Let’s see a show of hands: how many of you think PAR should publish a standard “as is” agreement of sale? I see great show of hands which is a little surprising given that the widely used PAR standard agreement, ASR, is in fact an “as is” agreement. True, PAR doesn’t use the words “as is;” rather it provides that the property is to be sold in its “present” condition.
Yet it is, however, a “present condition” agreement that can be modified after an inspection reveals problems and if the buyer has made the agreement contingent upon the outcome of an inspection.
Those of you who raised your hands and are looking for an “as is” agreement are thinking of something else: an agreement where the seller is under no obligation to make repairs or concessions post-inspection. This too, already exists. Nothing in the standard agreement requires the seller to change the condition of the property. A buyer can ask for a multitude of repairs and concessions and nothing in the agreement requires the seller to comply.
Okay, what people really want is an agreement, promising sale of the property “as is,” that does not invite the buyer to consider or even think about requesting a change or seller concession! Some of you would take it even farther by not allowing the buyer, once he or she has signed the agreement, to back out under any circumstance. Good luck with that!
When we say the property is being sold “as is” we usually are saying that there may be problems with this property, but don’t bother telling us because we already know it. Further, if you want to buy it, buy it but don’t ask us to do anything because we already told you there were problems and we have no intent of dealing with them. By the way, we think the property is appropriately priced.
So what happens when the buyer says okay, we get it. We won’t ask for a thing, BUT we would like to have an inspection. Hmm. This changes things.
Okay, we’ll give the buyer the right to an inspection, but then what? Don’t come back with any request and are we also saying that buyer has no right to terminate? Most of you would agree that if the buyer can have an inspection, the buyer can terminate, but remember the property is being sold as is so don’t come back and ask for any concessions!
In reality, what happens? The buyer does an inspection and finds there are problems. The buyer would still like to buy the property, but she doesn’t want it as is because of what she now knows. If the buyer’s options are to terminate or move forward, what to do? I know, tell the seller you will terminate unless the seller, is willing to make some concessions! Now we are back to the starting point which is that an as is sales agreement exists in the form of the PAR ASR!
And what about those agreements that allow an inspection, but the buyer can’t even terminate, let alone ask for a concession? As I previously said, good luck with that! You know what will happen if the buyer indeed finds a problem by way of the inspection. Will she demand a concession or terminate, regardless of what the contract says? Will she claim that the seller was dishonest on the seller disclosure statement and threaten suit? Does the agreement provide that the nominal deposit is the sole measure of damages in which case the buyer may be willing to forfeit next to nothing to move on and buy a property buyer likes better? And will the buyer provide the seller with a copy of the inspection report that now dictates revisions to the seller’s disclosure form?
All of this makes clear the one thing I can state with certainty: the market dictates what will be. I am talking about whether it’s a sellers’ or buyers’ market and I am talking about the market for a specific property given its condition, price and location. Show me a seller who is having difficulty selling his property and who needs to sell and I’ll show you a seller willing to make concessions. Show me a seller who is under no pressure to sell in the market where there is low inventory and I’ll show you a seller who may refuse to make any concessions. The type of agreement you use will not change the market.