How To Look At A House

McGarry and Madsen's home inspection blog for buyers of  

site-built, mobile/manufactured and modular homes

What do I need to know about buying a foreclosure?

Sunday, October 14, 2018

Most foreclosure properties are sold strictly “as-is.” 
No repairs will be made by the lending institution holding the title. While some foreclosures are in tip-top shape, others have been unoccupied for several years and look like the photo above. Vandals may have caused damage. The bank has no knowledge about the condition of the house and any previous problems or repairs, so the seller disclosure paperwork is minimal, and it’s extremely important to examine the house carefully to know what you’re getting into before you buy.

   When signing a sales contract for a bank-owned property, make sure to clarify whether you have the right to withdraw your offer based on defects found during the inspection. Typically, the bank will only allow you to withdraw based on material, significant defects. A cracked window pane won’t get you out of the contract. And, in some rare cases, you have the right to inspect but not the right to cancel the contract based on the inspection.

    Over the last, however, we have seen a shift in the attitude of banks towards foreclosure property buyers. They have been doing some cleaning, painting, and re-carpeting before putting selected homes on the market. Also, when presented with an inspection report that documents a leaking roof, or other significant defect that would make the house not able to be financed, they have become a bit flexible and willing to make repairs before the closing or give a price concession. But this is not a consistent trend, and is typically only happening for foreclosure properties that have been on the market for an extended period of time. Don’t expect anything if the property is new on the market. 

So, why bother with a home inspection if you know you’re buying a home with problems? 
    Because it’s the extent and expense of the necessary repairs that makes the difference between a good deal and a bad deal. Holes punched in the walls are ugly but easy to fix; roof, foundation, or mold problems can get very expensive. We will find any big-ticket defects for you, and give you ball-park prices for repairs where the extent of the defect can be determined.

What if the utilities are turned off? 
It is best to have all the utilities (electric, water, and gas) turned on for your inspection, so we can test the functionality of the plumbing water service and drains, and air conditioning system, along with the electric panel, wiring, lights and appliances. But if your realtor is unable to get the selling institution to turn on the utilities for the inspection, there are still a number of things that can be checked during an inspection. Number one is moisture intrusion. A home that is unoccupied for an extended period of time, especially in Florida, can have problems related to high indoor humidity. Also, water can enter the home from roof leaks and vandalized doors and windows. We use an infrared camera to scan for moisture behind walls and ceilings, then confirm the presence of water with a moisture meter.

    Here’s a list of components that can still be inspected with utilities off: structure, foundation, siding, roof, attic, insulation, doors, windows, interior walls, crawl space, garage, driveway, walkways, grading of property, electric service cable, and electric panel. A WDO (wood destroying organism / termite) inspection can also be performed. And, while we can’t test the HVAC, plumbing, and electrical systems, we can often document visible damage to these home components. Always, always first do everything you can to get the utilities turned on, though. Minimum surprises is a good thing when buying a home.

How much will a foreclosure inspection cost?
    Most home inspectors charge the same rate as for for a regular home inspection. 

Will you find all the defects in the home?
    No. We do a thorough, careful visual inspection and use a number of high-tech tools. But no inspector will find every home defect. We cannot use invasive search techniques that might damage the property, such as opening walls or pulling up carpet; and we do not disassemble appliances to evaluate them. 

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  To learn more strategies for getting the best possible home inspection, here’s a few of our other blog posts:

How can I make sure I don't get screwed on my home inspection? 

Should I trust the Seller's Property Disclosure Statement?

Can I do my own home inspection?

How can homebuyers protect themselves against buying a house over a sinkhole? 

What makes a house fail the home inspection?

The seller gave me a report from a previous home inspection. Should I use it or get my own inspector? 

    To read about issues related to homes of particular type or one built in a specific decade, visit one of these blog posts:

What are the common problems to look for when buying a 1950s house?

What are the common problems to look for when buying a 1960s house?

• What are the common problems to look for when buying a 1970s house?

What are the common problems to look for when buying a 1980s house?

What are the common problems to look for when buying a 1990s house?

What problems should I look for when buying a country house or rural property? 

What problems should I look for when buying a house that has been moved?

What problems should I look for when buying a house that has been vacant or abandoned?

• What are the most common problems with older mobile homes?

    Visit our “SHOULD I BUY A…” and COMMON PROBLEMS pages for other related blog posts on this subject, or go to the INDEX for a complete listing of all our articles.

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Buying a home in North/Central Florida? Check our price for a  team inspection by two FL-licensed contractors and inspectors. Over 8,500 inspections completed in 20+ years. In a hurry? We will get it done for you.

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