To many people, a seller wanting to use an AS-IS addendum in a real estate contract is seen negatively instead of being seen as a way to use the form as a modification to our standard real estate purchase contract. Often, there is a feeling that something is being hidden or not properly disclosed when people see the term AS-IS.
Section 5a of the current Residential Resale Real Estate Purchase Contract from the Arizona Association of REALTORS, is titled seller warranties. It currently reads as follows. “Seller warrants and shall maintain and repair the Premises so that at the earlier of possession or COE: (i) all heating, cooling, mechanical, plumbing, and electrical systems (including swimming pool and/or spa, motors, filter systems, cleaning systems, and heaters, if any), free-standing range/oven, and built-in appliances will be in working condition; (ii) all other agreed upon repairs and corrections will be completed pursuant to Section 6j; (iii) the Premises, including all additional existing personal property included in the sale, will be in substantially the same condition as on the date of Contract acceptance; and (iv) all personal property not included in the sale and all debris will be removed from the Premises.”
Editors Note: If you need your pool serviced or cleaned contact in the East Valley contact Big Family Pool Services.
Yes, it says ALL heating, cooling, mechanical, plumbing and electrical systems will be in working condition. So, for example, if you own a home that has a ceiling fan that does not operate, you have just agreed to fix it when you agreed to sell your home if you are using a standard purchase contract – Unless you write a counter offer taking that item out of the warranted section or use an AS-IS Addendum. **please note: the current standard purchase contract is undergoing changes once again and these sections may be significantly modified in the near future**
So, let’s use an example that comes up often: Seller A gets an offer on his home from Buyer Bob. Seller A has a home that was built in the 70’s and might have some minor plumbing or electrical items that will come up when Buyer Bob does his home inspection. If Seller A was to sell his home at or near what he was asking for the home, he is willing to do any minor seller warranted items that may come up. Unfortunately, Buyer Bob wants a larger discount on the price than what Seller A really wants to sell for. So, Seller A tells his agent that he does not want to do any repairs at that price, but he would agree to sell it in “AS-IS” condition. Now, when Buyer Bob sees an AS-IS Addendum, he gets a bit freaked out and thinks that Seller A is trying to hide something instead of just being at his bottom dollar with his negotiating.
Selling a home using an AS-IS real estate contract doesn’t necessarily mean that the buyer can not submit a Buyer’s Inspection Notice and Seller’s Response form during their due diligence period. The AS-IS form removes the seller-warranted items from the contract, but it does not say that the seller can not or will not agree to fix anything. Using the example above where Seller A and Buyer Bob agree to an AS-Is sale, Buyer Bob can still ask for repairs and Seller A can agree to do them. The difference is that Seller A is not obligated to fix anything. If the condition of the home is not satisfactory to Buyer B, he or she can cancel the contract during their due diligence period.
Here’s an article written by Michelle Lind at the Arizona Association of REALTORS that shows a partial list of warranted and non-warranted items:
*leaking faucet *leaking landscape features *outdoor sprinkler leak *leaking tub diverter valve *air conditioner below manufacturers specs on splits *windows don’t open/don’t stay up/don’t lock *malfunctioning pool light *non-working GFI outlet *ceiling fan will not operate *water osmosis system not functioning.
*structural pool leaks *loose or rocking toilet *ungrounded outlets *missing GFI outlet *hot and cold water outlets reversed *cracked window *small hole in window *vacuum seal leaking on dual pane windows *missing or non-working light bulbs *roof leaks.
As you can probably tell, this is not a complete list of warranted and non-warranted items that can be found in a home. Confusion and even ignorance often causes problems in the purchase or sale of real estate.
When you are choosing an agent to work with, it is a good idea to make sure they are very familiar with the terms and conditions of the real estate contract so that they can assist you every step of the way. This way, even a “tricky” AS-IS real estate contract can be navigated properly and effectively.