TIPS FOR PURCHASING AN "AS IS" PROPERTY
© Copyright 2011 Lee A. Drizin, Chtd.
1. Understanding what the home "inspection" involves. NRS 645D.070 defines an "Inspection report" as an analysis, opinion or conclusion, regarding the condition of a structure, that is: (a) provided after an inspection, in a written report, for or with the expectation of receiving compensation for the report; and (b) designed to describe and identify the inspected systems or structural components of the structure, their physical condition, any material defect and any recommendation for evaluation by another person. In short, the inspection is a visible inspection only. The Inspector will not (nor is he obligated to) move any items during the course of the inspection. Therefore, if a defect cannot be seen, it will not be reported. Although it has significant limitations, the home inspection is a value step in the due diligence process.
2. Understanding the contents of the written report generated by the Inspector.
A. Do NOT rely upon your agent to review the Report and make suggestions about further investigation of the Property. While the agent should review the Report and discuss it with you, he/she is NOT an expert in this field and you should not rely solely upon their opinions in your determination if further investigation is warranted.
B. Read the entire Report carefully. While a good report will separately set out "areas of concern" or "observations of defects", you should not assume this is the case. Therefore, there is no substitute for you carefully reading the Report to determine the scope of the observations made by the Inspector.
C. Do NOT be afraid to ask questions of the Inspector about the Report. Make sure that you understand exactly what the concerns of the Inspector may be about a particular problem and what he basis the opinion upon. A good inspector should be more than willing to discuss this information with you and should not be defensive. If this is not the case, then this may be tipping you about a careless inspection.
D. Do NOT simply take certain observations at face value. In other words, you need to carefully consider the potential consequences of the observations. One of the most common observations that is routinely ignored by prospective buyers is the notation by the Inspector that the "caulk needs to be replaced". Caulk serves several purposes: it seals cracks which rob your home of conditioned air, making it more energy efficient; it seals areas that expand and contract at different rates and at different temperatures; it provides a moisture barrier and seals water away from areas which could be damaged by rot or by the expansion of water as it freezes; and it prevents insects from crawling through cracks into your home. If caulk needs to be replaced, then the Inspector is essentially advising that water may have penetrated the area and the possibility of mold contamination exists!
E. Follow the advise of the Inspector regarding further investigations. There is no way the home inspector can advise you of the extent of damage or the costs of repair. Therefore, if there is concern regarding a condition of the property, it is generally well worth the costs of a further inspection.
3. Determining if the home is "insurable". Because of the absence of a real property disclosure report you may not be able to determine the full extent of any history of problems with the home. Most major insurance companies use a database which reflects whether any claims have been filed on a property for water damage or mold contamination. Before the expiration of the due diligence period, you should inquire with your carrier whether any such claim has been made and/or if there are any other anticipated problems purchasing coverage for the Property.
4. Inquiry of the selling agent. A real estate agent is required to disclose to each party to the real estate transaction as soon as is practicable any material and relevant facts, data or information which he knows, or which by the exercise of reasonable care and diligence he should have known, relating to the property which is the subject of the transaction. Many agents seem to think that because the property is being sold "as is" that this requirement is not applicable. They are wrong! Accordingly, I suggest you request the seller’s agent state in writing that he has no such knowledge.
5. Request for documents. The Seller has likely had the premises cleaned in order to prepare it for sale. Some of these documents may provide insight regarding the condition of the property. For example, the carpet cleaner’s invoice may reflect the presence of water damage or mold contamination. A painter’s invoice may let you know about particular areas of damage to the Property as well. Therefore, you should request that the Seller’s agent provide you a copy of all invoices, reports, etc., relating to the Property that the agent has in their possession or control.
The information presented herein is general information only and should not be considered legal advice nor should you rely solely upon this information in taking any actions regarding your matter. While no attorney-client relationship is formed by supplying this information, please do not hesitate to contact us at (702) 798-4955 to schedule a time to discuss your particular circumstances.