Just a few years ago buying repossessed homes was one of the hottest niches in the real estate world. Repo papers would barely hit the courthouse steps and buyers were lined up to buy the newly abandoned structures before they ever even hit the market. Competition grew fierce for these properties and bidders grew less and less concerned about the homes conditions. With the rising prices of homes and the low costs of getting a bank repossession, things like new roofs, plumbing issues or termite damage were less and less as an obstacle then they had ever been. With just a minimum of investment and easy financing for everyone, grabbing a 'steal of a deal' and selling it for a handsome profit even after repairs was good for all. That is, all who found the obvious damage and not those who glossed over massive termite damage that was hidden behind the walls.
It was along this time that the Department of Housing & Urban Development (H.U.D.) came out with a 'suggestion' to speed up the clogging sales pipeline that did away with inspections or services that slowed the process. Among these was the termite inspection and lenders dropped the service like a hot potato. Now banks could bypass the termite man and sales of repo'd homes soared and barely stayed on the rolls for any length of time. The problem was that these inspections were most needful and the directive was only a suggestion and not a mandate so homes with active termites and extensive damage were being sold. When H.U.D. was made aware they did nothing and unaware citizens were left holding the bag as usual when it comes to government and mindless bureaucracies. Record sales and huge tax dollars were all that mattered but trouble was brewing on the horizon and no safe guards were put in place to help.
Termites live and eat in complete darkness and rarely show themselves. At times the evidence is only a speck of mud on a wall and it's easy to see why the untrained eye can miss such a small manifestation. Eager buyers often see only the new paint or fancy trim of the newly 'renovated' repo and are more than happy to shrug off the fact it never had any termite inspection. In some instances, the original buyer who was looking to 'flip' the home actually found the hidden danger but with no oversight, the damage was covered up and passed along to the new buyer without his knowledge. While this kind of deceit is so far not found as something rampant, true numbers of homes sold with hidden damage might not be known for many years because of the nature of the termite.
Unfortunately there is little recourse for the purchaser of a repo home that is later found to have termites. Most contracts are an 'as is' document and are pretty lock tight unless you can prove negligence or intent to cover up a known termite problem. While some original buyers found and took care of termite damage before they 'flipped' the home some were not so honorable. Covering up damaged studs with new drywall or paint is not so difficult and it may be years before it is uncovered. While this unscrupulous practice thankfully is not widespread, it is something that took place and the extent may not be known for quite some time.
Fortunately most real estate and lending firms have come back around to ordering these most crucial inspections. H.U.D. has also clarified it's position and cleared up the mandate. In some areas however it is business as usual but there are ways in which you can protect yourself and in most situations have the bank pick up the tab. First, always insist on a termite inspection before bidding on the home. Next, should termites or damage be discovered ask the bank to pay for the treatment. In recent years this wouldn't have been an option but in the current market the banks need to unload these homes and are desperate to do so. Use this leverage to get what you can out of these institutions and you might be surprised at what they are now willing to do. It may take a hard line approach to negotiating the sale but if you are unsuccessful remember, there are more repossessed homes on the market now than even during the boom years so simply take a look around and find another one with which you can get your deal. Banks know this too and will more than likely pay for the termite professional that should have been there all along.
It was along this time that the Department of Housing & Urban Development (H.U.D.) came out with a 'suggestion' to speed up the clogging sales pipeline that did away with inspections or services that slowed the process. Among these was the termite inspection and lenders dropped the service like a hot potato. Now banks could bypass the termite man and sales of repo'd homes soared and barely stayed on the rolls for any length of time. The problem was that these inspections were most needful and the directive was only a suggestion and not a mandate so homes with active termites and extensive damage were being sold. When H.U.D. was made aware they did nothing and unaware citizens were left holding the bag as usual when it comes to government and mindless bureaucracies. Record sales and huge tax dollars were all that mattered but trouble was brewing on the horizon and no safe guards were put in place to help.
Termites live and eat in complete darkness and rarely show themselves. At times the evidence is only a speck of mud on a wall and it's easy to see why the untrained eye can miss such a small manifestation. Eager buyers often see only the new paint or fancy trim of the newly 'renovated' repo and are more than happy to shrug off the fact it never had any termite inspection. In some instances, the original buyer who was looking to 'flip' the home actually found the hidden danger but with no oversight, the damage was covered up and passed along to the new buyer without his knowledge. While this kind of deceit is so far not found as something rampant, true numbers of homes sold with hidden damage might not be known for many years because of the nature of the termite.
Unfortunately there is little recourse for the purchaser of a repo home that is later found to have termites. Most contracts are an 'as is' document and are pretty lock tight unless you can prove negligence or intent to cover up a known termite problem. While some original buyers found and took care of termite damage before they 'flipped' the home some were not so honorable. Covering up damaged studs with new drywall or paint is not so difficult and it may be years before it is uncovered. While this unscrupulous practice thankfully is not widespread, it is something that took place and the extent may not be known for quite some time.
Fortunately most real estate and lending firms have come back around to ordering these most crucial inspections. H.U.D. has also clarified it's position and cleared up the mandate. In some areas however it is business as usual but there are ways in which you can protect yourself and in most situations have the bank pick up the tab. First, always insist on a termite inspection before bidding on the home. Next, should termites or damage be discovered ask the bank to pay for the treatment. In recent years this wouldn't have been an option but in the current market the banks need to unload these homes and are desperate to do so. Use this leverage to get what you can out of these institutions and you might be surprised at what they are now willing to do. It may take a hard line approach to negotiating the sale but if you are unsuccessful remember, there are more repossessed homes on the market now than even during the boom years so simply take a look around and find another one with which you can get your deal. Banks know this too and will more than likely pay for the termite professional that should have been there all along.
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Don't get burned buying a repo home, get your termite inspection regardless of the stated policy. Find out how to get the bank to pay and save big buck.
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