An “As Is” clause in the purchase of real property is when the seller is conveying property in the condition it was in when the offer to purchase was accepted with no implied or expressed warranties.

What exactly does this mean? Let’s look at some commonly held myths that will actually paint a clearer picture.

Myth: The contract process is different on an “As Is” property.

The “As Is” addendum is a legally binding contingency of the purchase contract and the process of the real estate transaction proceeds as normal with the Buyer’s full knowledge there will be no warranties <insert blog on warranties.> on the part of the Seller.


Myth:    The Buyer forfeits inspections on an “As Is” property.

It is always important to be diligent in the inspection process of any home purchase but when an “As Is” contingency is part of the purchase contract it is time for a Buyer to take a second and hard look. The inspections and due diligence are not forfeited and since latent defects are hidden, it is imperative that a buyer hire professional home inspectors to determine the condition of the property.


Myth: An “As Is” purchase exempts the Seller from disclosure.

The “As Is” clause does not exclude the Seller’s duty to disclose all known patent and latent defects that are material to the property.   The Sellers must disclose.

A decade ago, an “As Is” sale in Arizona was a very rare occurrence while today it has become a common part of the business.   But what changed? With the downturn in the real estate market we saw an exponential increase in short sales and foreclosures, referred to as distressed properties. Banks put their foreclosed inventory on the market for sale “As Is” and investors in turn bought, fixed and flipped, and put the same properties back on the market for sale, “As Is”, of course, while turning a profit.


Not all, but most of the banks and investors had never seen the properties, much less lived in them, so they used the “As Is” contingency to sell without warranties and circumvent their disclosure requirements, shifting all the burden to a prospective buyer. The bump in the road was the Sellers were not willing to disclose or even fill out the Seller’s Property Disclosure Statement when some were aware of defects and covered them up with stucco and paint and other means.

That was then and this is now, and there is nothing wrong with listing a property “As Is”. In fact, there are some very solid “As Is” properties on the market.   Flippers are taking a more accountable role given the recent Arizona Court of Appeals holding that a Seller is still subject to liability if he fails to disclose known defects in the property or if the Buyer is prevented by the Seller from discovering these defects with an “As Is” clause as part of the contract. This now gives Buyers a more solid footing in recourse and they are more willing to take the associated risks with these types of properties.

While an “As Is” property is atypical in the more refined subdivisions of North Scottsdale they are randomly interspersed in this niche. The majority of “As Is” (foreclosed and flipped properties) are in the lower price points of the market but if you are a new investor building a portfolio, considering a purchase of a condo or townhouse (a hard hit foreclosure sector of the market) or buying the first home for your son or daughter, you will come across “As Is” properties in the home search.

Hopefully you now have a better understanding and are better prepared to make an offer with the “As Is” contingency clause but whenever you have questions talk to your Realtor or other professional before moving forward in the decision process.

A reminder, the Buyer Advisor is a resource for Real Estate Consumers provided by the Arizona Association of REALTORS® has multiple sections covering physical conditions in the property the buyer should investigate.

Don Matheson
Realtor | Founder
The Matheson Team – RE/MAX Fine Properties
21000 N. Pima Rd., #100, Scottsdale, AZ 85255