So you want to buy a cheap home, and you're hitting the foreclosure market. Considering the abundance of these types of properties and how few are in condition, it is tempting to jump on the bandwagon and buy them. And it may pay off as a long-term investment. However, like any major purchase, it would be necessary to know as much about the property as possible before purchasing it, which warrants a home inspection, carried out by an InterNACHI inspector.
Unfortunately, many real estate agents, who do not like to negotiate with banks, tell their clients that home inspections are of no value as a bargaining tool, since banks do not negotiate on properties "as is". Also as an added hindrance, the banks that sell the properties "as is" have no legal responsibility for hidden defects. While an agent's advice to forego an inspection as a means of negotiating price may be logical, it is surprisingly counterproductive, and possibly even negligent. Would you buy a vehicle without knowing if it has a transmission? The same premise is valid for a home, regardless of whether your intention is to live in it, or you want to repair it or tear it down. The real estate agent may try to salvage a deal that could possibly be terminated if an inspector discovers damage that the bank does not wish to take over, and you, as the buyer, must acknowledge that the agent's advice is not in your best interest. In this case, they are putting you at risk in order to ensure that they receive their commission.
Any realtor who discourages a foreclosure inspection (or avoids recommending that it be carried out) is ignoring the likelihood that long before the previous owners stopped paying the mortgage, they stopped performing necessary maintenance tasks. The appearance of moisture that leads to loss and the growth of mold are just some of the biggest problems that inspectors encounter in mortgaged properties. Tales of bizarre discoveries abound on abandoned properties, from wild boars to massive honeycombs. Previous owners may loot their own properties, removing all that can be removed or unscrewed, leaving behind rubbish and trash that will then have to be paid to remove.
There are also many stories told of mortgaged properties intentionally looted by their previous owners in retaliation against banks. In a famous case in early 2010, an Ohio native tore down his
$250,000 home after the IRS left the lien notice under the rug and then threatened to take over the house. The damage done by the owner was evident, although there are also less extreme situations where the damage is not so obvious, and that make the home inspection a top priority.
Before buying a property you should always do an inspection, especially when buying a bank owned mortgage. In such a case, it may be impossible to know how much they cared for the home, or if there was any major damage before the previous owners left it. Ask your bank how much time you have after the initial offer to carry out an inspection and schedule it immediately. If things go well, you will be able to enter into the agreement with peace of mind and a better idea of the repairs you will have to face. It just reveals this is worth the price of an inspection. If the inspection reveals a costly disaster, you could back out of the deal and save several tens or even hundreds of thousands of dollars.
by Nick Gromicko, CMI® and Kate Tarasenko.
Silverman Inspections LLC, a licensed Certified InterNACHI Inspector (CPI) that can not only inspect the house and create a detail report but, we can also create an estimate of the damages, defects, and code issues found so, you don't end up in a money pit!! What are you waiting for click here!!