Inspecting a Foreclosed Home Before Buying

So perhaps you’ve already decided on purchasing an bank-owned or REO property and now all you have to do is actually look for that home to fix up. Sellers and agents will most likely allow you to go to the property of course, and be glad to show you around. It is, of course, quite prudent to do this before you sign on the dotted line. But\, if this is your first experience buying a foreclosed home (or any home), what exactly do you have to look for?

Location, location, location

Chances are, the property location is the first thing you considered when choosing homes. Don’t rely on just descriptions on the neighborhood – believe only what you see. Drive around the neighborhood and look for red flags – abandoned buildings, unkempt lawns, no children playing outside, increased police presence – these are things you’ll find out for yourself.

Property Condition

The caveat of buying REO properties is, of course, the condition of the home. Most of these properties have been abandoned, so you can’t expect much. However, what you’re looking for is structural versus cosmetic damage.Cosmetic damage is easy to spot and easy to solve. You can get carpets cleaned or replaced, clean up grime in the bathroom and kitchen or add a fresh coat of paint to weather damaged walls.

You should also check the plumbing, gas and electricity. Faulty wiring and blocked or leaky pipes is something any knowledgeable handyman can fix (bonus points if you can do it yourself.) Mold is difficult to detect with just your own senses, but you can buy testing kits at home improvement stores and take appropriate action.

Unless you’re willing to shell out cash on a home you must absolutely have, then avoid any home with structural damage. Crumbling foundation and walls, sever roof damage and wood rot are types of damages that are costly to fix and you may be better off starting from scratch.

History

Aside from the age of the property, try to find out the house’s history – who owned it previously and reasons for foreclosure, if you can. Knowing the history can possibly warn you in the future, in case there may be property disputes or if you run into previous tenants and owners.

Ask a professional

Of course, it is always good (and in some cases, required) to have a professional home inspector come by and give the house a look. They should be certified and insured. Usually they will have a set amount of time per home (depending on how large it is) and so make sure you have some questions ready before they arrive.

Now matter how good a deal may look, never pass up the chance to fully inspect an REO home before buying. You may find that taking a few hours and going over the property with a fine tooth comb will help save you from headaches (and a lot of money) in the long run.

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