4 Things I Wish Family Law, Probate and Elder Law Attorneys Knew About 'As-Is' Property Sales

When a property is listed 'as-is' in the context of divorce, probate, or senior transition, it carries a weight of assumptions and misconceptions.

This term often signals to potential buyers that they're getting the property under its current condition, but the legal and financial implications can be much more complex.

As attorneys, understanding these nuances is crucial to guide your clients through the intricacies of real estate transactions in these sensitive circumstances.

Decoding 'As-Is' in Legal Context

The 'as-is' clause seems straightforward: the seller will not make any repairs or improvements before the sale.

However, in legal terms, especially in divorce and probate cases, this phrase can become a battleground of interpretations.

It’s important to clarify with clients that while 'as-is' means the property sells in its current state, it doesn't prevent buyers from requesting inspections or negotiating repairs based on the findings.

1. Property Condition Influences Market Value

In real estate, the condition of the property significantly affects its marketability and final sale price.

For instance, in a divorce scenario, a home may bear the scars of deferred maintenance or neglect, affecting its desirability to buyers.

Similarly, in probate or elder law cases, properties often come from estates where upkeep may have lapsed, presenting challenges in attracting offers close to the asking price.

2. 'As-Is' Changes In A Buyer's Market

The real estate market's state plays a crucial role in the 'as-is' sales process.

In a seller’s market, buyers will absolutely overlook flaws to clinch the deal, often waiving their inspection in the process.

As we continue to shift further into a buyer's market, expectations shift, with buyers more likely to demand repairs or price adjustments and an increased willingness to walk away over minor inconveniences.

This market variability means attorneys must stay informed on current trends to advise their clients effectively.

3. 'As-Is' and the Insurance Crisis

South Florida is experiencing an insurance crisis with fewer insurance companies and higher premiums.

When a buyer is securing financing during their purchase, the property must be insurable for the lender to approve the loan.

Deficiencies in the property can cause the property to be uninsurable and if the seller is unwilling to repair those deficiencies or offer credits towards the repairs, that can kill a deal.

Generally, instead of doing repairs which may lead to more inspections, I often recommend that our clients give credits for major issues that will lead to an insurance nightmare including roof issues, A/C, plumbing, electrical or structural issues.

4. 'How' Is Just As Important As 'How Much'

While this may sound counter intuitive, lowering the price on a property for property deficiencies can actually hurt the sale more than help it.

Consider a case where a roof needs repairs.

If the seller reduces the price by $10,000, the reduction gets amortized over the 30-year loan resulting in about a $50/month reduction on their monthly payment which does not help them get the roof repaired.

Alternatively, if the seller offers a $10,000 credit towards the buyers closing costs, the buyer's remaining cash to close is reduced by $10,000, giving them cash on hand to repair the roof.

The net to the seller remains the same but makes a world of difference in keeping the deal together.

Strategic Advice for Legal Practitioners

Attorneys should prepare clients for the realities of 'as-is' sales, emphasizing the importance of a thorough property assessment before listing.

Educate your clients on how market conditions affect the sale process and the potential need for negotiations.

Advising clients to consider pre-listing inspections or to set realistic pricing reflecting the property's condition can help mitigate surprises and streamline the sale process.

A Collaborative Approach to 'As-Is' Sales

Understanding the complexities of 'as-is' real estate sales in divorce, probate, and elder law cases allows attorneys to better serve their clients, ensuring a more informed and strategic approach to property transactions.

Collaborating with real estate experts specializing in these areas (CDRE for divorce, CPE for probate and SRES for elder law) can provide additional value, offering a comprehensive service that addresses both legal and market considerations.

If you're navigating the complexities of 'as-is' real estate sales in family, probate, or elder law, partnering with a seasoned real estate expert can be invaluable.

I am a certified expert in divorce, probate and foreclosure prevention. If you have any questions, please feel free to reach out - I'm always here to help.