Home Inspections on Foreclosures, Short Sales and Bank-Owned Properties
Short sales and foreclosures can provide significant savings, AND the risk is very high. Often the homes have been “Winterized” to save the owners (most often the bank) a few dollars more. We are often asked if we can do a home inspection on a winterized Home and we answer with “No; the risks are too great.”
Based on recent home inspections, we can say that it is far too easy to incorrectly (or incompletely) winterize or de-winterize a home. Either can result in significant, and possibly hidden, damage.
Buying a home in foreclosure can be a good deal, but you need to know precisely what you are getting into.
What’s Different About a Home in Foreclosure?
The simple issue is that homes go into foreclosure because the owner can no longer afford to make the payments on the home. This may also mean that maintenance may have been put off, or projects may not have been completed, or, worse yet, the projects were completed “on the cheap.” Lack of maintenance can drastically shorten the life of some home components, and incomplete or incorrectly done projects can pose a significant safety hazard.
Owners of homes in foreclosure or facing a short sale may choose to remove an item “of value” from the home, possibly substituting an item of lesser value. The substitutions are not always done correctly or safely. Sometimes foreclosed homes are even stripped of appliances and fixtures before the owner moves out.
It only takes a few hours to find out for sure what the home needs, or may need in the short term.
When a bank forecloses on a property, they will often “winterize” the home, meaning the utilities are shut off. While this is done to save money, it can have consequences on the house. If the water is shut off but the pipes are not drained, water can freeze and damage the plumbing system. If electricity is shut off, the sump pump won’t work, so basements may flood.
If you are considering writing a contract on a “winterized” home, be aware that some issues will not surface until the utilities are restored. The process of “de-winterizing” can take time, and can also be done wrong. For example, faucets are often left open after pipes are drained during the winterization process. If the de-winterizing crew does not make sure faucets are closed before restoring water service, disastrous water damage can result (see our blog post).
Possible Issues Hidden by Winterizing
When you first go through a winterized home, things may look normal (although the house will be cold). But there could be many issues lurking that will not appear until the utilities are restored. Most of these are common problems in homes, that are addressed when they arise, but in winterized homes, all these issues will crop up at once, leading to potentially expensive repairs. Here are some of the most common possible issues that may not surface until the house is de-winterized.
- Leaks in traps, fixtures or valves
- Low water flow
- Water pressure to high or low
- Rust or Sediment in the water
- Toilets may not flush properly or may continue to run
- Dishwasher could leak
- Any electrical device may not function
- Any normally tested appliance may not function (ceiling fans, bathroom fans, microwaves, garage door openers, etc.)
- Garage door openers may not operate safely
- Electrical safety devices (GFCI’s, AFCI’s) may not operate
- Lights/switches/receptacles may not operate.
- Dishwasher may not run
- Stove components (oven/burners) may not operate properly
- Heating/Cooling system may not operate at all or may need service to operate properly.
This list not meant to be comprehensive nor complete, but only to give you an idea of what can and cannot be inspected and the possible risks.
The Distressed Winterized House
Modern houses are not designed for internal temperatures to be much outside the 55-80°F range. Homes built before the 1980s can usually withstand the temperature swings better, but construction methods have changed. Newer houses are built using more “engineered” materials, such as laminated beams, particle board, and other materials that are far more susceptible to changes in humidity and temperature. When a house is allowed to swing outside this “normal” range and have abnormal humidity levels for an extended period of time, it may experience more cracking and squeaking than normal when utilities are restored. Some of these noises will subside once the house temperature and humidity stablize, but it’s quite possible that the noises will be permanent.
During a home inspection on a winterized house, Bob will inspect what he can, and make note of what he cannot inspect and why, but we cannot be held responsible for defects or conditions in systems or components which he could not inspect in operating condition. Bob suggest that the seller be responsible for de-winterizing the home and addressing any issues that surface during that process.