bcokeefe's blog

Buying Foreclosed Homes

When buying foreclosed home, home inspections can be critical

Caveat emptor is always a good policy for all buyers, but that’s especially the case when buying a foreclosed home.

 About 30 percent of foreclosed homes being sold have extensive damage caused by the former owner or renter, says William Craft, local franchise owner/inspector for HouseMaster Home Inspections, the country’s oldest and largest home inspection franchisor.

A trained engineer who has been doing home inspections here for the past six years, Craft said the home inspection is more important than ever when buying a foreclosed home. Craft was a commercial and industrial inspector prior to moving into the home inspection business.

 "A renter may be upset because they feel the bank wasn’t straight with them or an original owner may have failed to do maintenance knowing they were going to lose the home," Craft said. "They may have failed to change filters, or there may be a hot water heater or a furnace that no longer works or a flat roof that hasn’t been maintained."

 And when there is a sign in front of a home indicating it is in foreclosure, that’s a signal to outsiders that it’s probably not occupied—an invitation to vandals, Craft said.

 Usually it is a bank selling the foreclosed home, and Craft said banks aren’t bound by the same warranty provisions that bind sellers in regular home sales. Most likely, he said, the selling bank will refuse to make any repairs or fix any problems in a foreclosed home it is selling.

 Craft said about two-thirds of all the homes his firm is now inspecting are foreclosed homes. "People feel this is a time to get a bargain," he said, pointing to one home he recently inspected that sold in 2005 for $1.5 million, but recently was in foreclosure and went for $800,000. "Prospective buyers usually check out the location and what the neighborhood looks like, but they don’t always ask how old the furnace is or see other problems that can cost them thousands of dollars. Some of the damage in homes is a result of previous owners not performing normal maintenance."

 Craft pointed out that the foreclosure process is often extended over six months and owners who know they are losing their homes no longer are interested in keeping the home in good condition.

 And while sellers in a normal home sale want to avoid having a buyer come back after the sale and complain about problems that weren’t disclosed before the sale, Craft said, banks sell foreclosed homes on an "as is" basis and don’t worry about buyers coming back with complaints—they just want to get rid of the property.

 "So the home inspection becomes really important in these cases," Craft said. "We usually do the inspection 30 days before closing the sale, so the buyer has an opportunity to know if he’s buying a big problem."

 By spending $300 on a home inspection, Craft said, a foreclosed home buyer may save himself thousands of dollars. "It’s a little bit of an insurance policy for just a low percent of a down payment," Craft said. "It gives the buyer peace of mind knowing he has done due diligence."


Syndicate content