Home Buying in Sarasota>Question Details

Karen E,  in Sarasota, FL

What bad things to look out for on flipped foreclosures that were once abandoned??

Asked by Karen E, Sarasota, FL Thu Nov 8, 2012

What are the possible problems buyers should be aware of when buying (once) abandoned properties? Specifically ones that have been scooped up by investors and painted over to deliberately hide potential issues - making a fast buck on flipping?

We have found one we like but have been told by multiple people that it sat for years with windows and doors open. The investor never tested for mold - just cleaned and painted over inside and out. Cleaned out a blackened pool, replaced appliances and lanai screens. They did not replace carpets and it’s the original 1998 A/C unit.

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Karen E. purchasing a property whether it is a conventional sale, a short sale or a bank owned property, the first rule is would you live in it? If the answer is yes, then proceed. If not, then move on.

When you buy a conventional sale the property has been cared for and you will receive a warranty deed at closing. You can negotiate the price with the seller and close at a convenient time for both of you.

If you choose to pursue a short sale, you will have to provide proof of funds or a pre approval letter. You negotiate an offer with the seller and then all of the paperwork; both seller, buyer and contract are sent to the lender for approval or a counteroffer. This process may take upwards of six months depending upon how many investors are involved.

Some short sales are owner occupied and others are vacant. Utilities may have been shut off.

Bank owned properties may have been sitting for an undetermined amount of time without utilities.

When you purchase a property, have a home inspection!. Verify the information, research yourself and read the hoa or condo documents/rules & regulations.

This is more of an observation that a fact; most bank owned will require significant renovations. Most do not have appliances, the electricial, plumbing and air conditioning will have to be check if not replaced. You may have to plan on spending an additional $25,000 and up to bring the property current.

Have a pest and rodent inspection. Have a mold inspection and check with the local county public records regarding the history of the property.

If you are looking for a deal and bringing the property up to date, your best option might be a conventional sale which may require updating and not a complete renovation. You will have to figure out the best use for your money.

Compare buying a home for $150,000 and then investing another $25,000 to $50,000 into it to bring it current. If you purchased a brand new home for $225,000 everything would be new and maintenance deferred for 3 to 5 years. Plus, you would be able to finance the entire purchase rather than part of it and pull money out of savings to rehab the rest.

Best to sit down and figure out what your priorities are regarding a home.

Good luck
Lynn Brock
Brock Realty Inc.
941.313.1234
http://www.brockrealty-inc.com

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0 votes Thank Flag Link Tue Nov 20, 2012
Thanks so much everyone! We're kind of undecided still, but the comments are very helpful!
0 votes Thank Flag Link Thu Nov 8, 2012
Mold testing during a complete home inspection is easy. A good inspector will spend 2-3 hours depending on the size of the home and list everything concerning. I would be happy to help you with you property search! Also from WV, been here 14 yrs. now
Raffie
0 votes Thank Flag Link Thu Nov 8, 2012
http://www.etmrservices.com/
here's a web site to check out...
Flag Thu Nov 8, 2012
Karen,
If you find a home you are truly intersted in purchasing, submit an offer. Once the offer is accepted, then you have the right to have the home inspected. The home inspector will uncover any issues related to the home.

Once you have a fully executed contract, time is of the essence. All inspections must be done in a timely manner according to the contract. Should the buyer not be accepting the conditions, written notice must be obtained prior to end of inspection period along with a signed cancellation and release form. Some banks will make earnest money non-refundable after the end of the inspection period. Read your addendums carefully.

Home Inspection - After you have an executed contract you usually have 7-10 days on a foreclosure to get a home inspection, which you pay for. It costs $375 and up depending on size of home. The inspector will examine the home's structural systems and give you a written report detailing any problems found. The inspection takes a few hours.

Tammy Hayes, Realtor
Green Lion Realty
tammyhayesre@gmail.com
941-276-6185
0 votes Thank Flag Link Thu Nov 8, 2012
Typically most "investor/flippers" do nothing more than but the bare minimum white wash on a home and based on what you've written this is exactly what the sellers of this property did.

I would suggest you have an ASHI certified home inspector go over the property from top to bottom, in addition I would suggest that if they note any possible moisture issues in the sub-floor/crawlspace (if this is how the house is constructed) that you have a mold inspection done. if there's no crawlspace then I'd simply plan on having a mold inspection done.

In addition you should have a separate HVAC inspection done as the typical life span for this equipment is 10-12 years on average and you're approaching 15 years.

I've attached a link below to a detailed blog I posted here on Trulia about home inspections.

Good luck and I hope you find a great home.
0 votes Thank Flag Link Thu Nov 8, 2012
Karen,
Seems you have a good handle on what is of most concern to you.
Now, you simply need to assess the cost of satisfactorily resolving these issues. This cost may be one you need to pay which may include replacement of the carpet and HVAC. There a potentially $6
0 votes Thank Flag Link Thu Nov 8, 2012
Our best advice on purchasing a former abandoned home is to make sure there is a good inspection contingency in place with your purchase offer. This will protect your interests and allow you to back out of the agreement should major issues be detected.

Make sure your home inspector understands your concerns about possible problems going into the inspection. A thorough home inspection(s) is advisable for any purchase(even new construction) but with distressed sales, it becomes paramount. Don't overlook the need for mold and wood destroying organism inspections.

Considering using an experienced local agent familiar with distressed property sale in the area would be advisable. We would strongly encourage you to focus your attention on the "big ticket" items. The roof, HVAC, electrical, and plumbing should be given careful consideration.

Feel free to call with specific question. We'll be happy to provide you with information.

Hope you find this helpful.

Bill
0 votes Thank Flag Link Thu Nov 8, 2012
Hi Karen,

Definitely have a quality home inspection performed on the property by a certified home inspector. Attend the inspection when they perform it and ask questions. Let the inspector know you concerns and ask him to point out possible issues that may not be repairs now but potential problems down the road. Most definitely have a mold inspection. Homes left empty with no A/C running in Florida could have possible mold issues. Have him do a pool inspection and have a separate roof inspection performed. Some inspectors do not inspect roofs and you may need a roofing contractor for this. A/C and roofs can be the most expensive items to replace in a home so be sure to consider that when making an offer.

My best,
Terri

Teresa M. Fellows
ERA Waterside Realty
941-350-4297
tmf4257@mac.com
0 votes Thank Flag Link Thu Nov 8, 2012
An extensive home inspection including mold inspection should reveal or uncover potential existing problems. Most bank-owned homes have been empty for years.

Interview reputable and reliable home inspectors and discuss your concerns with them.
Ask what they cover in their inspection and what are potential problems they could not possibly identify.

Good Luck.
0 votes Thank Flag Link Thu Nov 8, 2012
Walk away. Sounds like it could turn out to be a moneypit.
0 votes Thank Flag Link Thu Nov 8, 2012
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