When is a Bank Owned Home Not a Bargain?

There is one common denominator between all real estate buyers today - whether they are shopping for investment property or first-time homebuyers...they all want a deal and the perception is that the bank owned, or REO, properties are going to be the smoking deals of the day.  But not always...

The truth is many of these homes can turn into big money pits.  Remember, when you are buying a bank-owned home in the Hemet - San Jacinto Valley, CA was probably a first time home for the previous owner...the same owner that for whatever reason was not able to hang onto their home and lost it due to foreclosure and now the banks own it.

In very general terms, realize by the very nature of being a first time buyer, they were more than likely renters before...or perhaps living with parents.  In either event, there was typically someone to lean on to make sure the maintenance was done and repairs made properly.  The sad news is that many first time buyers truly have a renter's mentality when they take possession of their new home...even if it is a subconscious mentality.

The point I am getting to is that homes, like anything else need the right maintenance and care in order to keep them in shape.  When a new homeowner does not possess the skills or knowledge base to take care of a home, the overall condition of the home is not uncommon to deteriorate.

Add to the mix the financial straits that the homeowner goes through as they begin the process of losing their home.  Realize that many homeowners live in their home for a year or more without making a payment.  You can pretty well guarantee that once they have mentally lost the home that they will not be spending time or money on any but the most basic needs of the home.  It would be like someone getting ready to have their vehicle repossessed by the bank...but it is in need of an oil change or the 60,000 mile service...I'll bet you dollars to donuts that both will be neglected as long as the driver gets to drive...even if it is another 10,000 miles or more.  The same principal applies to the thought process of those who are getting ready to lose a house that they called home.

INSPECT, INSPECT and INSPECT

It is so important that a home is thoroughly inspected once your offer is accepted.  Do your own home inspection.  Then hire a pro for a detailed report.  If the property sits vacant for an additional month or two, reserve the right to inspect again prior to the close of escrow.   While homes sit vacant - much can go wrong...from the obvious vandalism to the unseen mice and rats who love to chew through electrical wiring, HVAC vents and insulation.  They love empty homes.

Your systems and appliances can also deteriorate just by sitting empty.  For example, a dishwasher that sits unused for even a week can have its seals become dry and brittle...and this is not good.

Another reason to inspect again, just prior to the close of escrow is the plumbing.  Here in the Hemet - San Jacinto Valley, freezing temperatures are the exception to the rule...but every year or two we get a good freeze that can pop pipes wide open and if the water is turned off you won't even know it until you turn them back on.

I always like to ask my buyers to bring a digital camera so they can document the condition of the property when they write their offer and then if something changes or comes up missing, we can get it replaced...you know, like window screens, ceiling fans and yes even kitchen cabinets and appliances all grow legs in empty house.

PLEASE MAKE SURE

A Bargain is not a Bargain if you end up putting more money into it then you expected.  So, take your due diligence very seriously and don't let anyone...especially your agent...push you through the process.  You are making the biggest investment of your life and making life altering decisions that should never be taken lightly.  Ask all the questions you need and if you don't  like the attitude of the responses you get, then find yourself another agent...I'll take good care of you if you are wanting to buy a new home in my market - the Hemet - San Jacinto Valley, CA.