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Blog Foreclosure and REO Look Out For Termites In Your Repo Purchase
Look Out For Termites In Your Repo Purchase
Foreclosure and REO
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It wasn't long ago that repossessed homes were being purchased at a rapid rate. It is not hard to see why this was the case. Investors viewed these inexpensive properties as excellent deals that could make them money in the future. It was not long before competition for these homes became fierce. So fierce in fact, that many failed to consider the condition of the home prior to purchasing it.
Some level of damage was considered to be acceptable, as even after paying for repairs, the home might still be sold at a nice profit. However, hidden damage, such as that caused by termites, often went overlooked until it was too late. In severe cases, termite damage repairs could cost more than the entire purchase price of the property. Today, it is hard to imagine that anyone would purchase a repo property without having a home inspection completed first.
 
The government played a role in the speed in which repo properties were sold. Since these properties can be financial burdens to banks, H.U.D. suggested that banks bypass many of the customary inspections in order to get the property sold as soon as possible. This suggestion quickly turned into what was viewed as a green light for selling properties in completely as-is condition. With home inspections out of the way, sales soon reached record highs. Unfortunately, many were to find out that their great deal would actually turn into a money pit.
 
subterranean-termitesSubterranean termites found while on a home inspection in EscondidoSubterranean termites are excellent at hiding. They can damage even occupied homes for a period of years before their presence is detected. Early detection is key, but this can typically only be done by a professional. Again, without termite inspections being done on repossessed homes, infested homes were being damaged even while the deeds were being transferred and money was changing hands.
 
Those who have purchased a repo home that was later found to be infested with termites will find that there is little recourse. When the purchase contract includes the words, "as is" proving negligence will be next to impossible. The discovery of termites in these properties leaves new owners with one of two choices. Either pay for the removal and necessary repairs, or attempt to cover up the problem and sell the home. Fortunately, most home flippers choose to do the right thing. A termite inspection will tell you which path was chosen by the seller.
 
Today, home inspections are once again an important part of the repo buying process. H.U.D. helped by clarifying their position on the matter. There may still be homes that are sold without inspection, which means that it will be up to you to protect yourself prior to bidding on a repo property. The following steps will help:
  • Insist that a termite inspection be done in advance of bidding
  • Should the inspection reveal a problem, ask that the bank pay for elimination and repairs
  • If the bank declines, receive estimates on how much removal and repairs will cost you. Factor this amount into any bids you place
With a large number of bank owned repo homes on the market today, you may be surprised at how willing banks may be to cover the cost of repairs. It is a fact that foreclosed homes are an expensive liability for banks today. Banks also know that buyers have plenty of repo homes to choose from. These facts may work to your advantage should you need to bargain after a termite inspection has been completed.
 

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Darin Redding
Written on Saturday, 12 June 2010 03:38 by Darin Redding

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Last Updated on Friday, 18 May 2012 07:20
 

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