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Foreclosure Inspections; Why Didn't They Have the Gas On?

Many Realtors and Mortgage brokers have written articles on short sales and foreclosures. One point the haven't touched on is what is necessary to prepare a foreclosed home for inspection. When banks own the home they often (usually) have them winterized and often allow propane tanks to empty. Other utilities are usually left on. It is understandable that they would want to protect their investment as much as possible. Unfortunately, this protection makes it impossible to do a thorough home inspection.

When buying (or selling for you Realtors out there) a foreclosed home, it is very important to insist that the bank has the home de-winterized and has propane put in the tank. Without these items being taken care of, the water heater, heating system and plumbing systems can not be fully evaluated. I just returned, today, from a re-inspect of one of these homes for just the reason I've stated. Not only did this slow down the process, it also cost the buyer an additional fee for me to go back out to the site ( a rural one and some distance to drive). So please, on foreclosure sales, get those utilities back in operation!

Thanks for reading,

David Helm, Bellingham Washington Home Inspector

http://www.helmhomeinspections.com

David Helm, Inspector, Helm Home Inspections Bellingham, Washington Licensed Home Inspector #272 WSDA Licensed Structural Pest Inspector #69844 http://www.helmhomeinspections.com HelmHomeInspections@yahoo.com

Posted by David Helm, Bellingham, Wa. Licensed Home Insp on 03/06/2009 08:26 PM

Comments (12)

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12 Comments on Foreclosure Inspections; Why Didn't They Have the Gas On?

MAR

Hi David,

Good point and I have read a few others on the topic. Yet you mentioned propane, this never occurred to me before. We use natural gas in most our areas in So Cal.

Not sure about other states, yet in CA our purchase agreement states the seller is responsible for having the utilities on for the buyer's inspection. Unfortunately those who haven't read that clause usually do a lot of finger pointing when the time comes.

A couple of the agents in my office who do short sales and REO's regularly at times may have 30 open utility accounts on behalf of their (lender) clients.

Hi David,

I have had a bank tell me it was my buyer who had to make sure the utilities were on for inspection. I just make sure to find out ahead of time so we don't have delays.

David, I would argue that anyone that turns the heat off in a house in the winter really isn't interested in their investment.

MAR

Amen David!

Lynda, Thanks for reading. I expect that in rural areas of California you will find propane in use. Natural gas lines generally are too expensive to run far out into the countryside.

Valorie, Thanks. That's a new one. I've never heard of the buyer being responsible for utilities on a home owned by someone else.

Charlie, Point well taken. I should have kept that statement related only to the winterizing.

MC2, Don't know your name, but thanks for the comment.

David if the dewinterize , they need someone there to rewinterize and will have to pay for both.

This actually costrs much more than the Inspection.

Not only the above is an issue , but in my area these guys never winterize properly and the pipes have busted.

I often end up doing the best I can in finding the other issues ,since most of these are as is.

As far as return trips go I offer a free return ,which is not great for the bottom line.

MAR

Around here, most of the time it is either difficult, or impossible to get the banks to agree to have the utilities turned on. Sometimes, depending on the location, the homebuyer can get the electric and gas turned on. Cities will not turn on water for anyone but the owner of record.

Just as any Home inspector does, I run into many of these bank owned properties myself. It's always a fight to get the utilities on. Per CREIA SoP's, we will NOT turn them on ourselves. We have no idea of the condition of the piping, electrical and gas systems. There is frequently sabotage by the exiting owner or tenant. Who knows what little surprises they left for you? BOOM! Not ME! LOL

Just a thought, could a 30 day post excrow hold back or retention clause be written into the offer of say 1-2% of the sale price to handle re-inspection costs and any repairs needed in the previously mentioned systems? If nothing is wrong, then the balance is remitted.

Retention clauses are common in the construction field.

Good Post -

In the last 3 months I have had about 20 inspections that have had no heat. A number of those were in December and January during our cold snap. This is in spite our our strong recommendation to have ALL UTILTIES on.

I also have some strong language that turning off the heat and allowing a home to get below freezing is bad for it regardless of whether its winterized or not. Most companies that claim to winterize a home do a poor job and its almost impossible to blow out all the pockets of water in a home. Damage can happen that may not be apparent for several months after the home has been re-occupied.

My best advice to clients is buy a home warranty on all bank owned property. This will give them some protection from latent defects in the home.

Rick Bunzel, CRI
Pacific Crest Inspections
NAHI Member of the Year 2008
NPSAR Affiliate of the Year 2006-2007
WWW.PacCrestInspections.com
360-588-6956
Fax 360-588-6965
Toll Free 866-618-7764

Ditto, Ditto and double Ditto what Rick said----just don't do it----somehow it should be close to illegal:)

Most of my inspections are on bank owned properties and the utilities being turned on seems to be something nobody wants to pay for. Most clients tell me the banks say the buyer is responsible for having the utilities turned on and the property de-winterized and winterized.

Unfortunately clients, or friends of the client, decide to save a few bucks by turning on the water at the main themselves unaware of the broken pipes throughout. Arriving on site to water dripping out of walls and the ceiling is the norm.

MAR

Hi Bob, Yes if they are winterized and the home is not closed quickly (bear in mind that in the Pacific Northwest we seldom have days or nights below freezing after February[He says this while it is currently snowing outside]) it should be re-winterized. . . .and generally, there are plenty of issues to be found on most foreclosed homes. I still don't think it does the client good service if all systems are not inspected.

Kevin, It seems that the banks here will de-winterize/put in propane reluctantly, but they do comply.

Dana, Interesting concept. I don't know anything about real estate contract rules here, but it would be a sensible thing to do.

Rick, Couldn't agree more. Saving a few bucks could cost a bunch.

Charlie, Yup!

Vince, Good point, and the banks really do have the responsibility since they are the owners.

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