When the owner of a home passes away, his/her estate is responsible for the home. If there aren’t any heirs, the chosen attorney will handle the case. Either way, the home will likely be an estate sale. In other words, the home is sold ‘as is.’ The seller, who may be someone that never stepped foot in the home, doesn’t know anything about the house and will not complete the basic seller disclosures.
Understanding Sell ‘As is’
It’s important to understand the term sold ‘as is.’ Typically, when you buy a home from a seller, the seller must provide seller disclosures. These disclosures let you know anything that is wrong with the home, to the seller’s knowledge.
When a home is sold as is, there could be problems with it. Unfortunately, the problems are yours once you own the home. You would face a similar situation if you were buying a bank owned foreclosure. The bank doesn’t pay to have the issues with the home fixed – you buy the home as it is and fix it up yourself.
Could Financing be an Issue?
Typically buying an estate home isn’t an issue, but if the home is sold as is and there are problems with it, there could be an issue with your financing. Conventional and government-backed programs require that the home pass an appraisal. By pass, this means more than show that the home is worth enough. It means showing that the home is in good, stable condition. Selling a home ‘as is’ might not mean in good condition, which could affect your financing.
How to Protect Yourself
Luckily, with an estate sale, you can walk through the home. It’s different when you buy a foreclosed home on auction and you can’t see the inside of the home. As a part of the estate sale process, the owners will allow a walkthrough of the home. This is your time to truly inspect the home. Look in each room, try the appliances, check the electrical and plumbing systems, and look for any obvious issues with the home.
Of course, you’ll still want to hire an appraiser and an inspector to make sure the home is worth enough and is in good condition, but anything you can do ahead of time can help protect you in the end. Keep in mind, the estate sale typically only lasts for a few days, at the most. You will need to make your decision quickly in order to get ahead of other bids.
Buying a home in an estate sale may go a little quicker than any other type of sale. The sellers are motivated and will likely take a bid as long as you have the credentials to back it up. Before you go to an estate sale, make sure you have your financing lined up and that you’ve done your research. Know the value of homes in the area, and find out anything you can about the history of the home. The more knowledge you have going into the process, the more likely it is that you’ll come out a successful homeowner.