I am not a realtor, but I am looking at a home now that is being sold for $225K below cost (orig. $600K) due to water/mold damage due to a busted pipe and water back up because the power was shut off. The bank had to remediate, but took short cuts and won't disclose remediation and is selling "as is". This is a complete waste because the balance on the foreclosed mortgage was only half orig. cost.

However, the problem wasn't that the bank didn't turn the power on. The problem was that the owners moved out in the Fall and the house sat through the winter while it went through the "pre-forclosure" state. The foreclosure wasn't final until the following summer given the back log of homes of this nature.

So who is to blame in that situation? The economy? Or perhaps the owners? Althoguh I assume they fell on hard times - it happens - it would have been prudent to sell / short sell. I'm sure they could have sold slightly above their mortgage balance and made a profit. But it's only speculation.

Gary,
I agree with you on this one...ultimately everyone will loose. I have seen many foreclosures over the past year. The majority of these properties suffer from wet basements, frozen pipes, and mold. I believe that 65% of the properties I have seen with my clients...the damages could have been prevented. In many cases...perhaps the winterization was not done properly. In other cases the electric should have been left on especially when you have high water table areas/basements that contain a sump pump to disburse water away from the foundation etc. If you are doing business and specializing in REO properties in which there is a sump pump...you as the Realtor shoud be advising your Client/Lender that the Electric at a minimum should be maintained. Lets face it alot of the Lenders are not local and do not know how harsh our winters can be, and many areas in the country do not even have sump pumps in their homes. I would make this part of the Agreement/Exclusive Right to Seller that the Seller/Lender/Client will leave the electricity on and will put this utility in their name. I believe if this were to be carried out we would have less homes with water damages. In other circumstances where the properties were essentially abandoned in the winter months...the Lender would have no idea until the Realtor or REO rep found that the property was abandoned. At that point damages may have already occured..however I feel this should be noted when the BPO/Analysis is conducted. I have also recently seen where homes are flooding 3-4 feet in the basements due to sump pump failure/no electricty. Thes homes will not be eligible for any type of financing...as the mechanicals have been ruined.

Gary, when the bank assigns me the listing in the middle of winter there is nothing that can be done. At that point if the house was sitting empty it is frozen already. This is the case with the listings I have. Not only does it decrease the value of the listings but it also makes the houses disqualifed for FHA or RD financing is most cases. And as for who is to blame....hmmmm could it be the home owner who didn't fulfill their debt obligation? It is a side effect of foreclosures and once a house is in foreclosre it is in the banks, asset companies and agents hands to clean up the mess left behind. I think for the most part everyone involved does the best they can.

So, just to play devils advocate, what have you done to stop additional losses? I would think that this would cause these properties to decrease in value thousands of dollars, because someone made a decision not to spend 30 dollars a month to keep power to a sump pump.

Sounds needlessly wasteful to me. Who eventually will be blamed for this. Banks or agents?

Hi Gary, I have shown many foreclosed homes this winter that were taken after October when things were already frozen. I haven't seen flooding yet but I'm sure it's bound to happen. I have three bank owned homes listed now that were not able to be winterized. So power is off so that no one can turn the pump on now. Should be interesting!

I do not know how it is in Michigan but here in Northern Nevada we are starting to see an increase in our water damaged properties. When the listing is taken on a foreclosed property, the listing agent usually shuts off the water and/or has the home winterized but when it is time for inspections and the water is turned back on we are seeing leaks in the home. I have horror stories of these beautiful homes being flooded. It is very unfortunate, I think it is very important when the water is turned back on and/or the home is to be de winterized that the agent and plumber are there and does a complete inspection of the property so this does not continue to happen. I understand this could be time consuming but just yesterday I had to deal with one of my buyer's on a foreclosed home walk into a leak in the home at our walk thru because the water was tuned on and no one was there.