Joseph Richer is registrar of the Real Estate Council of Ontario (RECO). He oversees and enforces all rules governing real estate professionals in Ontario. He recently received a very good question regarding fixer-uppers.
The question was this: I’m currently house hunting and looking for a fixer-upper. I’ve noticed some online listings say they’re being sold “as is.” What does that mean for me?
Here’s what Joseph had to say about it:
Putting some sweat equity into a home can be a very satisfying experience. But finding the right home for the project can be daunting.
When you see a listing that mentions the home is in “as is” condition, it means the property is being sold in its current condition and the seller won’t make any repairs as part of the sale. Basically, what you see (or don’t see) is what you get.
That’s not to say the home is necessarily in poor condition or disrepair. It’s possible that the homeowner doesn’t have the time, ability or money to make repairs, or the home might be part of an estate sale or power of sale, in which case there is very limited knowledge of the home’s condition.
Regardless of why the home is being sold in “as is” condition, there are a few important things you need to know as the buyer:
1. Consulting with experts is a very smart idea. Remember the saying — “it’s what’s on the inside that counts?” Even if you’re planning on making upgrades once you move in, it’s a good idea to evaluate the state of the home’s major systems before you commit to the purchase.
That’s why consulting with a team of experts can be so valuable. Part of that process may include a home inspection with a qualified and knowledgeable home inspector, preferably an engineer. He or she will check out the home’s major systems, like heating, air conditioning, electrical, roofing, foundation and plumbing. You’ll learn a lot by attending the inspection and asking questions along the way.
It may also be a good idea to bring in the types of specialists that may be needed for the renovation, such as a contractor, electrician, mould remediation company, etc. This is your opportunity to find out if the home will be a labour of love or a never-ending money pit. Consult with your real estate lawyer to verify that your intended use of the property is in line with municipal zoning bylaws. Which brings me to …
2. Conditions are there to protect you. Before you put in an offer on a home, you can speak to your real estate professional about including a clause in your offer based on your satisfaction with the inspection results. If the results uncover issues that are beyond what you are willing to take on, you may be able to walk away from the deal without penalty, depending on the applicability of the inspection condition. This is also something you would probably want advice about from your real estate lawyer. It’s also important to remember that in a typical sale, there may be some wiggle room to negotiate repairs with the sellers, but that’s not the case with a home that’s being sold in “as is” condition.
3. Buying a home “as is” is not a guaranteed way to find a comparatively less expensive home. As always, you’ll want to consider your budget and be sure to factor in the cost of repairs and renovations when accounting for the total cost of the purchase, including the cost of obtaining the necessary building permits.
You’ll also want to think about how long the renovations may take and whether the timing will impact whether you have to stay in your current home a little longer before being able to move in. With that may come additional rent or mortgage payments, bridge financing or other financial implications. If you aren’t sure what I mean, I encourage you to watch a few home renovation shows. These expenses can really add up, so it’s best to see if you can finance this type of scenario.
By doing your research before committing to a home, you can take a lot of the guesswork and uncertainty out of the home buying process. Be sure to use all of the resources and professionals available to you this article.
Joseph appears weekly in the Toronto Star column, “Ask Joe.”
