How to Inspect a Foreclosed Winterized Home

Buying a home from a bank after the foreclosure auction can be very lucrative.  And by buying a foreclosed property, you are performing an important function in helping stabilize the real estate market in general as well as the neighborhood in which the home is located.

But REO home sales carry a hidden problem for prospective purchasers: the properties frequently have been “winterized” to protect them from the cold Massachusetts weather.

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If you’ve ever seen a home that has had burst pipes, you know the terrible damage water can cause to a structure.

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Where a water pipe bursts on an upper floor, the water damage quickly spreads.  Ceilings on lower levels collapse, walls sprout mold, wood floors buckle – whole sections of a structure must be gutted if water runs unabated for even one day.  It’s easy to run up repair bills of $50,000 and more.

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That’s why lenders which foreclose on properties during the cold winter months in MA will “winterize” the structure immediately upon taking title at the auction. 

They turn off the utilities, drain all pipes and often add anti-freeze.  Sometimes electrical service is left on, but everything else is turned off, disabled and drained.

This creates a lot of challenges for the post-foreclosure marketing and sale of REO homes. 

It’s impossible for buyers to do a full home inspection of a winterized home. 

“Dry” inspections are easily done, but there’s no way to judge the functioning and condition of the home’s heating and plumbing systems.  You just assume the risk of undiscovered problems with mechanical systems if you buy a home with only a “dry” home inspection.

Buyers may get the REO lender’s OK to pay to dewinterize the structure for a home inspection, but the buyer will also have to foot the bill to re-winterize the place after the inspection is done.  Together, the dewinterize/rewinterize process can cost well over $1,000.

You can say everything is negotiable and seek to get the REO lender to pay to dewinterize and rewinterize a property.

Some REO lenders will pay at least part of the dewinterize/rewinterize costs.  But communications with REO lenders (or their 3rd party asset management company) are notoriously slow and difficult. Many buyers give up on a REO purchase in frustration after lots of lost time.

Lack of open, easy communications between real estate agents and REO lenders greatly complicates inspections and sales of REO properties.  It’s the part of the buyers’ cost of doing business with REO properties.

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