About that “As Is” Clause in Your Contract

Pros of the “As Is” Clause

1. Faster Transactions
   Selling a home “as is” often speeds up the deal. Without the back-and-forth negotiations over repairs, sellers can move quickly to closing. This works especially for motivated sellers who need to relocate, settle estates, or simply cash out fast.
2. Reduced Repair Costs
   Sellers avoid the burden of paying for repairs. Whether it’s a leaky roof, aging HVAC system, or cosmetic flaws, the seller can pass those issues along to the buyer. This can save thousands of dollars, especially on older homes.
3. Attracts Certain Types of Buyers
   Investors and cash buyers often seek out “as is” properties because they expect to make repairs themselves. These buyers are less emotional about defects and more focused on the property’s investment potential.
4. Clearer Boundaries
   An “as is” sale sets clear expectations: what you see is what you get. It minimizes disputes over inspection findings and keeps the deal more black-and-white.

Cons of the “As Is” Clause

1. Reduced Buyer Pool
   Most homeowners rarely purchase an “as is” property because of the potential costs of hidden problems and expensive repairs. This reduces the availability of offers to a small group, mostly investors who will offer this clause as an incentive to sell.
2. Lower Offers
   Investors who are willing to accept an “as is” purchase typically expect a discount. They factor repair costs and risks into their offer price. This can result in lower sale prices compared to homes listed in move-in-ready condition.
3. Disclosure Requirements Still Apply
   Selling “as is” doesn’t let the seller off the hook entirely. Most states may still require disclosure of known material defects, like foundation issues or pest infestations and additional “as is” language may need to be included if the buyer is willing to accept those material defects. If buying from a financial institution, they will usually have additional disclosures such as a liability waiver indemnifying the seller.
4. Inspections Still Matter
   Even in an “as is” sale, buyers often retain the right to conduct inspections. If major issues are uncovered — like structural damage or safety hazards — you may still walk away or try to renegotiate, slowing the deal or killing it altogether.

Should You Use the “As Is” Clause?

Do I use it? If a property receives multiple offers, I may include it as an incentive to make my offer more attractive to the seller — but only if the property is in a safe area. If the property is in a C or D class neighborhood, I do not use this clause due to the possibility of increased risk of damage before closing.

For you, it depends on your situation. If you’re a wholesaler with limited resources to close or inexperienced in renovations, you may want to include this in both your seller contract and your assignment agreement. If you’re an investor, it can offer the opportunity to pick up a property at a significant discount, but you must be prepared for unexpected repairs and budget accordingly.

Let’s give an example of when you may want to reconsider using the “as is” clause. Say you have the property under contract, have gone through all your repairs, created your statement of work, you locked in  your budget and if you hit all your target projections, you stand to make a decent profit.

Your contract also includes a final walk through one day prior to closing and as you walk the property, you discover that the HVAC unit was stolen and all the copper stripped out of the property. You’ve estimated it will costs an additional $15,000 for those repairs and now you must pull permits, something you were not planning on doing.

Is the property still a good deal? Will you make enough profit to justify the increase in costs?

Are you still contractually obligated to close on the property? The answer is yes. You are buying it “as is” at closing no matter what the condition at closing.

A modified “as is” clause may look something like this:

“The property is being purchased in its current “as is” condition, provided it remains in the same condition after the inspection period ends. If the property sustains any additional damage thereafter due to vandalism, theft or act of God (fire, tree damage, flooding) prior to closing, the buyer has the right to cancel the contract without penalty, and the seller agrees to refund the buyer’s deposit in full.”

I am not attorney or pretend to be so you should seek legal advice to design an “as is” clause that works best for you.

This revised clause may be something your seller may accept but most likely not a financial institution. You still have to use your best judgement and weigh the risks of offering the “as is” clause in your contracts.