The Importance of Inspections When Buying Foreclosed Homes
With foreclosed homes (REO’s) and short sales leading the statistics for homes sold in the Reno and lake Tahoe area, it is critical that the buyers and their real estate agents understand the importance of having a comprehensive home inspection by a licensed Professional Engineer.
You may think that the results of a home inspection are primarily used for negotiating price. If this option is eliminated, as is often the case with REO homes, it may appear that the need for an inspection is diminished. In actuality, the need for an inspection is even greater. After all, if there are major defects, there is no recourse with the bank. And a foreclosed home is even more likely to have a few problems. Sometimes these will be major problems costing $20,000, $30,000, even $40,000 to correct. The old rule – “if it’s too good to be true, it probably is” – still applies. A great deal may not seem to be such a great deal once the actual condition of the home is known. Lack of maintenance, poor workmanship, and vandalism or sabotage may all contribute to expensive problems to fix.
In our experience, typical deficiencies found in Reno and Lake Tahoe area foreclosed homes resulting from a lack of routine maintenance include such things as:
- Plumbing leaks which can lead to possible mold/mildew issues
- Electrical deficiencies from do-it-yourself home modifications which can result in life threatening safety issues.
- Roof leaks
We also find sub-standard workmanship may result in the following problems:
- Inadequate/failing foundations
- Broken or poorly modified roof trusses
- Leaky window frames resulting in mold growth in the walls
- Defective plumbing materials
- Life threatening Electrical deficiencies
- Roof leaks which may have been covered by a quick coat of paint by the bank
Finally, because homes may be vacant or the former mortgage holder may have acted out of anger, we find these types of deficiencies (among many others) in Reno, Nevada and Lake Tahoe area homes due to vandalism/sabotage:
- Plumbing leaks caused by fixture removal resulting in mold/mildew growth
- Life threatening electrical deficiencies caused by appliance/fixture removal. Some of these will be hidden in the attic.
- Drain piping plugged with concrete.
REO’s and short sales are sold “as-is”, and many buyers seem to feel that if the bank will not pay to fix deficiencies, why should they pay for an inspection. The opposite is true of course. With no recourse against the banks for failure to disclose, it is more important than ever to have a thorough inspection to avoid what in many cases could be a very costly surprise later. Take note also that banks will often remedy safety deficiencies such as electrical problems. These in themselves will in many cases exceed the cost of the inspection!
If you are in the market to take advantage of current low prices, contact us to have the property inspected first. An inspection can reinforce a great opportunity or it may prevent a bad investment. Either way, it is worth the price every time.