Steps for Inspecting a Foreclosure Home

Everyone knows just how opportunistic today’s market can be with an abundance of foreclosed homes up for grabs. It seems like new foreclosure listings appear daily, with thousands of investors competing for the best discounted properties available.

Part of succeeding in such a market involves doing one’s homework regarding a particular property and making sure it is a sound investment. That means, among other things, having the property properly inspected. Here we’ll talk about strategies behind foreclosure inspection, why you should have your prospective foreclosures inspected, critical issues that you may encounter, and particular areas of emphasis to cover during your inspection.

Strategies and Tips for Better Inspections

These days, foreclosures run the gamut in terms of quality. Not all are created equal. Dilapidated, abandoned, and neglected foreclosures in the slums are a different beast altogether than recently-vacant, well-maintained, and intact foreclosures in higher-end neighborhoods in the suburbs.

Because of this, it helps to have inspections for your properties. The scope and detail of an inspection will depend on the quality of the home itself. For example, if you are dealing with a foreclosure in a relatively decent neighborhood, and the home appears to be well-maintained and in good order, you could probably deal with inspecting the home yourself for minor repairs and leave it at that. If that is your course of action, it helps to attend a professional home inspection at least once so you can get a good feel for how it is supposed to work.

Let’s say that the home appears to be in worse shape, or could potentially require extensive work. Even if nothing on the outside appears out of order, if your instincts tell you differently, it helps to go with a more in-depth home inspection, particularly with a professional home inspector.

If this is the case, you (or your inspector) will want to pay attention to these critical areas:

- Electrical wiring

o Look for exposed wires, damaged wiring, circuits that don’t work properly, stripped wiring, wiring that is old and not properly upgraded, etc.

- Plumbing

o Foreclosures often are victim of having copper plumbing stripped and sold for scrap. Check and see if everything is in place; if it is, see if there is any evidence of water damage or leaking in the home.

- Roof

o Leaks are a major concern; check the attic if applicable or the ceiling.

- Foundation

o Every foundation needs to be checked for cracking. Crawl space foundations are more susceptible to rotting and termite-infested wood, especially with older homes.

- HVAC

o Are there any missing implements? Are the heating elements properly installed and in good working condition? If not, they could pose a safety hazard.

One smart idea is to hire another trusted contractor or company to perform a second inspection and give you a better idea of what needs to be fixed with the home before you proceed further.

Benefits of Foreclosure Inspections

The main benefit of a foreclosure inspection is to help you determine how sound of an investment a foreclosure may be, so you are not pouring money into a money pit. Again, not all foreclosed homes are equal; some will require extensive, major renovations that could eat away at your profit margin and leave you in the red.

Another benefit is time. If you are purchasing this home for yourself, you can avoid potential issues that you’ll have to correct in the future. If you are trying to fix it and sell it, you will have less work before you.

Finally, inspecting a home makes it easier to price a home and bid competitively, and obtain permits for a home once the purchase has been made. If you know what the home will cost to repair to proper standards, you will have an inside track on pricing your bid or offer and maximizing your spending power.

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