What's involved in getting the inspections done so that you can move into a REO?

Asked by Fractious, 07438 Sun May 10, 2009

I'm considering buying a REO in northern NJ. The listing says the buyer is responsible for all CO (Certificate of Occupancy), smoke certification, and all other inspections. What's involved in getting those types of things done? Does it take a long time and cost a lot of money?

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Peter J Roge…, Agent, Mahwah, NJ
Sun May 10, 2009
You are talking about 2different things here. Any home buyer is entitled to have a home inspection done and if the inspection reveals flaws that you are unwilling or unable to correct then you are entitled to back out of the contract. Bear in mind that in the case of a REO no repairs will be undertaken by the bank although it would be worth seeing through your lawyer if they would give credit for those repairs. ( I was in one yesterday that had an abandoned swimming pool in the back - that would be worth seeing if you could get credit - if not then walk away)
The question of the Cert of occupancy is a little different since this has to be obtained from the town. Some towns will give conditional certificates pending correction of issues but it would be in your interest to get it written into the sale contract that your purchase is conditional not only on the normal inspections but also the granting of a certificate by the town - again the house I saw yesterday could be a good example. It would be most important that you speak with the building department of the town in question to see how they handle Certs of occupancy for REO's BEFORE you commit.
In NJ you will pay around $400/$500 for a home inspection which will include Radon testing and Termite inspection (most important) A certificatl of occupancy will cost $50 to $100 and a somke dectector around $50 ( all that requires is smoke and CO2 detectors in the right places and a fire extinguisher in the kitchen - no big deal.
Home inspection can be done within 24 hours of engaging an inspector and the Cert of Occupancy may take a week or 2.
Good luck
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Marilyn Gibs…, Agent, Saint Charles, MO
Sun May 10, 2009
REO's typically are sold "as is, with no repairs done by the seller". That is why many of them are sold to investors, who often are willing to take a risk on unknown conditions and repairs. As a home buyer, you can do one of two things:
1. Have the house inspected prior to your offer. You will be able to submit a stronger offer with no inspection contingency and often can buy the home for less because you have knowledge of its condition.
2. Purchase it in "as is condition", but with the stipulation that you can have inspections done at your expense during the first few days after the contract has been accepted, and you can terminate the contract if you are not satisfied with the inspections.
The CO inspection is typically ordered through the municipality or the fire marshall. Those inspections are usually not expensive, but if you have an independent whole house inspector and termite inspection (I recommend you do) plan to spend $400-$500.
Web Reference:  http://www.marilyngibson.com
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