Hopefully you are using an agent for this process of purchasing a "bank owned" property. If not, you must be aware that if financing the property, the lender may not give the money for a conventional or regular FHA loan unless the Certificate of Occupancy (CO) is granted by the town. If you cannot afford to pay cash for the property, you are going to want to discuss renovation financing with your lender. Wells Fargo is a lender with an entire division focused on renovation loans. There is one progam in particular that my clients have used before when buying bank owned properties - the FHA 203K Streamline Renovation Loan. This will allow you to close on a property while factoring in renovation expenses into your mortgage and which allows you to obtain just a Temporary Certificate of Occupancy in order to close (before the necessary repairs are taken to bring the home up to code). A lender can explain in more detail how the program works - but buying AS IS regardless is a risk.
As many have mentioned, you'll have the option to get a home inspection done within an allotted time to get a better understanding on areas of concern throughout the property. Also if you pay the application fee to get a CO done, the town inspector will point out all areas that need to be addressed before they can issue a Certificate and allow anyone to occupy the home. If you haven't put your offer in yet or are interested in learning more about purchasing "bank owned" properties, feel free to contact me. My office handles hundreds of foreclosure properties and we frequently assist both clients - from investors to first time homebuyers - along every step of the process. I'd be glad to help you take advantage in investing in this type of property.
ERA Statewide Realty
Office: (908) 874-7797, ext 519