The “As Is” Conditional Addendum sounds intimidating, but if you look at it closer, it does not mean much.
It does not change any of your rights during the inspection. You can still cancel, ask for credit, or ask for repairs.
It does not change the seller’s responsibility to disclose everything on their disclosure statement.
It specifically says that the Purchase Contract overrides the “As Is” Conditional Addendum, so if you call for something to be repaired in the contract, this overrides the “As Is” Conditional Addendum.
It does not even help the seller after closing because it specifically says they are still liable for claims where they did not disclose a material fact. So the buyer can still sue after closing. As almost all lawsuits are because of an undisclosed material fact, the As Is specifically says the seller is still liable in these situations.
So, what does it do for the seller then? It simply sends a message that they prefer not to do repairs. Buyers can still ask for repairs, but sellers are saying up front that they prefer not to do any.
We feel one of the most important things we can do for a buyer or seller is to help them close. Along these lines we do not sweat the small stuff on Purchase Contracts.
I see some agents change 3 days to 5 days, 12 days to 10 days, and they keep making the tiny changes that really mean almost nothing. I am not sure if they just want their client to feel like they are doing something, or they really believe those changes are needed.
We feel changing the inspection from 12 days to 10 days is not important. The goal is not to get the longest inspection period possible, the goal is to close on the home. If you focus on the goal, you can see those small changes are not needed. Plus, once in escrow if you feel an additional inspection is needed, you can always request a small extension, and we pretty much always see sellers grant this small extension as they do not want to fall out of escrow.
Attorneys are notorious for making a ton of changes. I can always tell if the Realtor is also an attorney by the number of changes to the contract they make. Attorneys work with contracts all the time, and they feel their job is to make it as beneficial as possible for their client, so even though they are also a Realtor they still wear their attorney hat and make a ton of changes. Unfortunately, attorneys forget that as a Realtor their goal is to get the client into a new home, not just get them into a favorable contract. I have seen attorneys that make so many changes to the contract, the seller says no thanks, so they actually lost their client’s dream home because of their need to make so many changes to the contract.
So our advice is don’t sweat the small stuff. Focus on the big things like price and how long until closing and if the other terms are within a reasonable range don’t counter them. Focus on getting the home!
If you are lucky enough to get a counter offer in a multiple offer situation, you really want to accept it unless there is something major that you can’t live with.
You have to keep in mind a counter offer can be withdrawn at anytime. It might have a response required within 24 to 48 hours, but at anytime and without warning the seller can withdraw that counter offer and accept another offer. Once both parties have signed the counter offer, then it is binding and you are in escrow, but until that time the seller can withdraw as desired.
So if you are OK with the price but there are some minor things you would like to change we suggest not changing them and just living with those minor things.
Sometimes small things can be negotiated during the escrow process. For example, say you wanted a 15 day inspection period, but they countered with a 10 day inspection period. Well 8 to 9 days into the inspection if you still need more time you can let the seller know. We have found that sellers do not want to fall out of escrow, so while they were reluctant to allow 15 days prior to going into escrow, they would probably OK a 5 day extension rather than falling out of escrow and having to start again. Falling out of escrow has a stigma about it, buyers will wonder what went wrong, so sellers prefer to stay in escrow and close if at all possible.
So keep this in mind if you are in a multiple offer situation and receive a counter offer. If possible sign it right away, get into escrow, and if a few minor details need to be discussed once in escrow that is OK.
This is the buyer’s opportunity to inspect everything about the property. We recommend using a professional home inspector. Sometimes additional inspections are needed by plumbers, electricians, roofers, etc.
At any time during this period and for any reason the buyer has the right to cancel and get all their deposits back.
After the inspections are completed, but prior to this contingency expiring, the buyer may ask to have repairs done or a credit. A credit is normally an easier solution for the seller and therefore more likely to get approved.
The seller is under no obligation to do any repairs nor give any credit, so it is a negotiating process.
If an agreement is not reached the buyer has the option to cancel and get their deposits back or continue.
Keep in mind the As Is agreement has no impact over this contingency and buyers can still do everything mentioned above even if the As Is was used.
The normal time for this contingency is 7 to 15 days. If it is over 15 days, it will normally be countered.
It is important to understand that if the buyer does not make an election to cancel the Purchase Contract prior to this contingency expiring, then they have waived this contingency. This means even if negotiations are still going on for a repair or credit past the expiration date, then by default the buyer has waived their right to cancel using this contingency.