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Three reasons to Inspect a Foreclosed Property
By Vic Hurlstorm | December 28, 2009
Typically when foreclosed properties are sold at auction, they will not provided potential investors with the ability to view the homes ahead of time because the home is being sold in an as-is condition. This holds true when a home is sent to auction. Working with a real estate agent experienced in foreclosures can be a major asset in making sure you have a thorough inspection. These agents will be skilled in the extensive paperwork process involved with foreclosed homes as well as being able to provide buyers with advice on the pitfalls to watch for.
Deciding to Use an Inspector
For any foreclosure buyer, the opportunity to use a certified home inspector prior to the purchase of the property should never be undervalued. The inspector can help to advise on issues that would cause you to lower your bid price as well as provide a report which shows the mortgage holder the extent of damage and repairs that will be required, further justifying your price. The cost of an inspector can sometimes be wound into the purchase deal with the lender, but more often it is exclusively out of the pocket of the buyer and can run about $250-500 for average, single family home dwellings.
On the surface, the property may appear to have no major issues, until the inspection is completed. A professional inspector would be able to provide advice on details such as changing the slope of the ground leading to the foundation of the house which will eliminate the leak that consistently shows up on rainy days. Otherwise as an investor with limited home evaluation experience, you might have thought you had a leak in your foundation and hired contractors for water sealing when this would in no way prevent additional issues.
Finding and Using an Inspector
One of the benefits of using a real estate agent is their industry contacts. A buyers agent typically has several preferred inspectors who can help to review your property prior to initializing a bid contract. The web is a great resource to find customer reviews for local real estate agents and contractors. Once you have selected the inspector, your real estate agent should coordinate the time and date of the inspection. The homebuyer is typically at the property while the inspector conducts the property inspection, this is a great time to learn of current home issues or future potential problems.
When the inspection is complete, a full report will be provided to the buyer who can then choose to move forward with the property purchase or rescind the offer based on the findings of the report. Banks that are motivated to shore up their balance sheet, might be willing to renegotiate the purchase price based on the amount of repairs, in order to facilitate the sale of the property. This is not the same level of detailed repairs that can exist between a traditional home buyer and seller, but it is similar in nature based on the report findings. A mortgage lender is not typically interested in retaining a property so in the event they have an interested buyer, they can be willing to negotiate the deal.
The Consequences of No Inspection
What an inspector doesn’t guarantee, is that they have captured every flaw. A homeowner who has purchased a foreclosure that is suddenly faced with plumbing that doesn’t work right cannot take it up with the inspector. In general, a professional inspector is certified by local, state or industry guidelines and is providing a review of the safety, quality and overall condition of a property. Some of the things a qualified inspector may be able to uncover range from small issues cosmetic in nature to serious code violations.
Some foreclosure buyers opt to forego an inspection because of either the cost to them personally, the time it might take that you worry will jeopardize the deal or because you believe it won’t make any difference, you want the house any way. These are very critical errors that can lead to huge headaches. If a foreclosure opportunity is available and provides the option for an inspection, a potential buyer should definitely consider the ramifications closely if they think declining will save any time or money. Knowing more about your property will only help an investor make a good decision on the purchase price as well as helping to keep the priorities in line when it comes to repairs and improvements.
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