Foreclosure filings hit 1.5 million homes in the first half of ‘09 according to the July 16, 2009 issue of the Wall Street Journal. The foreclosure train wreck continues, as a weak job market and falling home prices pushed foreclosures to a record high in the first half of the year. There are more properties in foreclosure available than ever before in California, and while these deals may seem like bargains, many of these properties have more than the usual number of problems. 

After beating out a number of other buyers, Jerry Malcome was able to purchase a foreclosure in Sherman Oaks California at a reduced price. However, as soon as he moved into the house the toilet backed up flooding the bathroom floor with raw sewage. The gas company refused to turn on the gas to the heater because it was listed as a condemned furnace and he had to replace some wiring and lighting fixtures that mysteriously disappeared. The money Jerry saved on the purchase was now going being spent on handling a list of unexpected emergency repairs.

To avoid these kinds of problems a buyer should be aware of the kinds of issues commonly found with abandoned and foreclosed homes:

1. There is often none of the usual transaction disclosure information required when banks sell a foreclosed property and typically they will deny any liability for problems found with the property during the sale process and after the purchase.

2. Many times these homes are poorly maintained and deteriorated because the owner ran out of money and was forced to let their property fall into a state of disrepair.

3. There is often sabotage and vandalism caused by disgruntled owners or vandals. Deliberately damaged walls, windows, and doors, as well as clogged toilets, garbage disposers, sink drains and sewer-lines are quite common.

4. Systems and components get stolen or removed from the property such as light fixtures, appliances, heaters, toilets and cabinets.

5. Pools and spas are left un-maintained or drained and left to deteriorate.

6. Houses left vacant create special issues: Unused sink, tub and shower faucets and drains often become clogged with rust flakes and debris restricting the flow of water.

7. Water, gas and electric services discontinued making it impossible to inspect each of the components and fixtures of the property. A buyer should have all the services turned on so a proper inspection of every system can be done before the deal is closed.

8. Mold and mildew issues are commonly found when buildings are left sealed up for an extended period of time.

A buyer’s best protection is to do extensive research and inspections. It should be standard to have professionally performed home inspections, sewer line inspections, chimney inspections, and mold inspections with a foreclosure purchase. Being diligent and thorough can help avoid the nightmare of serious unanticipated costs.

Courtesy of Larocca Inspections