New home buyers should be extremely cautious regarding hidden property defects of a foreclosure real estate purchase. Recent national real estate data reports that the majority of real estate transactions are now part of a foreclosure process. At the same time, a significant percentage of these buyers at forgoing the recommended professional home inspection process. Buyers are skipping this prudent inspection process is some cases because they have been misinformed by the bank, and others, that the property will be only sold “as is” and no repairs will be completed. As an experience real estate inspector (involved in hundreds of foreclosure inspections), I can report that the “as is” rational to forgo a professional home inspection will not only cost the buyer thousands of dollars in purchase price and repair losses, but will also put the buyer’s family at risk from undiscovered safety and environmental hazards.
Having a foreclosure home inspected diligent professional is as important as inspecting a home where the occupant homeowner is available – maybe more so. Sellers and their representatives are required to disclose all known significant defects. But, if a foreclosure home is owned by a bank, the bank has never lived in the property, so it is not likely there will be very much information on any disclosure statements. In this situation, it is especially important to take the necessary steps to know the true condition of the property. Homes usually go into foreclosure because the owner can no longer afford the mortgage payments and has moved out. As a result, maintenance and repairs get neglected as well. In many cases the owner or tenant is angry, and actually removes or destroys major systems in the home. It is critical that buyers know the condition of the structure and all the major systems. Only a Certified Real Estate Inspector will provide that information.
The “as is” statement, has been promoted as meaning the bank will not fix any defects found. My experience is just the opposite. My inspection clients have reported that banks are often responsive for expensive and or safety hazard defects reported by a Certified inspector. Even if the bank is unwilling to negotiate over any discovered defects, the information the buyer receives from a thorough home inspection is invaluable in making an informed purchase decision. And even if there are plans to do significant remodeling, why risk discovering problems with the furnace, foundation or structure after you close escrow and begin work? Better to eliminate any big financial, environmental and safety hazard surprises by knowing up front about problems by getting a detailed home inspection. The inspection process is really the only way to find out if the foreclosure property is really a good financial deal or not.
Homebuyers, banks and or sellers should retain the services of qualified inspectors trained and experienced in home inspection. It is also critically important that the inspector be a certified member of a well-founded professional association such as ASHI (American Society of Home Inspectors). ASHI is the largest and oldest inspection association in the country. Certified ASHI inspectors must adhere to CREIA’s Code of Ethics and follow the Standards of Practice developed and maintained by the Association. Recognized by national consumer associations, these Standards of Practice are considered the source for Home Inspector Standard of Care by both the real estate and legal communities.