The Honest Broker: What is an “AS-IS” Contract?

The Honest Broker: What is an “AS-IS” Contract?


There are different contracts that can be written for the sale of a home, one of them is termed “As-Is.” An As-Is contract can benefit the seller by releasing him from performing any mandatory repairs to the home that may arise with the inspection, especially if the home is in fair condition. Under a different type of contract, the seller is required or obligated to make repairs to a maximum dollar amount, usually no more than 1.5% of the purchase price. This type of contract can be costly to the seller. Therefore, most of the closed sales done nationwide are written on the “As-Is” contract and it has become the most prevalent.

The obvious reason is that the seller may not want to spend the time or money on performing any repairs, taking care of maintenance items, or make property improvements.

  When the home is marketed, it is disclosed that the house is to be sold in the condition it is currently in, or “as-is” and there should be no expectation for repairs to be made. Although the obligation to perform repairs is gone, some negotiating may have to take place to satisfy the buyer enough to keep the sale moving forward.  This negotiation may take the form of the seller performing some minor repairs or offering a “credit” to the buyer.  The credit is written in the contract to be used towards the needed repairs.  In giving a credit, the seller, in essence, reduces his expected total he was going to receive at closing.

For example:

   The home is under contract for $250,000

   Upon inspection, repairs may potentially cost $2500

   The contract price remains the same with a “credit” of $2500 towards repairs which will

    reduce the balance that the buyer needs at closing and reduce the expected amount to the

    seller at closing.


The buyer, in making an “As-Is” offer on a property, is still protected because there is a “right to cancel” clause in the contract. If the inspection reveals enough significant flaws or issues that far surpass what the buyer will be willing to accept, then he/she will be able to “walk away” from the contract without a problem and get their full deposit back.

However, a negotiated price for an “imperfect” home will benefit the buyer because the seller is aware that his/her home has flaws, and that any future buyer will probably try and negotiate for the same issues. This facilitates the negotiation for a final purchase price that satisfies both parties.

Be Well!


Diane Lott, Broker

Owner: Paradise Found Realty

*The highest compliment you can give is when you feel you can refer a friend…
  Hope to see them soon!

Paradise Found Realty, Inc. of Palm City



Phone:  954-294-5060

Your concierge real estate company. We come to you!!   

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