"Selling a home 'as is' always sounds easy to do and trouble-free for a seller. Every experienced agent will tell you that selling 'as is' has some major pitfalls for the seller as well as the listing agent," said John Leslie of Alain Pinel Realtors in Los Gatos.

The first problem is that the term "as is" is not universally accepted, so brokers need to add an addendum to contracts to explain what the term means.

"Sellers usually provide buyers with pest and property inspection reports and roof and chimney reports prior to accepting offers. Buyers review these reports and either accept them or order their own if time is allowed," Leslie said. "Sellers generally feel they have done all they can to disclose what 'as is' means. However, buyers do find lots of conditions that cost money to fix. The seller wants the buyer to assume these costs, which most of the time are not definite or completely understood. This situation leads to renegotiating the sales price and/or issuing credits for the buyer in escrow."

In a hot market where many buyers compete for the same property, Leslie said sellers end up selling their homes "as is" with no or little contingency time to inspect or order other reports. This may sound great for the sellers, but later there can be surprises.

"After the market has cooled, buyers move in and get to really live in the house. The 'as is' surprises start to pop up and so do the costs to fix them. Undisclosed conditions seem to materialize in all sorts of places. Then the buyers get that awful feeling that they got deceived by everybody and the phone calls start flying from that point," Leslie said.

So Leslie believes selling "as is" in a hot market has its risks. "Experienced agents know these risks and have the knowledge to minimize them. Selling 'as is' isn't so easy."

Stefan Walker of Alain Pinel Realtors in Los Gatos said "as is" homes do not relieve the seller of disclosure obligations, contrary to popular belief. He likes to use the words "as disclosed" instead.

"The contract usually used to transfer real estate has the seller agreeing up front to complete certain repairs prior to listing, such as roof leaks, plumbing leaks, and termite damage. The 'as-is' language eliminates these obligations, so the seller no longer agrees up front to do any repairs," Walker said. "However, the buyer does not have to proceed with the transaction if he is not comfortable with the condition of the property."

Walker said the biggest benefit is to the seller in an "as is" transaction. If the buyer does not successfully negotiate for repairs during the course of the escrow, the seller is not saddled with the need to complete repairs other than state-mandated items such as water-heater strapping and smoke-detector installation.

"The seller does have to be diligent in the disclosure and would be well advised to have inspections completed prior to going to market so that 'as is' offers could be made with full knowledge of the condition of the property. This eliminates surprises that could derail the deal in escrow and also puts a buyer in a position where he does not have to hold back on the strength of his offer for unknown issues," Walker said.

According to Walker, writing an "as is" offer can be intimidating for a buyer, as many erroneously believe they will be forced to buy the home no matter what they uncover during the course of the transaction. Once buyers realize they still retain the protection of their contract contingencies and can terminate a transaction if undisclosed defects are discovered, the "as is" scenario becomes a little less daunting. Buyers need to be sure they have been thorough in their due diligence prior to waiving contingencies.

"With the increased competition in the marketplace, multiple offers are becoming more common again. Sometimes offering a seller an 'as is' deal puts you over the top in a competitive negotiation," Walker said.

Realtor Linda Schultz of Alain Pinel Realtors in Los Gatos said the term "as is" is generally misunderstood.

"When a listing is professionally prepared with the minimum of a roof, termite and chimney inspection, there is disclosure to the buyer prior to the purchase. When a buyer comes in with an 'as is' addendum, the buyer is informed that they are buying the property in its present condition and they are strongly encouraged to have their own inspections prior to releasing the inspection contingency," Schultz said.

With 26 years of experience in the real estate market, Schultz said she believes a buyer should never waive the inspection contingency. "Buyers should not rely on the reports provided by the seller since reports prepared for the seller have no liability for the buyer. Satisfy yourself as to the real condition of the property on your own, and never waive your right to inspect," she recommended.

From the financing side, Scott Larson of Washington Mutual said selling "as is" can sometimes have an impact on lenders financing the property. Many lenders require a termite clearance before close of escrow and cannot close without this clearance. While this is less common than it used to be, it can potentially cause some issues in closing the loan.

"All 'A' lenders will require clearance of any health and safety issues that are identified in the appraisal. Examples of this might be a pool with a leak that is dry and presents a fall hazard, stairways without railings, floors with holes or incomplete subfloors found on remodeling projects. We are typically the deepest pockets associated with the transaction, and these types of issues provide huge liability issues," Larson said.

Buyer beware may be the watchword for "as is" transactions. Both buyers and sellers should consult a professional Realtor to determine the risks.