I'm glad that you have the foresight to ask these questions well in advance of your home purchase. Although, the bank is the new owner of the property, they have never lived in the property and will not have a sellers disclosure. They are only focused on their net after the sale. It is up to you to do a thorough home inspection. Price a house accordingly with the repair cost built in. Have a contractor do a walk thru with you to get a better idea of the cost of rehab. You won't get to home inspection until after the contract is accepted by the bank. Go to the town (building department) and find out the permit history and see if it matches what you see inside the house. You will be inheriting any work not done to code and will have to remedy that situation.
As far as winterization, I have had banks de-winterized a house for me to conduct a thorough home inspection. I have also negotiated some major repairs from the banks. Let me know how I can help. I live and work in Parisppany.
You have a lot of answers with details to explain the foreclosure process, but i wanted to point out that if the reason you want to buy a foreclosure is to get a great deal, that in this market so many great deals are out there, and you should keep your options open to regular listings as well. They can be just as good of a deal with a lot less stress for you.
While the two circumstances are different, the end result is that the property is in "distressed" condition. Buyer beware!
Homeowner's disclosures are usually not worth much, in my opinion. Seller's sometimes conveniently "forget" major problems or mentally downgrade them to minor ones. I have not heard of as much as a single suit over a misleading disclosure, although there well may have been a small number of them. In the case of bank owned property, the disclosure will be only that the property was acquired in a foreclosure proceeding and that, therefore, the bank has NO knowledge of the property.
ANY structure, new, resale, distress sale or you name it, that will be transferred requires diligence on the part of the BUYER. They have at their disposal a homeowner's inspection industry. While the inspection is not perfect (inspectors have neither the ability to reconstruct every event in the past nor the ability to see things hidden in the walls or even behind large pieces of furniture (they don't normally shift that sort of thing around,) they do have experience that is very valuable and can spot many major problems. If they do and it requires an engineerâ€™s opinion or calculation, then that is a further step and an additional cost.
An earlier response to you question say it well. Distressed home are a commodity best handled by investors with deep pockets, lots of resources and the ability to take a loss now and then in the over-all conduct of a BUSINESS of repairing and selling or renting these properties.
If you are going to buy a foreclosure, it's pretty much all on you. Basically what you see is what you get. There are no guarantees. If there are illegal improvements, it's up to you to legalize them. All inspections are up to you to pay for.
It's not like buying a regular house where there are an orderly series of protections. You are buying a distressed property. If it were clean and legal and well-maintained, it would not be a foreclosure, and you wouldn't be getting a great deal.
With great deals, come great risks. That's why you have to know what you are looking at and be willing and able to take the risk. If it looks scary and you are wondering who is going to take care of things for you, the answer is no one.
That's why distressed properties are best to left to the professionals who know how to size them up properly and make an offer that reflects the risks involved.
The bottom line is that most foreclosures are not great deals. You need to have the money, know-how and connections with contractors to convert the price discount to a profit. If you are the typical buyer who wants a nice place to live at an incredible discount, you are most likely going to be disappointed.
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