New home buyers should be extremely cautious regarding hidden property defects of a foreclosure real estate purchase. Recent national real estate data reports that most 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 in some cases because the bank has misinformed them, and in others, that the property will be only sold “as is” and no repairs will be completed. As an experienced real estate inspector (involved in hundreds of foreclosure inspections), I can report that the “as is” rationale to forgo a professional home inspection will not only cost the buyer thousands of dollars in the 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 studying 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 bank owns a foreclosure home, 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, taking the necessary steps to know the property’s actual condition is essential. 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 removes or destroys significant systems in the home. Buyers must 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, meaning the bank will not fix any defects. My experience is just the opposite. My inspection clients have reported that banks are often responsible for expensive 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 is a risk of 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 the only way to determine whether the foreclosure property is a good financial deal.
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.