When we were prospecting our house-to-be, we were attracted by the architecture - a split level design with 3 bedrooms and a spacious living room. And the price of 1.6 million pesos was a bargain considering that the original selling price was 3 million. However, the house is on an "as is" basis, meaning the buyer is to take care of the repairs. As I had posted before in another thread, the repairs took more than 3 weeks of work and the cost amounted to more than 100,000 pesos.
I bought a place 'as is'. IMHO it just means that the time and effort spent on repairs needs to be more than made up for by a reduced purchase price. And you need a damn good inspector so that you know exactly what you are getting into. Not just the obvious things like structural problems, plumbing and wiring, but vermin, mold, radon... anything that will cost you money and so is effectively part of what you are paying for the house.
Buying property that needs a lot of renovation to get it back to a good condition can be pretty expensive, if [as Penny points out] you don't get a good inspector to take a look at the house. A friend of mine who is a building contractor was hired by someone who had bought an old building, to renovate it but after taking a look around they discovered that repairs would cost a lot more [eventually] than tearing down and rebuilding the house. They did that. Be cautious. What might look like a great deal might not be that good a deal.
You are correct on that - a good inspector is important. When we did a final ocular before closing the deal, my siblings and their families came along. It was like a gathering of the clan, hahahaaa. And we also brought along my father's trustworthy carpenter who came up the roof to count the dilapidated galvanized sheets. He also checked the entirety of the house since it is a 20-year old house. The verdict - an estimated 100k pesos is needed for the repairs that would include the water piping, electrical wiring, roofing and excluding the painting job.
My houses have always been "as is". My partner is a qualified joiner/carpenter and his brother is an electrician. So dilapidated houses have never really put us off. There's a saying in the UK that where there's muck, there's brass and this is never truer than when it comes to property.
This reminds me of my husband's story when he met a Filipino named Robert and they became friends. Robert bought a new house that was needing a lot of repairs. My husband was wondering why Robert had bought and old house like that. First, an old house is cheaper to repair than buying a new house. Second, an old house is easier to get a mortgage than a new one. But most of all, that house that Robert bought was 80 years old. Wow, a vintage.
A lot of properties these days are being bought as is, for a cheaper price. As people are struggling with money, sometimes if they need to sell their homes and repairs need doing, they can't afford to do them before it goes on the market so as long as the buyer is aware of the problems and they are fixable, then a lower price is often agreed.
When purchasing an " as is " home I take in consideration the amount of work that has to go into clearing everything up and fixing everything up to code. There are some homes that need just a cosmetic appeal and upgrade and others that need a bit more attention. There are soo many options for the repair of the home but you have to think if it outweighs the overall value of the home. Is the home in an area that is good for resale value? Do you see yourself living in the home long term if you decide to stay in the property? Consider if the damage costs more than 1/4th the value of the property and move from there.
I think it is one thing if a property is listed from the beginning "as is" you would be on notice that there is a potential for issues that will need to be addressed. What I have seen in the market lately is a trend towards people taking a full cash deal from other people that might not know what they are getting into. Since there is no requirement for a cash deal to include an inspection what happens is the buyers get into a situation that can be potentially life threatening. I know of a condo that had been on the market, it had been owned by an older woman who ended up in a nursing home. No one knew enough to shut off the water for the winter and the furnace failed. The pipes exploded and the relator went in and did minimal repairs to both the unit and the furnace. Along comes some students that need a place to stay, they get their wealthy uncle to buy the unit with cash so they can move in quickly and not have a mortgage. It was not even one year later and the place burns to the ground. Cause bad wiring. Wiring that was no doubt compromised when the place was flooded. Yet no one inspected so no one knew. Get a good inspector and have that place gone over with a fine tooth comb. Also check for permits on any work that was done, prior to your owning the property. In some cases your insurance can refuse to pay for something you failed to check on if they feel a reasonable person might have checked on a structural repair or something to that effect. When spending money on a structure you can not cut corners.
Aslong as the buyer is aware of the problems that a property might have before they buy it, I think buying an 'as is' property can work, and there could be a big saving, depending on how much it will cost to restore it.
