Home Buying in West Haven>Question Details

Mlsloan7, Home Buyer in West Haven, CT

Is it best to do an inspection before making an offer under these circumstances?

Asked by Mlsloan7, West Haven, CT Fri Aug 12, 2011

We are looking at a foreclosed "bank owned" home being sold "as is". The house needs some cosmetic repairs and possibly has a mold issue, we have slightly seen some in the basement. There are no known reports of the status of the house. Even though the property is at a low market value and really looks good and solid, due to the repairs we would need to roll into the loan, we want to offer lower. We need to figure out how much repairs and estimate the cost of the damages so that we can make the offer. Does this make any sense? My husband thinks the inspection should be paid either by the owning bank or the loan bank. I am confused since I have never purchased before. Would an inspection be our best option? We already tried to use a GC but they concentrate on what we want done, not what we need to do to make it move in conditions.
Thank you!

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Julie Traver Lucia’s answer
I have sold many foreclosures and distressed properties. Most of the time the bank takes into account the condition of the property when listing and pricing it. The longer the property is on the market, the bank will opt to negotiate more than one just listed. You can definitely do inspections, the cost is always on the buyer. The bank usually will not make any repairs but if sufficient enough, they may give a credit as they are conveying the property in "as is" condition. It always help to know what you are getting into. Please let me know if you need any further assistance or listings. Julie Lucia, Realtor, Showcase Realty, 203-578-5631; julie@julierealestate.com
0 votes Thank Flag Link Wed Oct 26, 2011
No reason to waste money on a home inspection if you can't get the terms you want. Negotiate terms to a successful conclusion, make sure you have a good due diligence clause allowing to withdraw if you don't like what the inspector finds, with earnest money fully refunded.

That should do it.
0 votes Thank Flag Link Fri Aug 12, 2011
We like the approach of viewing the property with someone that knows construction and can provide you with an informal evaluation prior to making an offer. It doesn't need to be a contractor, just someone that ha a good working appreciation of a homes various components.

This way you will be able to justify your offer based on the work that will be required to make the home livable.

Good luck,

Bill
0 votes Thank Flag Link Fri Aug 12, 2011
In regards to the mold issue, unless you get approval from the homes owner (in this case, the lender) you won't be able to do intrusive testing. This means cutting holes in or removing sheet rock, tearing up carpet, removing fixtures, etc.

And no, the bank won't pay for an inspection.

If you have a inspection addendum as part of the purchase agreement and you did find issues after inspection, you could either cancel the deal or request a cut on the price of the home. But as bank owned homes are sold 'as is' and are supposedly priced with condition in mind, there's no guarantee that they will either cut the price or make any necessary repairs. This is the risk when making an offer on bank owned and short sale homes.
0 votes Thank Flag Link Fri Aug 12, 2011
Hi Mlsloan7,

The house is being sold 'as is' for a reason. The bank will not pay for your inspection - before or after you submit an offer. Buyers usually pay for the home inspection no matter what type of sale it is (bank owned, short sale, standard). Keep in mind the current list price may already reflect the items you are aware of and therefore a lower offer may not be accepted by the bank. Also, the bank may not 'allow' you to do an inspection before submitting an offer - your Realtor would need to check with the Listing Agent. Have your Realtor do a Comparative Market Analysis (CMA) on the property (if they have not already done one for you) using SOLD comps within a 1 mile radius of the property (the closer, the better) that have SOLD within the last 3 months. This will give you current market value of the property.
0 votes Thank Flag Link Fri Aug 12, 2011
I wouldn't expect that the bank would pay for the inspection, but due to our low knowledge level, I would be willing to pay for one to know if it is a money pit or something we can repair and have a sound mind after. The odd thing is that bank homes are going fast, but why is this one on the market for 200 days already.
We are in no rush, and have seen houses go fast. We would like this property but there are more chances like you say for the bank to say no to lowering the price. The taxes are also very high, so if we get outbid, it wasn't meant to be. In a market as we have it, where things may even get worse, I am in no rush and we have watched it for over 4 years before actually looking at homes. We don't want to run into something that we can regret buying. Caution before everything.
Thanks!
0 votes Thank Flag Link Fri Aug 12, 2011
Good luck asking the bank to pay for your inspection. You will be lucky if they allow you much time to do one at all. Banks are not easy or fun to deal with because they don't deal much. They say no a lot. The problem with bank owned homes is that they are already discounted and many are looking to buy them because they are deals. You can't diddle around or you will get out bid and find yourself wishing you had put in an offer sooner. Once the bank says yes, get the inspection quickly and decide -- move forward or bail out. You likely will not be able to deal for a better price after the inspection. That's why they say you buy it "AS IS".
0 votes Thank Flag Link Fri Aug 12, 2011
You may certainly have an Inspection done before you make an OFFER:
You would have to request this with the Seller, through his Agent.

I have seen these General Inspections run $300 to $500.
Do not expect the SELLER or the Bank to pay for this; and if it came out negative, and if you chose not to buy the house, do not expect to lay it off on them.

This is YOUR thing, and YOU are choosing to do it this unconventional way.

You will probably find that the Seller knows about the problems, and have prices the house accordingly.
0 votes Thank Flag Link Fri Aug 12, 2011
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