Inspection on an REO

Believe it or not this is a question that is often asked. You may be getting a great deal on the property but truly, how do you know unless you know what is wrong with the property? A $150,000 three thousand square foot home may seem like a great deal until you learn that it has $75,000 worth of repairs that need to be accomplished.

You should also be aware that many times the lender who is providing the new buyer with a loan will want to ensure the home that is being used as collateral against the loan is habitable. This is especially true on loans that are government backed such as VA and FHA. No bank wants to lend anyone money on a home that is uninhabitable and often the new lender will require documentation of the property condition before the new loan will fund. In California the lender is required to receive a Transfer Disclosure Statement (TDS). This document is similar to the Sellers Real Property Disclosure Statement (SRPD) that Nevada uses. In Nevada an SRPD is not required to be filled out by the seller is the seller has not personally occupied the property and has no knowledge of the property condition. California lenders will often accept a home inspection in lieu of a TDS. Our office often receives frantic calls from agents asking for an “emergency inspection” because everyone was at escrow ready to sign but the new lender placed a condition on the loan that a property condition report be provided.

You should also be aware that in many instances we have been successful in identifying issues that are deemed to be "habitability" issues that the new lender requires to be corrected before the new loan will be provided. We know of several instances where air conditioners were replaced by the seller / bank in order to satisfy this requirement even though no repair allowance was provided to the new buyer and the contract was “AS-IS”.