It is extremely important when considering purchasing a foreclosed property that a professional inspection be performed to the highest degree.
The foreclosed property will be offered for sale in an “As Is” condition, this means what you see is what you get including all the hidden defects and damage. If you purchase a foreclosed property without a home inspection you will assume all the risk and liability when closing the deal.
Foreclosures/Bank Owned Properties
As we all know for the past several years there has been an unprecedented wave of foreclosures. Though this means hard times for the homeowners and lenders, it could mean a windfall for home buyers or investors.
Buying a foreclosed property can come with its own special set of problems. One very real problem is that the real estate boom of the 1990s and 2000s often brought some fairly slapdash construction techniques.
Why was the home foreclosed in the first place?
Did it have defects or hidden flaws that weren’t discovered until after purchase?
Also bear in mind that if a current owner is headed toward foreclosure, chances are that repairs or maintenance on the property stopped some time before; it stands to reason that a owner who can’t make payments, can’t afford maintenance either.
With every foreclosure unfortunately someone has become a victim of hardship and has had to pay the price of losing their home, rental or investment.
Many vacate the property with no problems but there is an increasing number who are angry with the situation they have found themselves in and turn to the property to get some sort of revenge or satisfaction resulting in damage.
Very often the essential utilities may have been switched off because of none payment of the previous utility bills.
This effectively means you cannot check to see if the most important features (water, electricity, A/C, plumbing, heating, and garage door openers) work correctly.
It is recommended that you or your realtor, make arrangements with the appropriate authorities to have the utility services switched on for a minimal period for the inspection.
When you have this arranged this is your last chance to inspect the property and make your final decision.
Plan to attend the inspection
Be prepared to ask questions
The inspector is working for you.
He will answer any question or discuss any concerns you may have.
You are recommended to attend the inspection. Please be aware that a typical inspection lasts for 2 – 4 hours depending on the size, complexity and/or the age of the property.
During the inspection process the inspector will periodically stop to inform you about a specific item that may need attention.
During the inspection you will be asked to absorb a lot of information and make important decisions in a relatively short period time. This will include a written report, checklist, photographs, and what the inspector himself mentions during the inspection process.
With all the bank owned properties on the market right now, buyers must be particularly careful. Since no one from the bank ever lived in the home, they do NOT have to provide disclosures.
The history of a property can also be vague even if you are not buying from a bank.
Perhaps the seller recently bought it from a bank to “flip” it. They also will only disclose what they know, which is often limited.
It is now more important than ever to have a thorough home inspection report.