Bank Owned Properties ( REO’s) typically are marketed and sold “AS IS”. Meaning the owner of the property – which is the bank – will not make any repairs prior to the sale of the home.
Banks have no knowledge (typically) as to the condition of the home when they obtain ownership. They cannot sign the sellers property disclosure as to the condition of the home because they have not lived there and have not experienced any condition issues. Most of the time the lender hasn’t even seen pictures of the home at the time they take ownership.
Keep in mind that it is up to you to have inspections done before you follow through with the purchase of the home. The real estate agent typically doesn’t have any knowledge as to the condition either so if you expect that the previous owner let the condition of home go into disrepair, prior to its foreclosure, you should hire a professional inspector.
Banks will typically state upfront that they will not be responsible for having utilities turned on to allow inspections and they will not incur any costs. Based on where you live and what electric company you’re dealing with you may have to pay for a number of things to have service turned back on including; meter reinstallation, a permit fee may, a county inspector, and an electrician to the safety of having power restored.
An alternative to the above would be to have an inspection done on the foreclosed home by a “specialized foreclosure inspector”. These inspectors can test the heat pumps, water heater, appliances, lighting, and electrical outlets with a simple portable generator without officially turning on the utilities.
Even though banks have no obligations to perform inspections or to disclose information about the condition of the home and will most likely not make repairs – it is still a good idea to do an inspection.
Take matters into your own hands and give yourself some peace of mind before you finalize the purchase of your foreclosed property – otherwise it could be costly if you find problems after the fact that need to be repaired and will ruin homeownership for you in the process!
