REO Inspections and HUD Property Condition Reports...Buyers Beware

Home Inspector with Miller Home Inspection WA HI Inspector Lic. #209

The past couple years I have had a chance to see alot of bank owned properties. Some owned by HUD, and those referred to as REO (Real Estate Owned) properties. These properties can offer home buyers a great value and an opportunity for building equity.

Having a home inspection on one of these properties is so very important. Unfortunately the circumstances that led to the home being foreclosed upon also tells you that there likely is deferred maintenance and possible needed repairs that were not performed, because there was no money for the previous occupants to do so.

Furthermore the banks and HUD will have their own inspections performed. But Buyer BEWARE that these "inspections" are not necessarily performed by Washington State Licensed Home Inspectors, nor are those "inspections" performed in accordance to the States' Standards of Practice regulating home inspections.

A recent inspection I performed, for a couple in Snohomish, WA, revealed multiple serious defects which included electrical, plumbing, roofing, and structural concerns. The seller produced one of these REO inspection reports, explaining she received it when she purchased the home a couple years earlier. I read the one page report that provided little information useful to a home buyer, and revealed none of these obvious visible defects that would have been present at time of the previous inspection/ sale.



What is sad is this buyer relied upon the report as if it were legitimate, and failed to have her own inspection performed.

Another example is a recent inspection which involved a current HUD home in Kirkland, WA that also had a HUD Property Condition Report. Fortunately this buyer had the right idea, and hired me to perform a professional home inspection.

In preparation for the inspection, he asked if I would like to see the HUD report. I accepted and again was dissapointed, particulary once I had completed a thorough review of the homes' conditions.

This report was better than the Snohomish one, but still lacked significantly. There were several serious defects that the report did not address. Such as flooding of the crawl space, plumbing drainage and supply line defects in the crawl space, and heating system duct damage in the crawl space.

See the pattern....the HUD Inspector never inspected the crawl space!!!

Kudos' to the buyers' real estate agent for recommending the home inspection! Now the buyer can move forward with the knowledge of these conditions, and take actions to prioritize repairs and have them completed.

Harold Miller is a Camano Island, Stanwood area Washington State Licensed Home Inspector operating Miller Home Inspection throughout Snohomish, King, Skagit and nearby counties in Western Washington.

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Comments (2)

Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

Harold all good points.  Some inspections are obviously worse than no inspection at all.

Apr 13, 2010 06:44 AM
Harold Miller
Miller Home Inspection - Stanwood, WA
Certified Professional Home Inspector

Charlie, that is so very true.  :)

Apr 16, 2010 02:29 AM