Are closing cost credits the best resolution for buying a home 'as is'?
Post-home inspection, know when it's time to buy or walk away
I knew my Realtor wasn’t crazy about the condo I wanted to buy, specifically that mirror wall. I loved it though. I’d never walk out the door looking crazy if one of my four living room walls was made up entirely of glass. She shook her head and pondered on how much time I’d have to spend cleaning smudges off the glass.
She wasn’t the only one who wasn’t a fan. A childhood friend winced when she found out the neighborhood this condo was in, pointing out that the Ku Klux Klan once held a rally in this Cook County village. Although I’d been in and out of the area, I’d never gotten that energy from any neighborhood I briefly visited. And clearly if I wasn’t stopped from buying the condo, housing discrimination wasn’t an issue.
A couple of family members and friends wondered how loud a nearby Yellow Line would be to my upcoming home and whether I was ready to deal with living this close to a train station again.
ADVERTISEMENT ~ Amazon
As an Amazon affiliate, I earn a percentage from purchases with my referral links. I know some consumers are choosing to boycott Amazon for its DEI removal. However, after thinking about this thoroughly, I choose to continue promoting intriguing products from small businesses, women-owned businesses and (specifically) Black-owned businesses who still feature their items on Amazon. All five of my Substack publications now include a MINIMUM of one product sold by a Black-owned business. (I have visited the seller’s official site, not just the Amazon Black-owned logo, to verify this.) If you still choose to boycott, I 100% respect that decision.
(Side note: My first apartment was close enough to a Red Line* to the point where I could see people sitting on the platform benches. The noise was minimal when my windows were closed, but it became a complete nuisance during the summer months if I wanted some air. And no one warned me of just how often mice gravitate to train stations and spiders gravitate to homes near large bodies of water. Living by the lakefront and near public transportation isn’t all it’s cracked up to be. I moved out by year two.)
ADVERTISEMENT ~ Doodle
I ignored everybody. I was determined to buy this place after the first walk-through. It was at least two blocks away from a train station (and not loud) and nowhere near Chicago’s lakefront. I put my earnest deposit down. A couple of days later, the condo owner randomly told my Realtor that I would be required to buy the condo “as is.” I thought that was peculiar. First, why wasn’t “as is” emphasized before the first walk-through. What changed?
I returned for a second walk-through and a condo inspection. This time, I did something I’d avoided doing the first time: I needed to use the restroom, and I didn’t want to wait until I got home.
ADVERTISEMENT ~ Amazon
As an Amazon affiliate, I earn a percentage for each sale made with my referral links on this page.
I don’t recall what made me look up at the bathroom ceiling, but that was the first time I noticed a large brown water stain. Shortly after, I asked my Realtor to come to the bathroom and pointed up at the ceiling. Her eyes widened. She never noticed this spot before either, which left both of us wondering if a plumbing accident happened between the first walk-through and the second walk-through, or if we both overlooked it the first go-round. But it was such a large stain that I couldn’t imagine we’d both overlook it. Just like that, the “as is” emphasis made sense.
Recommended Read: “Rental walk-throughs: Pet-owning renters should inspect the floors ~ From pet-friendly rentals to homeowners, dodge pet floor damage early”
Knowing how much I wanted this home, my Realtor informed me that I could always ask for closing cost credits — a financial agreement made by the seller to the buyer to offset some of the buyer's closing costs, such as loan origination fees, title insurance or property taxes, in order to continue on with the sale. Closing cost credits don’t lower the price of the home; they just give the buyer the option to use a portion of upfront funds to take care of repairs instead of making the seller do it.
Recommended Read: “Before you buy a new home, get the inspection ~ If the asking price seems too good to be true, check it out — again and again”
But what bothered me was the seller wasn’t honest about repairs needed before I saw the home. And this made me wonder what else was not disclosed. It turns out there were a whole slew of problems, but the home was dressed up so well that you’d never know it from first glance. I called off the deal, got my earnest funds back and returned to my housing search.
ADVERTISEMENT ~ Trust & Will
In my case, closing cost credits just wouldn’t have been sufficient. This seller needed to re-list this home with all of its flaws (ranging from electrical issues to appliance issues to the closet doors not even being in alignment) so someone who was willing to make all of these changes would know everything before putting down a deposit. Does that mean closing cost credits are always a bad idea? Not exactly.