Beware Of Upfront Costs When Buying A Foreclosure Or Bank Owned Home In Alexandria VA
The Alexandria VA real estate market has its fair share of foreclosure and bank owned (REO) homes for sale. As the banks get ready to unleash a new wave of foreclosures into the real estate market, I thought it would be good to offer you some insight on the expenses you may incur as a buyer when looking at foreclosure and REO homes for sale in Alexandria VA.
Some of the phrases that you will commonly see in the remarks of a foreclosure listing can include ‘AS-IS’, or ‘Home has been winterized’, or ‘Buyer responsible for utilities for any and all inspections’.
While many Alexandria VA home buyers only consider the sales price as a deep discount on a foreclosure or REO home for sale, there can be out of pocket expenses even before the sale is final. For example, the average home inspection will range $300-$500 depending on the size of the home. Other inspections such as radon can cost up to $150, a termite inspection $50, and a roof inspection $150-$200. But if there are no utilities, and the home has been winterized, you may also have to incur the cost of hiring a plumber to de-winterize the home and turn on ALL of the utilities in your name. All this before you’ve even fully commited to the home purchase!
Banks will pay to have a home winterized to limit their liability and the likelihood that pipes will burst in the home during the cold weather months. Where there’s water, there’s eventually mold, so banks reduce the risk of property damage by winterizing the home. And shutting off the utilities deters squatters.
All bank foreclosures in Alexandria VA are advertised as being sold in as-is condition, but the buyer is usually given a specific time period for inspections. Once the inspections are complete, you will have to shut off the utilities and pay to have the home re-winterized. Even if you decide to move forward with the purchase after the inspections, the bank still bears the liability until closing so they will want the home to stay in a ‘vegetative state’ until the deal is done.
Distressed properties for sale in Alexandria VA can indeed be a great opportunity to find a below market deal. But buyers should understand that preparing a home for an inspection is an additional expense. It’s part of the cost of getting a good deal.
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April 23rd, 2009 at 7:43 am
This is a great list of up-front expenses. Just one question though.
Why do you list a roof inspection as a separate service? If the home inspector isn’t qualified to inspect the roof, find another home inspector. If a home inspector always recommends a second opinion by a roofing contractor, find another home inspector. There’s plenty of us out there that are happy to walk on the roof and tell the buyer if it’s acceptable, needs repair, or needs replacement.
One other thought – here in Minnesota, I’ve actually heard of banks requiring buyers to de-winterize and re-winterize. This isn’t common, but it gets very expensive for potential buyers.
May 17th, 2009 at 10:29 pm
Hi Reuben, not all home inspectors do a detailed roof inspection. And if the roof does need to be repair, and the buyer is using an FHA or VA loan, the lender can request a specific roof re-inspection from a certified roofer as a result of the appraisal. I just went through that in a recent transaction. It’s an additional expense because the home inspector is probably not a certified roofer. Having the appraiser re-inspect after a lender required repair is also an additional expense to the buyer.
April 11th, 2012 at 7:23 pm
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