Scenario: A Buyer is having an inspection done on a home he's purchasing from a bank's REO inventory. A sought after "foreclosure" deal that everyone seems to want to jump on these days. The Inspector discovers a leak from an unexposed area in the kitchen as soon as the main water valve was turned on. The Real Estate Consultant immediate stops the inspection and notifies the bank's Listing Agent of the leak and reminds him of the FHA guidelines for the condition of the home. The bank's Listing Agent responds approximately 48 hours later with this message.
"My vendor has examined the property this morning and there are no active water leaks at Ramsey Close. It appears that the dishwasher valve and laundry room valve were not closed off when the water was turned on by your inspector. The house has now been properly de-winterized, water is on and active and the meter is showing no movement therefore there are no leaks. You may complete your inspection at any time."
The inspection was initiated again. All the faucets were turned on and no water came from under the cabinetry this time. The inspector tested the outside faucet in the first round of inspection and there was no evidence of a leak. He tested the outside faucet during the initial exterior inspection and did not have evidence of a leak.
So months later the homeowner starts spring gardening and turns on the outside faucet to water his new garden. When he comes in for a glass of water, he finds his kitchen flooded with water! The homeowner finds the shut off valves and turns all of them off. In addition to the valve for the water line to the kitchen sink, dishwasher, and laundry room, he discovers an unexposed valve behind the cabinetry for the outside faucet. After testing the valves he discovers that the only way the water leak was stopped during the inspection was that the "vendor" must have shut off the immediate valve to the outside faucet which is unexposed to the naked eye. It is located in an area that no one would know exists unless someone acknowledges that the valve is there. Otherwise, even a professional would assume that the exposed valve is the valve for the exterior and interior faucets since they are on the same wall back to back.
The homeowner calls his Real Estate Consultant for advice. He offers some potential solutions to remedy the problem, including allowing a contractor to create an opening so the valve can be easily assessed, according to building code. His Real Estate Consultant contacts the Listing Agent and informs him that the leak still exists and was not caused by the dishwasher or laundry as the Listing Agent implied during the due diligence period. He also reminds the Listing Agent, via email correspondence, that he said his "vendor" checked the entire home for leaks, DE-WINTERIZED the home, and no leaks were found. He concluded the home was ready for inspection.
Would you consider this a fraudulent representation of facts from the Listing Agent, vendor, and the bank? Buyer beware, the banks love to hide building code issues behind the "AS IS" sales clause. There are still federally mandated guidelines for the condition and function of the home for FHA loans. Don't think AS IS means they don't have to repair certain items in order to sell you the home with an FHA loan. If I can be of assistance to you in any real estate or process improvement consulting situation, please contact me. I'd like to hear your thoughts...
Beneath this cabinet base
flows this water through the 1/4th-round base molding
Buyer beware when buying a Bank of America REO. You need an agent in these situations. Make sure your agent is a professional, knows the industry and not just trying to get paid, can run calculations for you, can provide a strategic action plan, and can negotiate mutually agreeable terms.
"My vendor has examined the property this morning and there are no active water leaks at Ramsey Close. It appears that the dishwasher valve and laundry room valve were not closed off when the water was turned on by your inspector. The house has now been properly de-winterized, water is on and active and the meter is showing no movement therefore there are no leaks. You may complete your inspection at any time."
The inspection was initiated again. All the faucets were turned on and no water came from under the cabinetry this time. The inspector tested the outside faucet in the first round of inspection and there was no evidence of a leak. He tested the outside faucet during the initial exterior inspection and did not have evidence of a leak.
So months later the homeowner starts spring gardening and turns on the outside faucet to water his new garden. When he comes in for a glass of water, he finds his kitchen flooded with water! The homeowner finds the shut off valves and turns all of them off. In addition to the valve for the water line to the kitchen sink, dishwasher, and laundry room, he discovers an unexposed valve behind the cabinetry for the outside faucet. After testing the valves he discovers that the only way the water leak was stopped during the inspection was that the "vendor" must have shut off the immediate valve to the outside faucet which is unexposed to the naked eye. It is located in an area that no one would know exists unless someone acknowledges that the valve is there. Otherwise, even a professional would assume that the exposed valve is the valve for the exterior and interior faucets since they are on the same wall back to back.
The homeowner calls his Real Estate Consultant for advice. He offers some potential solutions to remedy the problem, including allowing a contractor to create an opening so the valve can be easily assessed, according to building code. His Real Estate Consultant contacts the Listing Agent and informs him that the leak still exists and was not caused by the dishwasher or laundry as the Listing Agent implied during the due diligence period. He also reminds the Listing Agent, via email correspondence, that he said his "vendor" checked the entire home for leaks, DE-WINTERIZED the home, and no leaks were found. He concluded the home was ready for inspection.
Would you consider this a fraudulent representation of facts from the Listing Agent, vendor, and the bank? Buyer beware, the banks love to hide building code issues behind the "AS IS" sales clause. There are still federally mandated guidelines for the condition and function of the home for FHA loans. Don't think AS IS means they don't have to repair certain items in order to sell you the home with an FHA loan. If I can be of assistance to you in any real estate or process improvement consulting situation, please contact me. I'd like to hear your thoughts...
Beneath this cabinet base
flows this water through the 1/4th-round base moldingBuyer beware when buying a Bank of America REO. You need an agent in these situations. Make sure your agent is a professional, knows the industry and not just trying to get paid, can run calculations for you, can provide a strategic action plan, and can negotiate mutually agreeable terms.
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