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AS IS properties can be purchased FHA or Conventional; however, most AS IS homes are in need of minor to major repair. Any repair work that will deem the property non-livable will not go through FHA financing. Conventional financing is the same way, but are more lenient when it comes to smaller to minor repair work. FHA has an appraiser go out to the property and inspect it along with the FHA inspector. If anyone of the two inspectors note any missing or damaged AC units, broken windows, damaged carpet or an empty pool, they’ll deem the property as non livable conditions. “Chipping paint would not be a nonlivable flag, although bare siding wood would be.
Also, any safety or health concerns would have to be corrected prior to closing. FHA also requires everything be up to code.” – Sandra Dean-Mahoskey. This is the basic problem with AS IS properties. If you purchase a property AS IS and works needs to be done to “qualify the home” there’s no way of asking the lender to repair the items. The only option is for the buyer to come out of pocket for the work prior to the loan closing. This puts the buyer at great risk. AS IS properties are usually fine if built after 1990. Any properties prior to 1990, may be too old and may have much repair work to bring the property up to par. IS Properties include mostly bank owned homes, but can be short sales if the owner is no longer living in the home or has interest in the home.