Home Being Sold with As-Is and Where-Is clauses

   Let's first understand what the term "As-Is" and "Where-Is" imply, then we'll look at what actions are necessary to protect yourselves.  As always, there are many tangents to this issue that can change or complicate your particular transaction.  You can also visit my website or feel free to email me with specific questions.

There are a few misunderstandings with these terms.  The first is the time-frame to which they apply.  As-Is doesn't technically take affect until you bought the home; as in, you bought the home as-is.  Once you bought a home as-is, your legal ability to return to the seller and demand that they make repairs for a undisclosed defect are removed or greatly limited.  When the legal term "where-is" is used, your ability to seek a cure - from the seller - for title issues and others blemishes on your rights of ownership are also limited (depending on the type of deed you received).

The second misunderstanding is that by agreeing to an as-is clause, you are giving up your rights to due diligence, which includes inspecting the home for defects, and investigating the condition of the title.  The opposite is actually true.  "As-Is" is a huge red flag that should alert you to the need for much greater investigation.

The third misunderstanding is that the seller will not fix defects that you identify.  In any contract, the seller can not be forced to fix anything (unless they agreed to do so).  The same is true with an as-is clause.  You can request that the seller fix a defect, and if they refuse, then you have to decide if you still want the home.

As always, there are many tangents to this issue which can change or complicate your particular transaction, so please talk to your agent email or call me.

Matt and Christel Peterson

Matt and Christel - it was so nice to work with you and helping you get your first home.  See you on the 9th with pizza for the big move.  Evan Gagnon was happy that you both were going to make his house a home.  Thanks for allowing me to help

Question from home owner, "I owe the lender $240,000, but my home is only worth $190,000 what are my options.



Depending on whether you wish to stay in your home or sell, there are some options and some hope for you.  Although, there are not many success cases nationally, some lenders are working with borrower to modify their mortgages.  Nationally, only around 77,000 mortgages have been modified.  Lenders have many options when modifying mortgages:  interest rate reduction, principle reduction, term extensions etc.  All these modifications can help reduce your payments.  Your first step is to contact your lender's "Workout Department, or whatever they call it.

If you know for certain that you can not stay in your home, then you have a few options too.  You again need to communicate with the lender's Workout Department and inform them that you can not afford to stay in the home.  Ask them if they will take a deed-in-lieu of foreclosure.  This will affect your credit but not nearly as much as a full foreclosure.  You may need to strongly suggest that you can not afford staying in the home..."we will not be making any future mortgage payments".  Unless you are leaving the area for ever, DO NOT give up your home or otherwise abandon it.  Why pay rent somewhere else, when it could take a year or more for the lender to work something out with you.

The other solution is a short-sale.  You will need a real estate agent knowledgeable with the procedure.  You again will work with the lender.  This time we put your home on the market for the "market value" not what you need to get to pay off the mortgage and the bills. 

Let me know if you have subsequent questions on this issue

Carpet allowance verses installing carpet

I was asked today by a home owner whether is was better to include an allowance so that a prospective buyer could buy carpet or should they go ahead an install the carpet now and hope that this would attract a buyer faster.

Although there can be many different scenarios whenever people are involved, I believe that installing the carpet now is the best answer.

Let's go through the reasoning.  From a neuroeconomics position (the study of human decision making), we consumers are very visually impacted.  You can tell me all day that you intend to give me money for new carpet, or even that you intend to install new carpet, BUT all that I see is the old nasty carpet in front of me.  As a buyer, with numerous homes to choose from, I'll choose the home that made the best impression on me.

We (consumers) want it NOW not later.  You say I can have new carpet; well then where is it?  I want it now.  From a psychological standpoint, future benefits are weighted less against current benefits.   Which would you rather have, $100 today, or $100 in a month.

 

Jim and Linda Strysick's new home

Linda and Jim

It was fun working with you both (and your (Linda) sister Liz).  I hope that you feel extra special knowing that you are my first entry on this blog.  Let me know if you need help fixing the faucet.  And, Linda; it is not stealing now that you own the place.  Keep in touch

Brian