When you decide to buy a house as it is, that means that there is no guarantee from the seller about the physical condition of the house. That also means that you are accepting the faults that might exist in that house. One of the main reasons why the home is listed “as-is” in foreclosure. Many foreclosed homes are sold as-is because the previous owner of the house may have left it in a questionable state. If the house is then owned by the bank, they are not willing enough to invest in the home improvements or repair costs. That is why they sell the house as-is.
However, according to the San Antonio real estate agent, not every property is distressed. One of the common reasons that the seller decides to list the home as-is is a financial concern. They are not willing to take up the responsibility of repairs and costly fixes. Also, there are other cases wherein the seller lives somewhere else and does not want to deal with the management of the repairs before selling the house. Sometimes, it also happens that the house is completely in a sound condition and the seller just wants to sell the home quickly and get done with everything with as little hassle as possible.
When looking for an as-is house for sale in San Antonio, TX how can you be sure that you will be scoring a great deal and not a dud? Here is everything you need to know before you buy a house as-is:
What are the minimum property requirements?
Not all as-is homes are in despair. Some homes that are unlivable as sold as-is. This means a good bargained deal for contractors who can correct these problems. Although you might be all in for repairing the caved-in roof or a broken HVAC system. Your lender will not share the same opinion. A majority of loan types require that the property meets some livability standard. They are also known as Minimum Property Requirements or MPR. The appraiser accordingly assesses the property to find out whether a particular property will meet the required MPRs. Let us look at the minimum property requirements for most common loan types:
1) VA Loans
These loans are a benefit of service for active-duty military members and veterans. Because these are backed by the government, the Minimum Property Requirements or MPRs are quite strict as compared to other loan types. Below are some of the general MPRs for VA Home Loans –
- Home free of pests
- Good condition of the roofs
- The mechanical systems should be in sound condition
- The HVAC unit should be capable of warming the house to 50 degrees.
- Supply of clean drinking water
2) FHA Loans
FHA loans are comparatively affordable loans that are backed by the government. In order to qualify for an FHA loan, the house you plan to buy should meet the Minimum Property Requirements –
- The home should be safe for you and your family to live in
- Structurally sound
- No physical deficiencies in the house
- No compromise on its structural integrity
Typically, homes in dire need of complete renovations do not qualify for an FHA Loan.
3) Conventional Loans
A loan that is not guaranteed or insured by the federal government is said to be a conventional loan. These loans allow you to purchase the properties as-is with only minor deficiencies or deferred maintenance. The home should be safe and sound with minor structural issues because of normal wear and tear. Let us look at a few examples of the kinds of defects that are acceptable if you get a conventional loan –
- Damage to the interior walls
- Minor plumbing leak
- Worn out floors or carpets
- Holes in the window screen
- Minor cracks in the window
- Missing handrails
- Either damaged or missing window screens or cabin doors
- Sidewalks have deteriorated
- Missing electrical switches, light fixtures, or faceplates
- Damaged or missing trim
These minor defects will be noted by your appraiser in his report.
Get a home inspection done
When you see San Antonio homes listed for sale in the as-is category, a home inspector will be your best friend. A home inspection is a crucial part of buying any home, especially if you are planning to buy a home as-is. Every homebuyer must get a home inspection done before purchasing any property. Not only is it a crucial element, but even top realtors in San Antonio will insist on getting a home inspection done.
Despite getting the home inspection done, it is the responsibility of the seller to disclose any known issues with the house to the prospective buyer beforehand. Obvious defects can be easily found out through home inspections. But the seller should acknowledge any known hidden defects in the property disclosure form. The buyer has the option to walk away if there is any expensive repair revealed in the home inspection which is pricier than what the seller disclosed earlier. Whatever you decide on, be it a starter home or a forever home, a home inspection is a must.
Negotiate on home warranty
A home warranty is a service contract that promises to cover the repairs or replacements of the home appliances and components that break down over time. Home warrant helps you in saving money and also helps the home buyers to rest with ease with one less expense to accommodate in their budget. If you purchase a home in as-is condition, getting a home warranty is a no-brainer. It ensures that the home buyer is in peace of mind instead of worrying over expensive repairs.
Take help from an experienced real estate agent
Getting in touch with San Antonio real estate agent is the first thing you must do when you are planning to invest in real estate. Top realtors in San Antonio who are familiar with as-is properties will be able to walk you through the entire process. They have the right knowledge to explain to you in detail about the as-is purchase contract thoroughly. This way the customers will understand the concept and purchase the property as-is without any fear. They will help the home buyers navigate the house-hunting process safely and avoid potential money pits. The agent will also recommend quality service providers who will help in choosing the right mortgage product, making the home repairs, and so on.
The real estate agent will also help in determining the best offer for an as-is property keeping in mind the cost of repairs for which the buyer will be responsible. It is recommended that 10 to 25% of your budget should be set aside for the necessary repairs when buying the house as-is. Your real estate agent will also help you in determining the market value.
Is buying a house as-is the right choice for you?
Buying a house as-is is not a preferred choice for everyone. If you are a house flipper looking to make some profit or if you are aware of how to fix and spot issues, then maybe buying a house as-is might be for you. For others, buying an as-is house may be risky.
If you are planning to buy an as-is house for sale in San Antonio, get in touch with a real estate agent in San Antonio. Get a home inspection done so that you do not get any unwanted surprises. You must do your research and find out lenders that will fund your as-is house purchase.
