While the real estate market continues to show some signs of life, there are still pockets of high volumes of foreclosures and short sales throughout the country. In the Winchester / Frederick County, VA area the current inventory of REOs has fallen to 44. That may sound like a lot, but it is below previous numbers.
These REOs (Real Estate Owned,or Bank Owned) properties range in price from $79900-$379900. They offer bedroom and bath numbers from 1/1 to 5/3. With interest rates at record lows, it’s a great time to hop off the fence and take a second look at one of these foreclosed properties. When you do, there are some things you will want to look for, such as:
- The overall condition of the property. Are there broken windows, damaged door frames, soiled and smelly carpet or other unwelcome short-comings? Remember, some defects will not pass FHA / VA loan requirements. If the property is damaged, you may want to keep looking.
- Look in unconventional places for signs of problems. People notoriously paint a room and ignore the closets. Always look in every closet to see if there are any wet spots on the ceiling. Look under every vanity for water signs. Look in sink base cabinets to see if there are water stains from a leaky sink, food disposal or dishwasher drain line.
- If there are more baths or bedrooms than the tax record reports, check with the local inspections office to see if a permit was ever pulled. If it was, was it ever closed? Many contractors will put their rough-in and final inspection stickers on the electrical panel door. Always check with your locality about inspections. Electrical inspections are very important due to the obvious danger they present to unsuspecting users of power outlets.
- Look around the exterior of the house for settling and drainage issues. If the soil is lower against the house than it is a couple feet away you have a potential drain issue that can create major problems at some point. Those types of problems are typically easy to repair with grading and landscaping.
- Look in the attic for moisture stains on the underside of the roof. While you’re up there, check on the insulation depth. Different parts of the country have different R-values based upon the needs in that specific area. That information can be easily found online or at a local big box construction material supplier.
- Sniff, sniff, sniff. Do you smell anything unusual. Of course some REOs reek from the way angry owners left it, but in some cases, mold may be growing behind drywall or under carpets. If you smell something that is unrecognizable, leave the house and ask that it be inspected by a home inspector.
- Rub the walls with your hand. If it comes back black, there is likely a ventilation issue with the fireplace or wood stove chimney. Ask that it be inspected.
- Step back in the yard and look at the roof. Do you see ripples or missing shingles? Ask about the age of the roof. This may be hard to find on an REO, but a home inspector can give you a good idea.
- Ask for an inspection on the well and septic system. A drain field must be a specific distance from a well head. You will want to know if it is outside those limits before you place a contract on it. It’s very expensive to move either one.
Remember, most lenders will only do the bare minimum to get a property ready for resale. Some lenders will not do anything. Most will not guarantee the property. It is your responsibility to make sure you know what you’re buying. Once you close the deal, it’s yours. As-is means as-is. So, do a thorough inspection of an REO before putting a contract on it.