Selling a house “as is” is sometimes a good option for owners who want to move the property quickly and smoothly. The house is sold in its existing condition and the buyer cannot expect the seller to invest in repairs, even if defects are found during an inspection. As-is sales have pros and cons, both for sellers and buyers.

Here is an example of how an as-is sale works. Imagine a home inspector finds a property defect that would cost $6,000 to repair. In a normal transaction, the seller would either extend a $6,000 credit toward the purchase price or have the problem fixed before the closing. But in an as-is situation, the seller would do neither. The buyer’s choices are to accept the property with the defect or to cancel the transaction.

New Jersey real estate law allows as-is sales, but sellers cannot simply list a home that is riddled with problems “as is” and leave it to the buyers to discover the problems on their own. Sellers must be transparent about the property’s condition. Transparency means the real estate contract must be clear about the following:

• That whoever buys the house is accepting it as is
• How the property was used prior to the sale
• Whether the furnace, appliances and other home systems are in proper working condition
• Any modifications the seller has made to the property
• Any tax obligations arising from modifications made to the property

Additionally, sellers are required by law to disclose all known, existing property defects. Examples are dry rot, areas of the property prone to flooding, dysfunctional air conditioning and heating systems, lead paint, structural problems and remodelings or extensions that may violate municipal codes or regulations. Buyers in as-is transactions have a right to have the home inspected. If the inspection finds undisclosed problems, the buyer can walk away.

As-is transactions have advantages for sellers, such as the potential for quicker sales without haggling over credits and without inspection contingencies. On the other hand, as-is homes are usually sold below market value. This might mean selling the property at a loss, especially when there is a sizable mortgage. Conversely, an as-is home can be a real bargain for a buyer. However, banks and mortgage companies often won’t finance a property in need of substantial repairs, so the pool of buyers may be limited to those who can manage an all-cash purchase.

If you are considering buying or selling property as is in New Jersey, reach out to the Law Offices of James C. Zimmermann by calling 973-764-1633 or contact us online to schedule a consultation. We have offices in Vernon, Wayne, Pompton Lakes, Hackensack and Nutley.