No, unless you write “offer conditional upon satisfactory home inspection”, you can’t back out if it the contract says sold “as is” if there are too many repairs UNLESS your attorney discovers a work order to carry out some repairs (which your lawyer can argue is a title issue). Standard real estate contracts used by realtors usually have small print clauses dealing with title issues and that they need specific waivers or the contract becomes invalid. Only then could you back out. Doesn’t your attorney wife already know that?
Seriously, if somebody writes “sold as is” it should be a red flag that something is wrong and you should proceed with caution and, if you continue to go ahead, you should be demanding a much lower price and/or vendor financing or you’ll walk away.
I guess what I meant was that just because you make an offer on a place that is being sold “as is” does not mean you’re not entitled to an inspection prior to closing, correct? And if the inspection uncovered something that wasn’t even plainly visible, like mold, you could back out I would assume.
My wife has been away this week so I haven’t discussed it with her… and she’s not a contracts lawyer so it’s doubtful she would even know the standards and practices of home sales.
No, you are only entitled to an inspection if the agreement of purchase and sale specifically says you’re entitled to a home inspection, that’s why you have to write it in there. The only warranty you get if it’s “as is” and there’s no inspection clause are title searches, and the title insurance company will uncover those work orders and notify your lawyer that they are not insuring anything relating to those work orders. Always get title insurance.
Now in the case of mold, you may have another escape clause if your lawyer discovers it was raided as a marijuana grow op and the realtor never had a waiver signed that he disclosed it to you, but if the mold was caused by water getting in behind the walls from a roof leak, you’re not getting out of that sale if it’s “as is”. That’s why you need a home inspection. And make sure they are insured because if a home inspector misses something he should have noted in his report like some of the roof flashing is missing that can cause a leak, that’s negligence and you can make a claim against the home inspector’s insurance provider for the mold damage caused by the leak.
Another reason you should get a home inspection is because it allows you to negotiate a reduction in price afterward the inspection. The home inspector says you have these issues that will cost $30K to remedy. Now, you can go back to the seller and say the building is not worth this price and unless you discount the price I’m backing out of the offer. The vendor may say they think the repairs are only worth $15K and you might get a $15K reduction in price and do most of the repairs yourself and pocket the difference.
I am trying to understand why you specifically want to LIVE in a duplex/multiplex rather than just get your feet wet with a rental? I am in the Baltimore market, not too far from you. We have a handful of section 8 rentals in the city. We receive between 1400-1700 for properties we have 70-90k invested in. I have a contact of a HML that would lend most of the acquisition for a property like this. It seems from the information you provided that you have a very good income. I can’t imagine telling my wife, when we have a combined 6-figure income such as in your situation, that we are going to live in a multiplex with tenants around us. It sounds like a nightmare Perhaps the financials make sense, I am just not sure the ends justify the means…
With owner-occupied places, we can get an FHA loan with only 3.5% down. And we can get owner-occupied rates which are less than investor rates. We have very little saved for a down payment. I’ve been told by a couple different loan officers that we need to show evidence that we’ve been saving money toward a down payment. It’s not just good enough to suddenly come up with a down payment. They suggested that we get one “gifted” to us. We were also told that because we currently rent and do not own that it will be tough to get an investor loan at all unless we occupy one of the units.
Please advise if we are receiving bad info/advice from loan officers. Or, if anyone knows of more flexible loan officers in the VA/MD region, I am all ears. My wife would love to hear that we can stay where we are!
Great point on home inspection clause. I am currently in the same situation where i made an initial offer on a duplex 5K over my initial offer only because the ROI is pretty decent while renting. If i have my inspection done, maybe i could go back and negotiate a lower price on the unit.
Question: Does the negotiation apply if the seller happens to be Fannie/Freddie? This is who seller is. Just curious.
PS: I am new to this forum and i think its wonderful.
Perhaps the financials make sense, I am just not sure the ends justify the means…