Buying a Foreclosure or Short Sale “As-Is” in Northern VA

I’m working with some clients that submitted an offer the other day on a home that was a short sale. With distress sales, both short sales and foreclosures, a bank is involved in the process it’s somewhat different than a regular sale when just the buyers and sellers are involved. One of the differences is that the home almost always must be purchased in “as-is” condition, meaning that what you see is what you get. This scared my clients because they obviously hadn’t done a home inspection so they didn’t necessarily know everything that was wrong with the home.

I understood their concern but I explained to them that just because they were taking the home “as-is” did not mean they couldn’t do a home inspection. In fact, the home inspection contingency would still allow them to get out of the contract if they found any major issues they didn’t want to tackle. The reason that banks make buyers sign the “as-is” clause is that they will not make any repairs or credit repair costs at closing and for the most part I’ve seen that be the case.

So don’t be intimidated by the “as-is” clause, you’re still protected with the home inspection contingency if anything unforeseeable comes up. However, also make sure when you’re submitting your offer that you factor in the cost of a good bit of maintenance. With foreclosures and short sales, if the owners are having trouble making their mortgage payments in most cases they have also been deferring maintenance on the home. As with any purchase, but especially distress sales, make sure you do your homework and also have a knowledgeable and experienced Realtor on your side.

Jim Patrick