Many bank and corporate owners do not perform repairs to a foreclosed property. There are many reasons this decision is made. The result is that these homes are marketed sold as-is with no seller fixes. In these cases, it is up to the buyer to assess what will need to be done to make a home ready for occupancy, and the cost to do so.
When a property is marketed as-is what can a potential buyer expect? It’s hard to know and the possibilities are endless. Buying a home marketed as-is requires the knowledge and skills to assess all parts of the property to assess cost and risk. It’s not a game for the inexperienced.
There are exceptions to most as-is policies. From over 20 years of experience, we have learned that even as-is sales involve some seller investment. The following is a list of seller fixes that a bank or corporate seller will almost always incur before selling any foreclosed home.
Secure the Property
The owner will maintain the exterior to a minimum standard required by the local community (lawn, windows, access). Security of the property will be provided to the extent the location dictates.
I have never seen a foreclosure owner try to sell any home with trash. Foreclosure owners will perform trash outs. They will also try to offer personal property back to the former owners within the requirements of the local legal system.
The bank or corporate owner will do what is necessary to stop a problem that risks causing further damage and loss of value to a property.
Water and Mold Damage
Foreclosure owners will address mold depending on the volume of the mold. Addressing it may mean stopping it at the source of the water intrusion. Once the water intrusion is stopped the resulting damage is usually repaired. An assessment is made of the risk to humans of entering the property. Lesser amounts of mold are usually left to a new owner to remove. More serious cases of mold are reviewed and sometimes the seller will choose to market the home utilizing a mold waiver for all parties to execute prior to entering the home. Or the seller may choose to tackle the mitigation process. This decision rests often with the marketing plan and the expected final buyer (occupant or investor). Mold remediation may require such extensive repairs that a full rehab project may be the final outcome.
A more recent problem found increasingly in homes, particularly in more rural areas, is that of a Methamphetamine lab (Meth Labs). These labs commonly use a residential home as a cover for their operation. Upon finding a home that was used for the production of meth, the foreclosure owner and their representatives have a difficult and costly job. Remediation will become the responsibility of the owner (via foreclosure) in order to sell the home. This is a very expensive project as it commonly affects all parts of the property. Toxins may have saturated the home structure so severely that demolition is the final outcome. County health departments and federal agencies must also be contacted and only approved and certified contractors may work on the rehabilitation of the property. Once remediation is complete an all-clear certification will be obtained with full disclosure made to all potential purchasers.
These are homes converted to the full-time germination and harvesting of marijuana plants. Other than a persistent odor that must be removed, this is not as serious of a cost to repair. The foreclosure owner will generally remove all carpet and provide fresh paint and a good sterile cleaning.
Defective Chinese Drywall
An issue found primarily in the southeast US, affecting homes built from approximately 2003-2007 is defective Chinese drywall. Unfortunately, there is not a standard available for determining if this drywall is emitting a hazardous toxin in the air, or just an unpleasant odor. There is also corrosion to brass fixtures and hardware. The foreclosure owners seem to have several different approaches to addressing this issue. In some cases they do nothing and do not acknowledge or even suggest there might be an issue. They are within their rights to do so as even the federal government has been unable to establish any harm to humans from the strong sulfur smell produced from this drywall. Many foreclosure sellers have found it almost impossible to sell a home with this smell and the corrosion. Many foreclosure sellers, upon suspicion of the defective drywall, remove all the drywall from the home. The seller will then either re-finish the interior or sell the home at a price that allows the purchaser to complete.
There are many issues facing homes that develop due to simple lack of maintenance. These issues are more likely assumed by a purchaser in an as-is foreclosure purchase. The above are some of the significant seller fixes to expect when purchasing a foreclosure.