My husband and I are buying this property for very little money in an old part of the city but it is downtown where my husband thinks it'll be great to use as an office. He wants a place where he can begin writing for a magazine. The property is being sold "AS IS". Should we have it inspected before we sign the contract and should we get an attorney?
When should I decide that perhaps it is not a good idea to purchase this house? We do not intend to sell the property but use it as an office and plan to do some repairs. We don't have much more money to pay for an attorney.

Property sold "AS IS" generally already has something wrong with it and the seller wants it known he will not repair the defect. You need to find out what that defect(s) is/are so you can make and educated offer. Ask the seller to disclose the defect but get the best detective home inspector you can find. Whatever the inspecter finds you could double that repair estimate and add it to the selling price. Now is when you decide if its worth it. Get a lawyer, well sure unless you aren't afraid of making big mistakes. That lawyer will help to prove there are no liens and the title is clear. Most closing will only cost you around $400 and the lawyer is worth it.

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Originally Posted by mariakanga

My husband and I are buying this property for very little money in an old part of the city but it is downtown where my husband thinks it'll be great to use as an office. He wants a place where he can begin writing for a magazine. The property is being sold "AS IS". Should we have it inspected before we sign the contract and should we get an attorney?
When should I decide that perhaps it is not a good idea to purchase this house? We do not intend to sell the property but use it as an office and plan to do some repairs. We don't have much more money to pay for an attorney.

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Absolutely get it inspected! Have the title searched and the land surveyed! This will protect your investment and save headaches if and when you decide it's time to sell.

A reator or a real estate attourney is highly recommended due to subtle legal clauses that can and will escape the average buyer with "new future" eyes. (got that phrase from a realtor friend)

Proceed with caution... "as is" usually means some one doesn't want scrutiny, just a quick sale.

It's a good idea to have the property inspected.
This way you'll know what you're buying.
The home may have nothing seriously wrong with it, but it could possibly have hidden issues that only an inspection will reveal.

You do not have to hire an attorney to have a home inspected, but you will more than likely be the one hiring and paying for the inspection.
*edit - It would be very wise to hire an attorney for the sake of buying the property for the reasons ballengerb1 stated*

After the inspection is complete, you can decide whether you're still interested in buying or not.

If you are going to have to get a mortgage, most likely a home inspection and a title search will be required anyway.

But there could be seroius foundation or radon, or asbestos, or a 1000 other things.

I had a house I bought a few year ago, ( remember I remodel homes all the time so I don't normally miss big things. I knew it needed a new roof, but when I was pulling out the kitchen counter and cabinet, 1/2 of the way, including the studs came out with it, all rotten and just covered over with panneling. I had to replace about a 10 foot wall ( inside and out) and if it would have serous mold, that can cost a fortune to clean and dispose of properly.

Thank you guys for your advice on buying "AS IS". After asking my agent about the parking area he later came back saying that he found out why the price on the house was so low and it was because of an encroachment of the house into the adjacent yard which belongs to the city. He even emailed me the latest survey which clearly marked the problem. He gave me a few options on how to proceed with the offer including claiming adverse possession in seven years. On the day we submitted the verbal offer, the selling agent informed us that the seller was able to rectify the problem of encroachment that very day and that the possibibility of increasing the price on the property was now an option. My husband looked on line and found that on one website the price of the property had been lowered but when I checked the selling agent's website the price reflected an increase of 30,000 more. We submitted a verbal offer the very same day they informed us that they might increase the price. What can I do now. I believe that the land is now worth more but it is not fare that we had already submitted although a verbal offer. The selling agent had agreed to accept our offer and all that was needed was for my husband and I to submit proof of the funds and we did. I have a feeling that because the offer was verbal that the selling agent may come back to us with a rejection. I tried to proceed with caution but in doing that I feel that I may have lost on a great deal. I seemply feel that I have no rights no advantage now since the offer was not binding. My agent was to get with me last Friday to sign the contract but he is still waiting for a response from the seller.

Hello marie:

Yeah, verbal stuff doesn't work in real estate.

By the way, you didn't say HOW the owner is going to correct the problem - just that he could. Then you tried to buy it, even though you have no idea whether he CAN fix the problem or not...

You say you lost a great deal... I say you lost a headache.

excon

Yes, there is no such thing as a verbal offer, it has no legal standing.

Next there is no "proof of funds" requested at a time a formal offer is made. What part of this is starting to sound like a scam.

A real estate agent will require to get a written offer on the property, at that time the offer is sent to the seller, who will either accept, reject or make a counter offer.

The agent is not following correct legal real estate practice.
Next if they could have fixed the one problem, they would have done it before. Ask for proof that the problem was fixed and make it part of the contract that it be fixed before bying it.

Also adverse prossession is not as easy as everyone wants to make it sound. Unless this deed issue is cleared up, you should not get this property

The reason for the low price on the property according to my agent had been because of an encroachment to the city's vacant lot. Just when I was ready to submit an offer, my agent told me that he submitted a verbal offer to the selling agent and that I just needed to wait for a respond from the seller or selling agent. I do think that it is rather odd that my agent would have to wait for the seller to prepare the paperwork for me to submit a written offer. Why do I have to wait for a response from the seller if it was only verbal? According to my agent a clear title had been obtained by the seller which cleared the encroachment and now it seems the land is more valuable and they do not want to sell it to me because they now know that I cannot afford it. They just don't want to tell me because they realize that it was not fair that they advertised the house for less than what they are asking for now. I agree that they are not following correct legal real estate practice. I was supposed to meet with my agent last Thursday to sign the contract and submit my $1000 binder but why do I need to wait for the sellers response? I don't understand what is going on. I husband really wants this property and is prepared to do some work to it over time.

Your agent should be the preparing the paperwork, a formal offer. They say the issue is resolved but do you have hard evidence that it is now corrected? Do not make or accept anything verbal and expect it to hold up.

As excon and Fr-Chuck pointed out, there is no such thing as a verbal offer in real estate. Your agent may have been trying to access how motivated the selling party was, but a verbal offer is not valid.

The only other thing I wanted to offer is to remember even though a property is being sold "AS IS" the seller still has to disclose any known defects and if they conceal damage or problems you have up to 2 or 3 years (depends where you live) to sue the seller.

All of the previous posts have provided sage advice. I would not buy any property without getting an Owner's Title Insurance policy (paid for by the seller). If you plan on getting a mortgage on the property, there may be a problem getting a Lender's Title Insurance (ALTA) policy because of the things you have mentioned. Also, standard mortgages are only available for "Residential" property. From your description, it seems to be more of a commercial property. If that is the case, and you wish to proceed with the purchase, the seller may have to "Tote The Note". Make sure that your offer is contingent on your ability to secure suitable financing.

I just called the agent and he is still waiting for the bank's approval of the verbal offer along with the proof of funds that we submitted. He says the bank in this case has to prepare the contract. I could not understand this but what the agent told me is that this is how it is done with a pre-forclosure. A pre-foreclosure is what I was not told this property is. It does not say this on the advert online or any other listing that I found. I did a bit of research and found that the property was purchased by a bank for $100 as a foreclosure in January of 2007. Now why is it that I am still buying a pre-forclosed house? I don't think that these reputable real estate companies are running a scam. Could it be taking so long for a response because it is a bank owned property? Would an individual have made a decision much sooner? The listing online does say, as I just found out, that the buyer needs to submit a pre-qualified letter before a formal offer and in my case since I am buying cash, proof of funds.

Thank you everyone for your opinions! I am expecting to see a contract any moment and I am sure to read every bit of it before signing. We did receive a verbal acceptance of our offer and will be scrutinizing the contract carefully. My understanding, of course, is that nothing is binding until all parties have signed so I don't think that I have taken a bad approach so far. I can back out and so can the seller. The other thing that I might consider is making a lower offer since they lowered their asking price the very same day we made our offer. Should I take that risk? The bank seems to want to get rid of this property that has been on the market since July.

Hello again, m:

I'm not sure you've been listening. I don't think there's ONE piece of advice you've received that says you should jump on this property. As a matter of fact, I think the consensus is the opposite.

Plus, you're still listening to "verbal" acceptances to your offer. Don't you yet understand, after all we've told you, that that kind of dealing is unethical, unusual, contrary to standard real estate practices, and may very well be illegal??

The problem you are suffering from is that you fell in love with the property. That is the first of many major mistakes you made - and continue to make.

excon

Even if you use a realtor know your rights in an AS IS sale. Even if you inspect the property, and find mold or other high expense issue, you may lose more than your earnest money if you back out, you could be sued for specific performance. It would be wise to have your realtor, write offer contingent upon inspection of the AAR approved purchase offer. You may lose the property to another buyer, but you won't be buying a money pit. A wise Realtor will always counsel you to consult with an attorney anyway. Same with short sales consult a real estate attorney, wheter a buyer or seller. There could be tax consequences too.