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Bank Owned (Am I Missing Something)

By
Home Inspector with StepByStep Home Services LC

Scratch Head Clip Art There used to be a time when I knew what to expect when I inspected a bank owned home. A couple years ago when I was interviewing a potential client for a Metro Detroit Home Inspection  I would schedule extra time if they told me the home was bank owned. Often times these properties were in excessive disrepair so I knew it would take time to document the condition. Most of the time the buyer would tell me right off that they knew the home needed a good amount of work but they just want to be sure there are no "big problems" before they move forward with the purchase.That last part has not changed to this day. Buyers still want to know the property condition with particular interest in significant issues.

The difference I am seeing these days is most of the bank owned homes I am inspecting are in decent condition as far as homeowner maintenance. Once in a while I do find a home stripped of copper or seriously lacking proper maintenance, but for the most part they appear to have been decently maintained by the previous owner. Last year a Realtor told me banks are offering a cash incentive to sellers who turn in their key without damaging the home. I know it still happens but I'm not inspecting many homes with evidence of damage from malicious previous owners. 

So if an owner turns in their property without kicking in the walls etc. why won't the banks do their part in ensuring the property remains in livable condition? Turing off the utilities when there is a sump pump installed will more than likely result in a flooded basement. Frozen plumbing supply lines seems to be the norm these days because banks can't or won't have the home properly winterized. The end result is a home that was taken care of by the previous owner now needing hundreds or even thousands of dollars in repairs.

What am I missing here?

 

Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

I guess what you are saying is that things have really changed. Those with pride of ownership are now losing their homes, unlike the days when it was only drug dealers, and irresponsible numb skulls.

Jan 17, 2010 01:12 AM
Jason Howe
Prudential Bob Yost Homesale Services - York, PA

You are missing that the bank is TOTALLY not making smart, educated decisions when it relates to properties they now own.  I am amazed how little they will do to facilitate the sale of their property by having utilities on for inspections and appraisals and wonder why most buyers steer away from the properties. I am in the process of representing a buyer on a property like you described.  In great condition, but no utilities.  The buyer is going to turn on the utilities for inspections and the like.  Why wouldn't the bank or the agent listing the property do this to ensure a fast sale?  I am perplexed by their lack of thought sometimes.  Sorry for the vent but you really hit the nail on the head.

Jan 17, 2010 01:13 AM
Cynthia Smitherman
Emage` Fine Properties, LLC - Chandler, AZ
DESIGNATED BROKER, ABR, GRI, REALTOR REALTIST

It appears banks don't care.  We as Real Estate Professionals try to do the right thing, after all repeat business is our bread and butter.  Banks know that they are in the drivers seat, eventually we all have to go to them for something. 

By the way, I love the music - I enjoyed the Deer Hunter too.

Jan 17, 2010 01:14 AM
Dana Couch-Davis
Kendall Haney Realty Group - Memphis, TN
CRS, GRI, ABR, SRES

What I have noticed is that too often the banks are out-of-town and don't have an appreciation of the market, weather, etc.  One of the things that I try to do when preparing a BPO for a property is give the bank as clear of an opinion of the property that I can at that time.  It is painstaking, but it is something that has to be done.

Jan 17, 2010 01:18 AM
Vince Santos
StepByStep Home Services LC - Canton, MI
Southeast Michigan Home Inspector

Melissa - I didn't touch on it in this blog but it's a sad fact that a large portion of these homes were lost because of the difficult job market here. Inspecting a bank owned home with rooms decorated for the kids is especially thought provoking. I often wonder what happened to the owners and if they found gainful employment and a warm place to live.

Jason - Cancellations because of a misunderstanding in regards to utilities results in wasted time and money. This month alone I've had four last minute cancellations because someone promised the utilities would be on only to find on inspection day they are not.

Cynthia- It does appear as though they really don't care. I'm glad you like the music. The Deer Hunter is one of my favorite movies.

Dana - I didn't think about the possibility of the banks being uninformed. Your efforts are no doubt highly appreciated and hopefully equally rewarded.

Jan 17, 2010 01:26 AM
Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

Banks do not care -- and don't want to be involved with the details -- sad state of affairs .

Jan 17, 2010 03:03 AM
Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

Vince it is pretty simple really----banks care about "business" not "houses"

Jan 17, 2010 04:09 AM
Vince Santos
StepByStep Home Services LC - Canton, MI
Southeast Michigan Home Inspector

Bob & Carolin - It is sad especially when you consider how many of these homes are on the market.

Charles - The banks own the home. You would think that makes it their business.

Jan 17, 2010 05:17 AM
Jack Gilleland
Home Inspection and Investor Services, Clayton - Clayton, OH

I always wondered how a bank could sit around and let their assests depreciate at an ever increasingly rate.  Then wonder why they can't get out of the property what they have in it.

These are the folks that control our financial system.  The really sad thing is to see whole neighborhoods deteriorate beyond recovery.

Good Post.

Jan 17, 2010 11:07 AM
Reuben Saltzman
Structure Tech Home Inspections - Minneapolis, MN
Delivering the Unbiased Truth.

Vince - I'm not sure who gets credit for it here in Minnesota, but when properties go in to foreclosure, things have become quite streamlined here.  The water gets turned off, a 'trash out' company comes through and cleans the place up, and a bunch of out-of-work home builders come through and clean the places up.  

We've come a long way in the last few years.

Jan 17, 2010 12:22 PM
Vince Santos
StepByStep Home Services LC - Canton, MI
Southeast Michigan Home Inspector

Jack - I've seen it time and again. It is a sad situation particularly in my area.

Reuben - Sounds like they have figured it out in your area.

Jan 18, 2010 12:04 AM
Gene Allen
Fathom Realty - Cary, NC
Realty Consultant for Cary Real Estate

Part of is probably which pot the money is in.  The bank has to pay upfront for utilities and takes a loss at the end for the sale of the house.  Things might be changing.  I was in two bank owned properties today with power on.

Jan 23, 2010 12:44 PM
Vince Santos
StepByStep Home Services LC - Canton, MI
Southeast Michigan Home Inspector

Gene - I hope thing do change.

Jan 24, 2010 12:55 AM
Not a real person
San Diego, CA

You're missing cities like we have here that require owners to maintain their properties, and that includes banks and foreign owners. If such is not done, the city will do it and put a lien on the property for the cost of doing maintenance.

Jan 27, 2010 06:43 PM
Vince Santos
StepByStep Home Services LC - Canton, MI
Southeast Michigan Home Inspector

Russel - I wish that were the case here too.

Jan 27, 2010 11:05 PM
Robert Dirienzo
HABITEC Home and Building Inspections, LLC - Franklin, TN
Home Inspections - Nashville TN

Vince,

This is a great point and we're not finished with this mess by a long shot.  HABITEC frequently inspects bank-owned and foreclosed homes in Nashville and Middle Tennessee and, despite specific language in our initial email to the Client and their agent, and their subsequent effort to get the bank to make sure all utilities are operational, we find some or all of the utilities shut down when we go out for the inspection.  Everyone loses.  Sometimes the inspection is cancelled.  Sometimes we do what we can and then we are called back later to check features using the shut down utilities (at additional costs to the buyer), and sometimes the Client just walks away from the deal in frustration.  And then the banks wonder why they cannot sell the home. 

Thank you,

Richard Acree

http://habitecinspections.com

Mar 31, 2010 04:20 AM
Robert Dirienzo
HABITEC Home and Building Inspections, LLC - Franklin, TN
Home Inspections - Nashville TN

Vince,

This is a great point and we're not finished with this mess by a long shot.  HABITEC frequently inspects bank-owned and foreclosed homes in Nashville and Middle Tennessee and, despite specific language in our initial email to the Client and their agent, and their subsequent effort to get the bank to make sure all utilities are operational, we find some or all of the utilities shut down when we go out for the inspection.  Everyone loses.  Sometimes the inspection is cancelled.  Sometimes we do what we can and then we are called back later to check features using the shut down utilities (at additional costs to the buyer), and sometimes the Client just walks away from the deal in frustration.  And then the banks wonder why they cannot sell the home. 

Thank you,

Richard Acree

http://habitecinspections.com

Mar 31, 2010 04:20 AM