared that increases everyone’s confidence and raises the likelihood of closing the transaction. It also improves the odds of everyone feeling like it was a ‘win win’ situation in the end! And who doesn’t want that?