Take It or Leave It: All DC Homes To Be Sold As-Is

by Shilpi Paul


On January 1st, the Greater Capital Area Association of Realtors (GCAAR) and the Northern Virginia Association of Realtors (NVAR) issued a revised contract for all home sales in the region. The most notable change in the new contract is that it drops the Normal Working Order clause, which effectively means that all homes in the area will now be sold as-is.

Previously, homeowners with up-to-date HVAC, electrical and plumbing systems and new appliances guaranteed that their goods would convey to the buyer in good condition per the Normal Working Order clause. Sellers with older systems could opt to drop the clause and sell their home as-is. Now, sellers of homes in DC, Maryland and Northern Virginia will only be required to have the property “free and clear of trash and debris, broom clean and in substantially the same physical condition as determined” (as per the new contract) on a specific date.

GCAAR president Adrian Hunnings believes that the change will create more transparency in contract negotiations.

“What we strive for is a contract where the buyer and seller have a clear idea of what their obligations are,” Hunnings told UrbanTurf. “Normal working order defies clear definition, and in the old contract, 95 percent of the house was sold as-is. The old contract focused everyone’s attention on the (remaining) five percent, and there were disagreements between the buyer and seller about whose responsibility it was to fix things.”

While the new contract may result in increased transparency, many believe that it will shift power in favor of sellers, and could affect property values.

“In the past, when an appraiser saw that the heating, cooling, plumbing and electrical systems and installed appliances of a home conveyed in Normal Working Order, he knew the house was in better condition and more valuable [than one sold as-is],” Larry Wasson of Affiliated Inspectors explained to UrbanTurf. “This new contract limits the contractual warranties and leaves the condition of all houses equally ambiguous. Appraisers now have no basis for providing a higher valuation to houses which previously conveyed with systems and appliances warranted to be in normal working condition, which makes it harder for sellers who have maintained and invested in their properties to receive the higher valuation they deserve.”

In the contract, GCAAR did provide an addendum aimed at giving those purchasing homes some leverage. Buyers can opt to include a Home Inspection Contingency, which allows them to present a list of repairs/replacements or a request for dollar credits to the seller after the property is inspected. The seller can then decline or agree to make the changes. The buyer can also include a General Inspection Contingency, which allows them to void the contract after the inspection if they find the home to be in unsatisfactory condition.

Despite the addendum, Dana Hollish Hill of Buyer’s Edge in Bethesda said buyers should be prepared for a few sticky consequences from the new contract.

“If an appraiser identifies a problem in a property that must be remedied before settlement and the property is as-is, the buyer has to pay to have improvements made to a home they do not yet own. This is a messy situation with as-is properties and now it applies to all properties.”

For more information, changes to the new contract are outlined here, under the “Regional Sales Contract Training Forms”.

See other articles related to: home inspection, gcaar, dclofts

This article originally published at http://dc.urbanturf.com/articles/blog/now_all_dc_area_homes_to_be_sold_as-is/4838


  1. Adrian Hunnings said at 11:46 am on Tuesday January 3, 2012:

    A point of clarification regarding the last quote: the provisions governing lender required repairs has not changed, but are now included in the Financing Addendum.

  1. Keith said at 3:46 pm on Tuesday January 3, 2012:

    There’s nothing to prevent that clause from being stricken from the contract, it’s all negotiable. Personally, I’d walk if someone insisted on that rather than assume the risk. Too many horror stories from the boom of “as is” purchases becoming nightmares for the buyer.

  1. Juliet Zucker said at 4:45 pm on Tuesday January 3, 2012:

    As with any major change, and this is major, time will tell how the “as is” provisions in the new Regional Contract will affect buyer and seller behavior and home sale prices and values.

    If nothing else, (1) buyers should find a real estate agent they like/trust who is knowledgeable and experienced to represent their interests (with a signed buyer agency agreement) rather than relying on the listing agent whose primary client is the seller; and (2) buyers should include a home inspection contingency in the offer (and probably a financing and/or appraisal contingency as well) and use a reputable home inspector.

    A point of clarification.  There are two different types of home inspection contingencies that the buyer can choose from. One allows the buyer to either send the home inspection report to the seller with a list of items they want the seller to repair or provide a credit for (these would be negotiated between buyer and seller according to a specific time-frame/process established in the addendum), OR, the buyer can void the contract without asking for fixes/credit (as long as this is done within the established time limit).  The second home inspection contingency option simply allows the buyer to have a home inspection and to void the contract before the contingecy expires, with no process for requesting the seller to make any repairs or give a credit.

  1. Toot said at 5:16 pm on Thursday January 5, 2012:

    All that happened what the contingencies were moved from the purchase agreement to an addendum, instead of both like before.

    Just read the full document and addendum. Same assortment of contingencies for a buyer or seller to subscribe to.

    What buyer wouldn’t read the document him/herself? Regardless of buyside broker…

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