“AS IS” Contract vs. FAR/BAR Standard Contract
“AS IS” contract is a warranty disclaimer. Property is sold “as is” in order to limit any liability relating to the condition of the property.
FAR or the BAR approved contracts is what most South Florida real estate agent use. The FAR/BAR “AS IS” Contract and the FAR/BAR Standard Contract are streamlined and comprehensive. As a result, they are now present in transactions of all shapes and sizes across the state.
“AS IS” Contract and FAR/BAR Standard Contract
In this article, we’ll explain what is an “AS IS” contract and its difference from the FAR/BAR Standard Contract.
What does “AS IS” mean in Real Estate?
“AS IS” means the property is sold in its current state without any repairs. However, it states that if the buyer’s lender requires any repairs, the buyer needs to pay for those themselves.
Q: How does “AS IS” contract differ from FAR/BAR Standard Contract?
A: Aside from the general “AS IS” disclaimers, the main difference is the inspection and repairs.
FAR/BAR Standard Contract – REPAIRS
Under the standard contract, the seller is obligated to repair limit if the cost to repair exceeds the repair of limit. The buyer can basically elect to have the seller certain defective items up to the repair limit. If neither election is made, either party can cancel the contract. However, parties under the standard contract must still follow extensive inspection and repair provisions. These can include:
- Buyer must still give notice of defects.
- The seller must still obtain written repair estimates. Buyer cannot cancel if the seller agrees to make all requested repairs.
- If the seller does not agree to make the repairs. The seller can cancel if the buyer fails to elect to take the property in its “AS IS” condition.
FAR/BAR Standard Contract – INSPECTION
Under the FAR/BAR Standard Contract, the buyer has 15 days after the Effective Date of the Contract, or 5 days prior to closing, to complete inspections and deliver notice to the seller.
The seller has 5 days to obtain repair estimates and deliver to the buyer. In addition, a seller can also obtain a second inspection if the seller disagrees with the buyer’s inspection report. If the reports differ and the parties can’t agree, the parties jointly share the cost of a third inspection which results are binding on both parties.
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“AS IS” – REPAIRS
Under the “AS IS” contract, the seller is not obligated to make any repairs. However, the buyer can cancel the contract within the inspection period if the buyer determines the property isn’t acceptable.
“AS IS” – INSPECTION
Buyers usually have 7-15 inspection days. There are different types of inspections that buyers can have within the inspection period. In other words, the buyer can either have a mold inspection or a pool inspection.
The “AS IS” contract has no limitations on the type of inspections or who can do these inspections. So anyone including the buyer can inspect the property and it doesn’t have to be a professional inspector.
“AS IS” contract and “AS IS” addendum
The “AS IS” contract and the “AS IS” addendum are two different things, the right to inspect and cancel addendum. Therefore, a home inspection report is something that you always have to disclose if you don’t close with that person.
Who uses the “AS IS” basically?
- Bank owned properties are always sold “AS IS”.
- Similar institution trustees typically sell properties “AS IS”.
- A seller may also decide to sell a property “AS IS” if the property is in a state of disrepair.
- If the seller agrees to a significant price reduction the seller may also sell the property “AS IS”.
- The buyer may use “AS IS” to make a more attractive offer.
- A buyer may use “AS IS” to tie up the property while continues to look at other properties.
Why sell a house “AS IS”?
Most sellers often list a house “as is” when they need to get it off their hands quickly. Usually, this means they are in financial straits or a major life event is forcing them to move.
The “as is” sale allows a seller to bypass much of the work usually associated with a home sale. Therefore, sellers can skip fixing, renovations, and pre-sale repairs. As a result, the seller might profit less from the sale and may have trouble attracting buyers.
Who is the best person to help with an “AS IS” real estate contract?
Contact an experienced realtor if you need help with an “AS IS” contract. Above all, an experienced realtor has firsthand experience buying and selling “as is” properties. They’ll be well-versed in the intricacies of “as is” contracts and can answer your questions.
The Stampini Team have experience reviewing and negotiating all types of real estate contracts. In other words, we have extensive knowledge and experience handling FAR/BAR “AS IS” and Standard Contract. We determine whether your interests are adequately protected before you sign.
Want to learn more? Then watch this video to learn the more about “AS IS” contract and how it differs from FAR/BAR Standard Contract.
Or fill out our contact form to schedule a free, no-obligation consultation with one of our qualified real estate agents.
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