06-13-2009 07:32 PM
I am looking at buying a property that is in a short sale. Our bid was made 3 months ago and is still in the bank's netherworld. The selling agent never disclosed that the property was being sold "as is" anywhere in the MLS. Now that we are starting to make progress w/ the bank, he is asking us to sign (actually write our own) letter saying that we understand the property is being sold "as is" and that we won't try to negotiate.
First, I wonder why I would sign, let alone write, any document that isn't in my interest as a buyer unless it is holding up the deal. According to my agent, this document is being asked by the selling agent, not the bank. It seems to me that he could be trying to cover his own butt.
Now I do understand that negotiating with a bank during a short sale will be tough...but whether or not I try, I would like to know if selling agents are REQUIRED to disclose sold "as is" properties and what is the implication if they don't? Do I have some wiggle room here?
06-17-2009 08:40 AM
Most short sales will include language from the sellers/listing broker stating that the property will be delivered "as is", usually because somebody in that position does not have the ability to 1) Further reduce the purchase price 2) Pay for repairs out of pocket 3) negotiate with the bank to cover any of the cost associated. Usually but not always this language is found within the MLS listing but there is no rule about this clause. You should certainly be protected against being locked into the deal if the inspection turns up major items but an "as is" clause is actually pretty standard. You don't have to agree to anything that makes you uncomfortable but this is not uncommon. It's easiest to think of it as part of the negotiation but as you noted if it holds up the deal then you may have to relent.
My concern with this clause on a short sale is what may happen to the property after you sign the P&S before you actually close on it, so if you do go forward, it would be essential that the condition of the property be given a date and description if possible, usually around the time of the home inspection. You don't want somebody removing all of the fixtures, pipes, etc.. before closing and pointing to that clause.
If you have read these forums you will be well aware of all of the issues and problems with short sales so whatever you do please make sure you have a qualified, experienced attorney involved in any decision you make regarding this sale. If you would like to discuss further please feel free to contact me directly.