Work the foreclosure, but don’t skip the inspection. Trying to save a few hundred dollars may cost you thousands!
Foreclosed properties are generally much cheaper than retail properties, which makes them very attractive to buyers. As inspectors who have scrutinized hundreds of foreclosure properties, we have seen the good, the bad and the complete money pits. Of course there are “diamond in the rough” properties out there, but most aren’t in pristine condition. With the odds stacked against them, the average buyer really needs professional assistance to ensure the greatest chances of success. When all due diligence is properly done by the buyer, success will likely result. And in our opinion, that due diligence includes using trusted real estate professionals such as Realtors, mortgage brokers, appraisers and inspectors. Whether you are purchasing a foreclosure as a personal residence or as an investment, we highly recommend you seek the advice of these professionals.
While foreclosed homes may appear to be very affordable from the start, they may quickly become money pits if knowledgeable professionals are not part of the process. Many of these foreclosed homes look incredibly appealing to buyers on the surface, yet some may have serious conditions that may not be noticed except by a trained eye. A professional home inspection by a certified inspector could potentially save you from costly repairs and help you avoid some serious health and safety hazards.
Some alarming conditions may be visible when you walk into the house, but others may be completely hidden and may not get noticed, even if you’ve walked through the house several times. In the excitement that typically accompanies a home purchase, you may miss a lot of the home’s defects, especially on roofs and in basements, crawl spaces and attics; places which may not get much attention during a walk-through.
Distressed Property Inspections Are Crucial
Before you buy those bargain properties, be sure you know what you are getting into. Education is vital when buying a foreclosed property; it helps the buyer understand their options, allowing them to ensure their dream doesn’t become a financial nightmare. Many of these homes may have had lapses in maintenance or other issues that home buyers must take into account. Never purchase a home without hiring an inspector to look it over first!
Here are just a few of the potential problems which may cause a buyer to unknowingly commit to significant and costly repairs:
MOLD & MOISTURE CONDITIONS: Many vacant foreclosure properties develop mold conditions due to various reasons. Some of the properties have been vacant for extended periods of time and during that time some of the precautions and ongoing maintenance needed to prevent such conditions were not performed. It is also likely that some of the conditions were present prior to the foreclosure. Some of the contributors to such moisture include: Severed plumbing lines, excessive debris in gutters, poor downspout drainage near the foundation walls, improper slope of soil or concrete surfaces at the foundation walls, no electricity for the sump pump system and poor seals or large gaps at the concrete or asphalt joints near the foundation walls. Cost of inspection: Averaged at $275.00. Cost of mold remediation, outside drainage modifications and/or waterproofing: $3000.00 to $8,000.00. NET LOSS WITHOUT INSPECTION: $2725.00 to $7725.00.
SIGNIFICANT FOUNDATION CONCERNS: Some vacant foreclosure properties may have suffered significant foundational damage or displacement. Although this may not be related to its vacancy or distressed status, foregoing a professional inspection could mean the buyer will inherit a “problem structure”. The average home buyer and investor can usually spot something that’s drastically wrong: Major wall bowing, huge slopes in the flooring, etc. But not all serious foundation concerns are easily seen. And since foundation repairs can cost well into the 5 figures, it only makes sense to budget for a professional inspection before you commit to the property. Cost of inspection: Averaged at $275.00. Cost of foundation repairs: $5000.00 to $25,000.00. NET LOSS WITHOUT INSPECTION: $4725.00 to $24,725.00.
A BAD ROOF: Some homes have roof structures that are not easily seen from the ground (like a flat roof or large shed dormer roof). And outside of a professional home inspection or roofing company evaluation, it would be doubtful that any deficiencies in these unseen areas would be discovered prior to ownership. Are you prepared to add a new roof to your budget? Cost of inspection: Averaged at $275.00. Cost of new roof: $3500.00 to $10,000.00. NET LOSS WITHOUT INSPECTION: $3225.00 to $9,725.00.
Do your research!
There are many other resources online to help you make informed decisions; decisions on whether to purchase or keep looking…whether to use an inspector or do it all yourself.
Here are but a few articles…
Buying Foreclosures and Pre-Foreclosures
4 Tricks and Traps Foreclosure Buyers Need to Know
Inspecting Home Foreclosures: Organizing Your Checklist
How to Safely Buy a Foreclosed Property
Do I Really Need An Inspection on a Bank Owned Home?
