Patty Manzi's Tri-Valley Real Estate Blog

I recently heard a horror story and though I would share it with you. 

A family made an offer on a property, it was a distressed property so they were dealing with the sellers bank.  After the offer was submitted to the bank, the bank came back with an addendum that said there was NO Inspection Contingency period, and the buyer would be accepting the house AS-IS.  So the family, with the knowledge of their agent, decided to accept the banks addendum.  The buyer, and apparently the agent as well, mistakenly thought this addendum meant the bank was not allowing them to have any property inspections - so they didn’t!.  After escrow was closed the buyer called the utility company to have the power turned on.  They moved into the house and guess what?  No Power!  The utility company said the service was connected to the home, so the lack of power meant they had other electrical issues inside the house.  As more details of this story unfolded, it was apparent that the house never did have power.  When they initially saw the house the utilities were turned off.  At no time did anyone (sellers agent, buyers agent, buyer, seller) suggest the power be turned on so they could make sure everything worked. As a result, this buyer is now having to do electrical repairs so they can live in the house  - and they are very very sad, dissappointed, and angry.  And they should be!

First of all, when any contract says that a sale is AS-IS, the buyer still has the right to know what the “AS-IS” is.  You HAVE to know what you are buying.  Banks cannot disclose the condition of a property because they have not lived there.  Their contracts are AS-IS because they have no knowledge of the property condition.  It is the responsibility of the buyer to INVESTIGATE the condition of the property.  And by investigate, I mean order ALL THE PROPERTY INSPECTIONS YOU WISH TO HAVE. 

When a banks addendum says there is NO Inspection Contingency, that ONLY means the buyer will not have the typical  ’grace period’ after the inspection in which they can cancel the contract based on the results of the inspection.  It DOES NOT mean that you relinquish your right to have inspections.  The bank won’t know, or even care if you have inspections that are not part of the contract, just like they won’t know what you had for breakfast today. 

Always, always, always get inspections when you are buying a home!