-
Find Us Here
-
-
Buyers Due Diligence when buying a bank owned foreclosure
Do your due diligence when making an offer on a bank owned property. Everything should be taken care of by your agent, bank and title company. Sometimes you never know, somethings might fall through the cracks.
Here are a few things to check on
- Get a property inspection, enough said.
- Make sure to follow up with the city on Truth In Housing requirements. Some cities don’t have Truth In Housing.
- Contact the city for current tax and assessment information.
- Make sure no squatters or renters are occupying the property. (It happens, I’ve heard stories)
- Is there a well or septic tank on the property? Verify with county or city regarding requirements.
- Check with the homeowners’ association, if there is one, to see if there are any delinquent dues, transfer fees and any assessments.
- Call the city and county to find out about any assessments for unpaid utilities, sewer and water bills.
If you enjoyed this post, make sure you subscribe to my RSS feed!
The problems with some REO inspections…
So, you just made an offer on an REO foreclosure property and things are moving right along. Wait, that is until you get to the inspection and find out that water can’t be turned on or any other mechanicals for that matter. Stuck, a little worried
What do you do?
This part of the inspection should be made clear before you write the offer on the property. Whether or not the water will be turned on or access to test out the mechanicals will be granted. If they are turned on you’re in the clear. If not however, you can always ask for them to be turned on if there isn’t something immediately wrong with them.
If a home is winterized, the bank might not want to pay for the property to be dewinterized and then it is solely up to the buyer to pay the fees.
Good luck getting an inspector to turn on things on
Before you hire an inspector, they will make clear that they will not turn on anything. Why? Huge liability issues if something goes wrong because they flipped or switch or turned a valve.
If something goes wrong it all comes back them and most insurance providers that inspectors have won’t cover that error. I have heard stories of inspectors being set up so when they turn something on it backfires, not good.
As is means As is
This came about recently in a transaction, at this point it is all up to the buyer. We found a great property for an investment opportunity but the water would not be turned on for the inspection. When we wrote the offer we were aware of water damage because the basement carpet had been removed, water was noticeable when we went through the house.
The client chose not to turn on the water during the inspection not wanting to risk further damage and being liable for it. It is somewhat obvious that a pipe that is broken somewhere but it won’t be known where until the water is turned on.
Just some risks to be aware of when buying a REO foreclosure and inspection issues that may come along with them.
If you enjoyed this post, make sure you subscribe to my RSS feed!
