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Hello and Welcome to another episode of
Selling Greenville your favorite real
estate podcast here in the upstate of
South Carolina I am your host as always
Stan McCune realtor right here in the
upstate you can find as always all of my
contact information in the show notes
should you need to reach out to me for
any of your real estate needs or just
want to discuss
podcast if your name is Chris you
might be trolling Me by text messages
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there today we are going to be talking
about Asis offers which up until you
know really the past year year and a
half we didn't see these a whole lot
except in very unique
situations and the reason why that
has changed is because things have
gotten so much more competitive with
buyers that they are trying to find
the slightest ways in order to make
their offers more attractive
and really the simplest way to make your
offer more attractive outside of just
increasing the price is to start waving
contingencies and we've talked about
this in the past there's a lot of
different contingencies in a standard
contract financing appraisal termite
letter Etc and one of them at least here
in in the upstate of South Carolina I
can't speak to what some of the other
states are like but one of the main
contingen contingencies that we have
pertains to inspections and how those
are handled and I've talked about
this in another episode there's an
episode where I talk about how
greenville's contract is super weird the
standard real estate contract in this
area I recommend you listen to that
particularly if you've never done a real
estate transaction here and you're
looking at potentially doing that
listen to that episode I don't know what
number it is but I believe it was
around 30 give that a listen and
it it spe specifically states in the
title something about the Greenville
contract but we talked about how
there are three different inspection
options there's repair procedure there's
due diligence and there is as quote
unquote as is I'm not going to get
into the other two because I've already
talked about that but I'll remind you
what the Asis option indicates when
you select as is you're not just saying
that you're not going to ask for repairs
to be done although you are saying that
as well what you're also saying is that
you will forfeit your earnest money if
you back out of the contract based on
the condition of the property you're
essentially saying that you're
comfortable with the condition of the
property and to the point that you're
willing to risk your earnest money that
is what we're talking about here in
Greenville when we talk about an Asis
contract at least that's usually what
we're talking about it it can vary in
some other instances for the purposes of
this show and and this episode that's
what I'm referring
to now so in essence if you check
that Asis box you're essentially waving
your inspection contingencies you can
still have inspections done and it
specifies that in the language of the
standard form 310 that we use among
Realtors but you're you're
essentially waving the ability to
back out on the basis of that inspection
whatever inspections you end up doing
now just as a reminder you can select
Asis and still do a termite and moisture
inspection and still have that
contingency because that is its own
contingency so you can have an Asis
contract that is still contingent on it
being free of termites and moisture
issues and and that can sometimes be
a good way to go about it as well to
protect yourself from something major
like that that perhaps you don't have an
ey for that's something to consider
as well but in some instances we're
seeing
people U waving the termite inspection
which we colloquially call around here
the cl00 that's the the form that it
comes on when the inspection is done
it's a state regulated form the CL
100 we're seeing in instances
where that is waved and where all the
inspection contingencies are waved as
well and people are basically saying
hey if we find anything wrong with
this house we are just going to either
accept it as is or lose our earnest
money now before I go any further into
why you would consider that well let
me just say the only reason you would
consider that is if you are in a
competitive offer a multiple offer
situation you're really trying to make
your offer attractive that would be the
only reason why you would do that
otherwise you should always try to
give yourself as many contingencies as
possible as a buyer and that's always
what I recommend to my clients and I
never recommend to my clients that they
go the Asis route I always recommend
that you wave inspection
contingencies I sorry I always recommend
that you keep your inspection
contingencies that you don't wave them
however at the same time we have to
be realistic in this market even if it's
not my recommendation that you wave
those contingencies
sometimes you have to make your offer
more competitive and so usually I will
explain to my clients this is a way that
we can make the offer more competitive
here are the risks of us going about it
in this way and at the end of a day
everything here is about risk mitigation
and risk tolerance right all those
contingencies that we have in a contract
they're trying to lower the risk for you
as a buyer and from the seller
perspective they're seeing that as
higher risk for them so everyone is is
assessing an offer that is made from a
buyer to a seller they're all assessing
it from the standpoint of how much is it
and how many risks are there for each
party so what are ultimately the risks
of going this as is Route we've alluded
to some of this I've alluded to some of
this already but the first thing is
that you're risking your earnest money
and this is a much bigger deal for some
people than it is for others and what
I mean for that by that is if you
someone that has quite a bit of money in
the bank and losing two or $3,000 which
you know on a $200 $300,000 house is
what your earnest money would would
typically be losing that amount of money
obviously nobody wants to lose that but
that might not be the end of the world
for you as as a buyer that is a big
consideration if you aren't someone that
has a lot of money in the bank let's say
that you have you know $10,000 in the
bank and you've got to put earnest money
you've got to put your earnest money
down but your down payment ultimately
when you go to close and you've got
closing costs and all of that and if
you lost you know $2 or $3,000 in
earnest money that would really set you
back substantially now at that point
you should probably take a step back and
consider okay maybe going the AIS route
is not the best way that's a really
risky that's even riskier if you don't
have money in the bank so you have to
consider your personal situation first
and foremost can you afford to lose that
earnest money that's a really important
question and then let's say
additionally to to build on that let's
say that you do purchase the house as is
you don't ask for repairs maybe the
inspection flagged a few things you were
willing to to move forward with it
anyway but then you move in and
immediately something goes bad the AC
unit goes bad you have to replace the AC
the water heater you know the inspector
flag that the water heater wasn't
working very well well it turns out you
just need to replace the water heater
are you in a position to financially to
take care of that is that something that
you're able to to to to handle and to
pay for after closing if not again
you're exposing yourself to greater risk
you as an individual there is inherent
risk with doing an Asis type of offer
but there's even more risk for certain
buyers particularly the buyers that
don't have a lot of money in the bank
they need to really take a step back
and consider what the worst case
scenario could be for for buyers that
have a lot of money in the bank for some
people I've heard them say3 $5,000
that's a drop in the bucket they're
willing to risk that it's not a big deal
they just want the house so that
is a a big part of this is your personal
situation and as well just how much
like I just said how much do you want
that house you know again you might have
hundreds of thousands of dollars in the
bank but nobody wants to lose two three
four $5,000 nobody wants to Jeff Bezos
you know wealthiest man in the world I
can assure you that man does not want
to just lose $3,000 over nothing nobody
wants to lose that money and so
part of the consideration too if if you
are in that camp where you do have a
substantial amount of money in the bank
a substantial amount of money and
savings etc etc a good salary all of
that maybe it's a situation where you
know what I don't want to lose this
earnest money but man this house is so
unique this property is so unique I
don't think I'm going to see this again
I don't want to miss out on it I'm
willing to risk that money that is a
a consideration I've run into that with
some of my clients in the past where
they're just like can't lose this house
I will do whatever it takes in order to
get it even if I'm putting up
substantial risk for my myself so that
is a consideration with regard to the
property itself okay now pivoting from
you as the buyer to the property itself
you need to consider how risky the
property is right so ultimately what
you're risking is your earnest money but
then how much of a risk is that earnest
money in the long run how much of a risk
is it that you'll actually lose it
because remember
at the end of the day yes going the AIS
route means that you're not going to be
asking for repairs most of the time an
inspection only reveals a few hundred
worth of repairs anyway and a lot of it
is Ticky Tac really what you don't want
to run into is a situation where a major
aspect of the house is you know is wrong
the structure the water sewer has
Plumbing has problems you know
there's major issues with the AC with
the heat with the roof different things
like
that and just a reminder if you go
back and listen to my episode about the
weird Greenville contract there are
times when the repair procedure which is
kind of what most of the time we use
in in situations where a buyer is making
an offer the repair procedure only
protects you to a certain extent on that
stuff anyway I mean if the inspection
reveals that the roof is super old
doesn't really matter the the seller is
not obligated to replace an old roof is
the roof free of leaks then the
seller is basically in compliance
with the repair procedure at that point
is the AC working but it's 25 years old
repair procedure says that there's
nothing that the seller has to do so you
have to keep that in mind the the risk
from going from repair procedure to as
is really isn't as big of a risk as you
might think as long as you are
careful when you do the showing when
you walk through the house that you look
at things very closely and I always
recommend to my clients that they do
that for repair procedure anyway for the
purposes that I just explained you you
don't want to be surprised when the
inspect when the inspection comes
along that oh the water heater the AC
unit and the roof are all super old and
will be need to be replaced in the next
5 years most people don't don't want to
hear that and so it's good to know that
on the front end but you it it's really
important when you're talking about
an Asis
house now if the house is newer of
course then you've mitigated a lot of
that risk let's say it's a it's a house
that's less than 5 years old well you
know that roofs last 20 to 30 years AC's
typically last 15 to 20 years water
heaters typically last 10 to 15 years
code is stricter now than on older homes
so to an extent there is relatively
low risk of of structural issues and
so again you look at that you already
know you you don't have
to look at all the ages of everything
when you know that the home is only 5
years old or or you know younger than
that you have just lowered the risk of
there being a problem with one of those
major categories just by virtue of the
fact that it's a newer house I feel much
more confident with my clients going the
asiz route if it's a newer home in
general there's a lot less that can go
wrong if it's an old house
well now you're taking a a big risk I
mean old houses and and by old I mean
you know let's just say greater than 30
years old even though there are some
30-year old homes I wouldn't call old
but once you start getting you know
around 30 years old and older for for
houses that's those are the homes that
tend to start having increased problems
with them and so you need to consider
you need to think long and hard about
going the Asis route for a home that age
there there could be all sorts of
problems even if those major systems
that we just talked about look okay and
and don't seem that old there are all
sorts of things all sorts of skeletons
in the closet that could be there
with a home that age I will say
though on on the playing The Devil's
Advocate if the home is priced
appropriately then maybe again you're
willing to take on that risk you're
saying you know I feel like I'm getting
such a good deal on this I don't care
you know I did this one time there was a
a a
property a rental property that I
purchased and and actually I've done
this multiple times properties that were
just priced so in my opinion
aggressively or properties that I wanted
so badly and thought that there were
such a good value for them that I went
ahead and bought them and didn't I
didn't need to do inspections who cares
I know I know what I'm getting is
going to be valuable and it's what I've
been looking for and it's going to be
hard for me to find something else like
like this I don't need to to do all
these inspections and to worry about all
these different things if if we discover
a major thing needs to be replace just
replace it no big deal but again you
have to be in a situation financially
where it's not a big
deal now there's another situation
where you're kind of like in between
these two extremes we talked about house
that's kind of newer we talked about
houses that are older what about that in
between and and that's where it can get
really weird those homes that are 15 to
20 years old you really need to be
careful again if you're considering
going the Asis route if there's a home
that's 15 to 20 years old that you
really love that you that you really
want to get it can be risky going
this as is Direction in terms of of your
offer and you need to consider several
things I would recommend just kind of
getting a sense of you know does the
owner seem to have taken care of this
house and you can tell starting from the
outside of the house even with the
landscape maintenance and all of that
and working your way inside the house it
gives you can get a sense of whether the
owner has taken care of this and I'm
usually pretty honest with my clients I
can tell right away if a house has
deferred maintenance just based on some
very basic things and I will tell them
you know hey this is this house this
is going to be a big inspection report
there's going to be a lot of things
flagged on this and there there's a
really simple rule of thumb if you see a
lot of things wrong with the house
there's a lot more wrong with the house
that you don't see and those things some
of those things will be flagged by an
inspector some of those things even the
inspector won't see and you'll find out
after you buy it so you've got to be
careful in that situation a home that
age you really need to look closely at
the condition of the roof roof if it's
15 to 20 years old if it has a 20e
composition shingle that roof may be
near the end of its life if it has
its original AC unit that AC is at the
end of its life if it has the original
water heater that water heater is at the
end of its life all of these different
things become much more risky when
you're talking about a home in that 15
to 20 year old range where people
often times try to extend out the
lifespan of all these different things
if it has a crawl space you really
need to look at the crawl space see if
there are if there's a moisture barrier
if there signs of standing water if
there are signs of fungus sniff around
you know stick your head in there sniff
around does it smell really damp it's
always going to smell a little bit damp
but does it smell damp mildewy do you
get a headache or start to feel one
coming on those are are bad signs down
there in crawl space and so you have
to be a lot more more careful when
you're talking about a home at that
at that age range in terms of of
completely waving your inspection
contingencies again particularly if
you're a buyer that doesn't have a lot
of money in the
bank now I will mention as a caveat
and really we're we're here at the end
this is a a shorter episode than some of
the ones we've done recently but
there is one demographic that's kind of
different than than kind of all of
these that I've been talking about up to
this point one demographic a buyer that
I feel like has kind of a leg up in this
discussion and that is an
experienced home purchaser an
experienced property purchaser someone
that has moved several times in a short
period of time or an investor for
instance someone that knows what they're
what they're looking for they they buy
and sell properties all the time or
someone with a construction background
obviously they have a leg up they know
what to look for they can kind of assess
how much risk there is relatively
quickly and that's really the best
case scenario for my clients that are
are purchasing and going the Asis route
that they kind of know what they're
looking for if you don't know what
you're looking for I will try to help
you obviously I have to be very careful
there's a lot of liability for me
that because I'm not an inspector I
can't perform an inspection for you
but I can help you to identify okay what
are some of the major systems what are
what do you need to look for what are
some of the concerns
here and so I can assist with with some
of that and I and I feel like that's
something that I'm quite good at I
have a background in in Insurance
adjusting so and and not to mention
that I have flipped lot of houses I've
got rental properties I've done home
remodels several times over I I know
a little bit about that okay let let me
just say it that way I have to be
careful not to tell not to do all that
work for you at the end of the day and
and tell you how you need to think about
the property but I I have some
experience that I can Avail my clients
of and at at the end of the the day
being you you've got to be confident
enough in the condition of the property
it just comes down to confidence if you
I frequently say do will you sleep well
at night making this offer and that's a
test I feel like that is important and
it's a test that goes both ways because
sometimes a person might make an offer
and then not sleep at night because
they're like oh man I regret that I I
made that offer that was too aggressive
I don't or perhaps they have instant
buyers remorse they don't like the house
who knows what and on the flip side
you might make an offer and then not be
able to sleep because you didn't know
you're not sure that the offer was good
enough you don't want to wake up the
next day and find out that you didn't
get that house and so you need to
consider all of that at the end of the
day you're you're emotionally invested
in whatever properties you get even
investment properties even among
investors that don't get emotionally
caught up in the individual properties
that they have there's still a level of
emotion to it all at the end of the day
and so this is a tool in your
toolbox being able to potentially go the
AIS route but there are a lot of
considerations for when when it makes
sense to use it when it doesn't make
sense to use it what the risks are with
using it but it it's something that has
won over for several of my clients the
past year it's won them great deals
on on properties that that they were in
multiple offer situations for that they
have one because they were willing to
wave basically their inspection
contingency and so it's definitely
something to consider you just need to
think through how risky is it for you
both from the standpoint of your
personal situation and how risky is it
for this deal for this house for this
property is this a risky property to
wave that contingency on every every
transaction is different and so we have
to not do a one-sized fits-all approach
we have to consider holistically every
single transaction what's going on with
each one how your situation might vary
from one transaction to the next and
then make a determination from there so
that's it for today's episode if you
have any questions about any of this
please let me know my contact
information is in the show notes please
rate review subscribe download do all of
these things for the for the episodes
for this show sell in Greenville if you
have not done that already and I hope
until next time that you guys have a
great rest of the week
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