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Buyer Beware of Foreclosed Homes
If you are considering buying a foreclosed or bank-owned home, either for yourself or to resell, there are some things you should consider before you take the plunge. This market is definitely “buyer beware,” both in terms of the safety of the homes and in terms of your ability to get insurance coverage.
Kieron Quane, a real estate broker in suburban Chicago, has seen several recurring problems with foreclosures, including serious problems with water damage and the resulting mold.
She notes that some foreclosed homes have had the heat and electricity turned off but have not had the pipes drained. As a result, pipes can freeze, causing water damage and mold. Similarly, sump pumps won’t run without electricity, which also can lead to water damage and mold. Kieron says, “I have seen more mold in the last year than I saw in the 15 years before.”
In addition to damage to the house, there can be lingering health considerations from mold. And the worst part is, you might not even know the extent of mold, or even if there has been a mold problem at all. If a bank is selling a home out of foreclosure, there is virtually nothing that the bank has to disclose—including water damage or mold. Even private sellers only have to disclose whether a home was tested for mold.
So what can you do? First, understand the risks. Get a highly qualified home inspector to go through a house thoroughly before you buy it. Don’t rely on a cut-rate inspector or your cousin’s buddy who does home inspections on the side.
Also, see whether you can get insurance before you commit to buy. It is very difficult to get coverage on a home you buy out of foreclosure; understandably, insurers don’t want to take responsibility for issues they might not even know about. And if you can’t get the proper insurance, buying a home is way too big a risk.
If you have questions about a home you are considering, please give us a call. We can discuss your options, and help you make a decision that protects your investment and your family. Give us a call at 847-572-0800 or email me at email@example.com.