5 Things You Didn’t Know About Buying a Home Sold-As-Is
As a first-time home buyer, you might not know what you are getting into when buying your first home, especially when it’s being sold as is. Here are 5 things you didn't know about buying a home sold-as-is.
Most buyers envision a home that is move-in ready where you can just add your furniture and be done. However, if you are looking to save a buck or two, you might be interested in that fixer-upper or estate sale that is cheaper than buying a habitable home. Well, please know that when you are looking for these options, you might not know what you are getting into. So, as they say, "Buyer Beware."
#1 Ask for Repairs.
There is a myth out there that because a home is being sold as is, you cannot ask for any type of repairs. You CAN ask for repairs. If the repairs are really big, like roofing or foundation issues, the seller might not agree to do them. However, if the repairs are minor, some sellers do budge. You have to remember the motivation for a seller is to sell. Maybe they are falling into a short-sale situation or maybe it's a divorce that is happening. Most of the time, when the seller needs to sell quickly, they will do what they have to do. They might give you a repair or they might not. You’ve got to try it out. The worst thing they can say is ‘No.”
#2 Ask for a Credit.
If the seller doesn't want to repair anything in the house, especially the items that are on the home inspection report, then the other option is to ask for a credit. I recently had a client who got a $3,000 repair credit in the form of a price reduction. There were a lot of issues found at home inspection, and the seller had already bought another home and was paying two mortgages, so they needed to sell fast. They agreed to reduce the price by $3,000.
When it comes to trying to get a credit with a home that is being sold as is, make sure you talk to your real estate professional or your attorney. You might get a repair credit or, even better, a price reduction.
#3 Beware of miscellaneous costs, like transfer stamps.
There are so many costs involved when you are buying a home. One of them is called a "transfer stamp," which is normally the responsibility of the seller to pay. However, when you are buying a home that is sold as is, you need to be aware that this will fall on you.
According to Wikipedia, "Real estate transfer taxes are taxes imposed by states, counties and municipalities on the transfer of the title of real property within the jurisdiction....Real estate transfer taxes can also be used for specific purposes, such as affordable housing and open space development."
In my own words, a transfer stamp is a tax that is imposed from owner to owner to show the state of residence that you are now the rightful owner of that particular parcel of land and property. The tax is imposed on the privilege of transferring title to real estate or a beneficial interest in real property that is held, in my case, in the state of Illinois.
Transfer taxes vary from city to city. As an example, in Chicago the transfer stamps imposed are:
Chicago Transfer Tax
|Area||Tax Levied||Paid By|
In this case, you as a buyer will be responsible for paying your portion of transfer taxes as well as the seller's portion because the home is being sold as is.
So, make sure you check that out because you will be responsible for that money and that’s out of your pocket. Talk to your attorney and your real estate professional about transfer stamps.
#4 Be aware of Past HOA Fees.
If you are thinking about buying a condo, make sure you are familiar with paying for past HOA (Home Owner's Association) fees. This will apply if you are buying a foreclosure or a short sale since they are being sold as is. You will be responsible for the last 6 months’ worth of homeowner’s assessment fees. Be careful with this.
Here is an article from the Chicago Tribune stating what I said above. If you look at the Illinois Property Condominium Act (765 ILCS 605/) Condominium Property Act, section 9(g)(3) states the following:
#5 Buyer, Just Beware.
Home buyer, beware. There’s a lot of risks when you’re buying a home that is sold as is. Make sure you do that home inspection because the home inspector will be looking at big components such as electrical, roofing, foundation, etc. A home inspection typically costs between $300-$550 depending on the square footage of the home. It's best to spend this amount and know you are getting a solid home with minor defect than to find out you have a money pit.
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