Short Sales & Foreclosures: Do I need an Inspection?

While there are many things that are different about foreclosures and short sales compared to the typical real estate transaction, one thing that is still the same? A property inspection is still a vital piece of the transaction that helps to educate and protect buyers and REALTORS® alike.

My brother in-law recently bought a short sale property as his first home for himself and his future wife. Our whole family is very into construction and remodeling and are very capable on that front, but I still encouraged him to have the property inspected, and I certainly would have the same recommendation for anyone in a similar position.

Typically, a buyer of a foreclosure or short sale home will be asked to purchase the property "as is," which means no repairs, but it's wise to know what the current condition of the home really is. What was my brother in-law "getting himself into" was the question. How much of "a deal" was it really? Even $150,000 under the typical market value for a home like this, might not be so appealing if it's going to take that much or more--plus a year of sweat equity--to fix it back up.

A thorough inspection of a short sale or foreclosure property will not only identify material defects but will also educate the buyers regarding any necessary restoration of the property, helping them to anticipate thousands of potential dollars in unexpected repairs or replacement of components.

In my brother in-law's case, one of U.S. Inspect's NJ inspectors, Dan Helmsetter inspected the property, and then he grabbed this diamond in the rough. He did end up finding things like crack pipes in the basement, but because of his inspection, he was already well aware of all the major issues in the home and he budgeted for them. Now, after just a few months of hard work--it's already looking fantastic and it will eventually be a beautiful starter home for him and his wife.

Waiving your rights to an inspection as a buyer, or suggesting that your clients do so as an agent, is never a great idea. Whether a traditional transaction, short sale or foreclosure—all transactions carry risks and home inspections continue to be one of the best ways to help reduce that risk.

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Related Topics: Defects Commonly Found on Foreclosure Properties