Buying, Repo'd Home,Termites - Image via Wikipedia
Not too many years ago the termite inspection business was literally brought to its knees. Banks and real estate firms were no longer requiring the crucial termite inspections and homes were being sold regardless. Repo’d homes especially were a target of this new policy and unaware home buyers were seemingly happy to get rid of this hoop that only once was a big deal.
Credit and loan approvals were so easy to get and the low priced repo home that could be flipped for huge profits on the surging markets seemed to be a good deal for everyone. Inexperienced investors risked savings and collateral to cash in on this new wave but were never aware of the hidden dangers that only a trained professional could detect but there was no stopping this perfect storm.
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.
The subterranean termites nature is to stay hidden and not reveal himself to the outside world. Damage can occur even in occupied homes for years before anyone is the wiser. Evidence of damage or presence of this wood destroying pest can be as small as a pencil mark and only a true professional knows where and what to look for. Without the customary termite inspection many homes were sold while profit robbing damage was being done even while the papers and money was being exchanged for the transfer of the deed.
There is very little you can do once a home is purchased in the foreclosure market to recoup for damages. It is by design an ‘as is’ contract and any deficiencies or defects are yours at the time of sale. Unless you can prove intent to hide the infestation or negligence you’ll have little footing in the legal process. It’s not uncommon for damages or repairs in a repo home but termites have always been one exception at least for the treatment.
Many original buyers who purchase a repo find such damage and fix it much to their dismay. Others find it easy to cover up the infestation and with no previous findings recorded they can simply deny finding anything and you’re ledt with the burden of proff that the termites were there the whole time. That’s always a hard road to go.
There are remedies to this approach to buying repo’d homes. First, H.U.D. has since clarified their position and this has brought the termite inspection back into play in many areas. Second, even if it is not a requirement in your location it is your right to have these inspections performed and in some cases make the purchase contingent on the findings. Also in the buyers favor is the slowing market, although repos are more plentiful than even at the time of the boom the sales have dropped dramatically.
With this in mind banks are far more willing at this time to work with you on treatment costs and even damage repairs. It may take some firm negotiations but the odds are in your favor and if they decide not to deal favorably you can always find another great deal and probably just around the corner. Repos are still a great opportunity for many investors and would be home buyers alike, it still pays however to have the inspection and/or treatments from your local termite pro that could save you thousands of dollars.
Repo homes can have hidden costs, don’t let termites be on of them. Protect yourself with information and go to the negotiating table prepared.
Related Posts:
