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FORECLOSED AND SHORT SALE PROPERTY INSPECTIONS  By Gerald Warren
11/11/2009
Gerald Warren is the owner of G. Warren Inc. Home Inspections in Scotch Plains, New Jersey. Gerald is a licensed home inspector in the two states of New Jersey and North Carolina and has been in real estate for over thirty years. Besides the home inspection business, Gerald worked as a licensed real estate associate and a licensed real estate appraiser and is proficient in both fields. Gerald is a member of the two prestigious home inspector organizations, ASHI (American Society of Home Inspectors) and NACHI (National Association of Certified Home Inspectors).
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BUYING FORECLOSED AND SHORT SALE PROPERTIES
There is no doubt that these types of properties are a very high risk purchase due to the condition of the dwelling and hidden expensive repairs. Just as there is high risk there is also high profit, if the purchase is made with complete detailed knowledge of the risk and the cost of the repairs. The type of inspection done on these properties is very difficult for a host of reasons that will be the purpose of this article. This article will detail how this type of inspection is different from a normal home inspection and highlight some of the hidden repairs and expenses that can be encountered with inspections of foreclosure and short sale properties. It is important to note, up front, that this type of inspection is not for the inexperienced inspector or the brother-in-law who is a contractor. A career certified, professional home inspector is a must. A missed hidden repair could cost thousands of dollars and become a financial nightmare.
INSPECTION REQUIREMENTS
Before the buyer spends one dime on a home inspection, the buyer and the realtor should make sure utilities are on and functional. The term "utilities" includes the water, the electric, and the heating systems. If one of these systems is not in service and functional, we recommend that the buyers not go forward with the inspection until the systems are functioning. Not to inspect any one of these systems could be a financial disaster after you occupy the dwelling. Do not take anyone's word that the utilities are turned on and the house is ready for inspection. If possible, go to the house and see with your own eyes that all the utilities are on and functional. From our experience, and it happens quite often, the realtor, the mortgage company, the bank, and sometimes the seller, are told that the utilities are on and functional and they are not. Most often it's a communication problem of date and time with the utility company. However, when the inspector gets there for the inspection and the utilities are not turned on, the inspection cannot be conducted. To summarize, in order to get a complete and detailed home inspection, make sure all the utilities are on and functional before you confirm a date and time with a home inspector.
FORECLOSURE OR SHORT SALE INSPECTION METHOD
A distressed property inspection is not conducted in the same manner as a normal inspection. A distressed property inspection is much more difficult and time consuming. With a normal home inspection the inspector starts the inspection in the kitchen where he can set up his computer and related equipment and start the inspection of the kitchen. With a distressed property uncontrolled water is the main cause of expensive repairs, therefore our inspector will start the inspection in the most vulnerable area for water intrusion. These areas include the exterior siding of the house, the roof and attic, and the basement. For the purpose of this article, the author will give a quick outline what the inspector will be looking for when doing the foreclosure sale inspection. Special attention will be paid to certain areas as the inspector looks for serious damage and repair problems that are more prevalent in a distressed property inspection than a standard home inspection.
AREAS REQUIRING SPECIAL ATTENTION IN A FORECLOSED HOME INSPECTION
Exterior House Structure and Condition in a foreclosure home inspection:
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Siding - see if the siding is damaged or bulged out which would indicate structural damage
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Windows - check the condition of all windows. Replacement of windows may not be a deal killer but damaged, missing and broken windows could be the reason for serious water damage in the interior. The inspector should inspect the interior window area very carefully for water damage.
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Holes in the upper siding may be a sign of squirrels in the attic.
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Patio and deck condition - these two areas can have serious repairs due to lack of maintenance and the constant exposure to the elements.
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Front and rear entrance steps - if there is one area most likely to need some type of repair it is the front and back steps.
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Entrance doors - Doors that have been damaged and no longer lock could be a sign that the house has been burglarized.
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Foundation - Damage such as serious cracks or foundation displacement should be checked.
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Debris - Many times with a distressed property sale there is a lot of hidden debris on the property that is very expensive to remove. Hidden areas include areas under the deck, under the porch, in a crawl space, behind the garage, and in the back of the yard.
Inspection of the garage in a foreclosure home inspection:
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The garage seems to be the one area that gets very little maintenance particularly in a foreclosure or distressed property sale. And, due to the lack of maintenance and control of the rain water, some very serious structural problems can be created, such as:
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Roof leaks that may have created wood rot damage to the wood structure of the garage. In addition, if it is an attached garage the attached side of the house can also be wood rot damaged.
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Finished ceiling or exposed open beam type ceiling should be given a special look for water damage or other obvious problems.
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Garage floor should be inspected for floor cracks, and floor displacement such as sunken or raised floor sections which could be expensive repairs.
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Garage walls should be inspected for cracked masonry walls with displacement, or wood frame walls that have been water damaged.
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Termite infestation and damage should be taken very seriously. Termites love damp wood. It's their dinner table. A good termite inspection is a must, particularly with water damaged homes.
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Garage vehicle door and frame should be examined for visible door and frame damage. The door should be tested for operation.
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The roof shingles will be inspected the same as any other home inspection, Even if the roof shingles and the structure looks good on the exterior, the attic should be one of the first areas of inspection of a distressed property for the following reasons:
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Roof Leak - There could be a roof leak that was never addressed because the previous owners knew they were leaving and didn't care about any repair problems. Again, "uncontrolled water is the enemy." It can do some very serious and expensive damage, with roof leaks such as:
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Rot the structural beams and roof decking and eventually damage the ceilings and walls in the house.
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Create a heavy moisture problem in the house and attic that can lead to mold which is a serious health and environmental problem.
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Insulation damage - the insulation can be damaged from a roof leak creating mold. Ripped up insulation may be a sign that there are squirrels in the attic.
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Animals - when a house is vacant for a length of time it's very easy to have animals (squirrels, raccoons, birds, mice, bees and others) take up residence.
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Storage - Many times home furnishings and stored items are left behind by the former owner for the buyer to dispose of. This can be very costly. Areas where stored items are found that are not so obvious are the main house attic and the garage attic. Any storage in these areas will be reported to the buyer so removal cost can be evaluated.
Inspection of the kitchen in a foreclosure home inspection:
The initial kitchen inspection is a visible inspection to see if the stove, sink, countertop and cabinets are in place or have been removed or stolen. If the kitchen is intact with all appliances in place, the inspector will test the sink and all the appliances for condition and function. In the event that the kitchen is missing any appliances, cabinets, or other kitchen equipment, we recommend obtaining replacement cost before purchasing.
Special kitchen inspection items:
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Structure - the first area of inspection is always structure. The floor walls and ceiling will be inspected for structure and condition.
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Stove - If the stove has been removed, the gas line will be checked to see if it is turned off, secured, and capped off properly. There was an inspection where the gas line was wide open and discharging gas into the kitchen when the inspector arrived for the inspection. The inspection couldn't be done that day. The line had to be capped off and the house aired out for safety. Needless to say, an open gas line is a very dangerous situation.
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Sink and Dishwasher - Inspect the sink and dishwasher for condition and plumbing.
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The cabinets and counter tops will be inspected for condition.
Inspection of rooms in a foreclosure home inspection:
The inspector will inspect every room in the house. The following is an outline as to what the inspector will be looking for with a distressed property inspection:
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Floor damage such as water damage, buckling floor boards, or heavy sloping in the floor. If sloping is observed, the inspector should look in the basement for structural problems.
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Windows - See if any of the windows have been removed; particularly if the house is boarded up on the exterior, covering the window sections.
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Heating system - If the property is heated by steam or hot water, look to see if any radiators or baseboard heating sections have not been removed. Replacing radiators or baseboard heating units could be very expensive.
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Electrical fixtures - See if the electrical fixtures have been removed.
Inspection of the bathroom in a foreclosure home inspection:
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See if all the fixtures (such as toilet, tub, shower, and sink) are in place and have not been removed.
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Before testing any fixtures, make sure none of the plumbing has been removed and all of it appears functional.
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Test to see if there is water flowing from the bathroom fixtures. Don't run a lot of water. Just give a quick test at first to make sure the plumbing drains are functional.
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Inspect the walls, ceiling, and floor for any serious damage, and check the condition of the finished tile areas.
Inspection of the basement and crawl spaces in a foreclosure home inspection:
The basement is an area where a lot of areas needing repair are discovered in a normal lived in house, never mind a distressed type property. One has to be very careful entering the basement of a foreclosed property which has been vacant for a period of time. Many times the electric company has shut off the electrical service due to lack of payment. When the electricity is shut off, it disables the sump pump. In a high water table area with the sump pump non functional, you may find a foot of water in the basement. Act with extreme caution if there is standing water flooding the basement. If the electricity has been turned on and the pump is still not working, DO NOT ENTER! If there is an equipment electrical short, you could get electrocuted. (Yes this is serious! Do not take off your shoes and socks and roll up your pants to enter the basement to see why the sump pump is not functioning) Assuming that the basement is not flooded and can be safely entered, the inspector will examine the basement structure and related equipment as follows:
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Foundation - Inspect the foundation condition for serious cracks and foundation displacement.
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Wood structure - Examine the main beam, the floor joists, and support columns for obvious structural damage.
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Furnace and hot water heater - Inspect to see if they are in place and not removed or stolen. If the equipment is in place, test and inspect it for function and condition.
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Plumbing - Inspect to see if the plumbing is in place and not removed or stolen then test and inspect the plumbing and related equipment for function and condition.
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Electrical panel and wiring - Inspect to see if the panel is in place and not removed or stolen and if the panel is intact, then test and inspect the panel and visually inspect the wiring and related components for condition.
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Basement floor - look for serious cracks and displacement which may indicate a serious structural problem.
This author will end this article with the following comment: "Foreclosure, short sales, and distressed property inspections are special inspections that require the skills and knowledge of a professional experienced inspector." To repeat a previous statement: "A career certified professional home inspector is a must for a thorough New Jersey home inspection." These type inspections are not for the inexperienced inspector or the brother-in-law who happens to be a contractor. A missed hidden repair could cost thousands of dollars and become a financial nightmare.
DISCLAIMER - The information contained on this
site/article is for general information only. Anyone
using information obtained from this site/article has
the responsibility to obtain professional advice on your
particular problem or circumstance G. Warren Inc.
disclaim all responsibility, including negligence, for
all consequences of any person acting on, or refraining
from acting in reliance on, information contained in
this site/article. The laws and regulation undergo
frequent changes and the fact that there is a multitude
of items covered under the "Grandfather Clause ",
anyone using this information , should first obtain
professional advise on your particular circumstance
before using information from this site/article. Note -
Due to the fact that every home inspection is unique,
and many of the items mentioned in this site/article may
be inaccessible, covered with wall covering, storage,
etc. G. Warren Inc. gives no guarantee, or
promise, expressed or implied, that every/any item
mentioned in this article will be inspected or addressed
in a home inspection. Any home inspection conducted by
G. Warren Inc the actual home inspector's report supersedes any information contained in this
site/article.
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Union County,
Somerset County,
Essex County,
Hunterdon County,
Hudson County,
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Passaic County,
Mercer County,
Ocean County,
Monmouth County, and
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