Buying bank owned properties can be a bit stressful! When banks sell you a piece of property, they will not provide you with any disclosures, the property will be sold in “as-is” condition since the bank has no information about the condition in prior ownership. Therefore, you may be able to purchase the property in a good discount. However, it doesn’t mean that you can skip getting a certified home inspector to inspect your home! This is a VERY important step and sometimes home buyers think they can save the $300-400 just because they bought it in such a great deal! Home inspection should be able to let you know some of the visible defects of the property, so you can estimate the cost of repair that will go into it. However, before you submit an offer to the bank…please also consider the defects that may be found behind those walls once you start your renovation project. For example: broken pipes, major termite damage. That can double your original estimated cost of repair!!! If there is damage during escrow, you can always go back to the bank to renegotiate your offer.
Although this may not happen in every bank owned property, it is a precaution a homebuyer should have prior to submitting an offer. Do not get emotional with the house and submit a higher price because you want to get the offer accepted, or you wlil truly be emotional after you closed escrow!
Rules of Thumb:
– Never skip Home Inspection on a bank owned property no matter how deep of a discount you get! There are so many investors who buy properties at such deep discounts (a few thousands of dollars only!!!) and thought they can skip home inspection. Turned out the cost to repair the property is so large that it ends up costing more than what the house worth.
– Before your inspection contingency is up, it doesn’t hurt to hire a contractor to give you an estimate on the repair of the property. Always add an additional 20% to the estimate as your actual expense will almost ALWAYS be more than what the estimate comes out to be.
–Helen Chong, Realtor®, www.HCRealtor.com