Assess the home’s physical condition: structure, condition and mechanical systems.
Find out items that need repair or replacement.
Estimate the remaining useful life of major systems, appliances, structure, and finishes.

Coverage of professional home inspection of foreclosure home

Structural components
Exterior condition
Roofing, chimney, and gutters
Water supply and plumbing system
Electrical system
Heating, cooling, and ventilation systems
Interior walls, floors, windows, appliances, equipment, and carpets

Your right to inspect the property is one of your biggest advantages in determining the best price, negotiating that price, and other terms. The seller will be more willing to give in at this stage since everybody is half way through the process if you are buying it at a pre-foreclosure stage.

Benefits of foreclosure home inspection

Fortunately, most home inspections reveal problems that you and even the seller may not know. The seller may feel embarrassed about some problems that he or she did not disclose. It is a legal obligation of the seller in practically all states to disclose defects and malfunctioning or missing items on the property.

Foreclosure home inspection gives you good assessment of market value

Make a list of all inspection results. Emphasize that the inspector is an objective third-party.
Ask the seller to fix the problems. Let the seller think about doing it in weeks or months with all those out-of-pocket expenses. Let him or her feel the difficulty of doing it.
Get the costs for a professional to fix it up. Ask seller if he or she is willing and can afford to fix it up. If he or she says “Yes,” then ask whether he or she has done it in the past. If you still receive a “Yes” answer, say that you expect a professional job.
Add all financing costs and lost rent as additional expenses.
Explain how much time, effort, and money you would need to do it all.
Let him or her compare the different courses of action and feel how comfortable it would be to sell the property “as is.”

You need professional inspection for estimating foreclosure repair costs of fixing up the foreclosure property to determine whether you should buy the property.

Setting up your negotiation strategy in making your offer for buying foreclosure house

Their property is in a worse condition than they know.
Fixing it up will be costly.
Cost of the material and labor are higher than before
It takes too much time to do it.
They can reduce the price, make a quick sale, and let somebody else take care of it.

Keep the center of negotiations on the property, not on the person. Ask him or her not to take this personally.

Review some negotiation tips for buying and set up your strategy before making your initial offer.

Make your purchase of foreclosure home contingent upon full inspection

Ask your real estate agent to include a contingency clause, making your purchase subject to an additional inspection before the closing. This gives you an upper hand to request additional deductions in price or allowances at settlement.

How to design your home inspection contingency of foreclosed property

You should also ask for clean property at the time of settlement. If you find dirt, debris, or any other junk inside or outside the house during a walk-through inspection before the settlement, then you are entitled to ask for compensation.

Remember: every contingency you can introduce strengthens your position.

Contingencies may take several forms with the home inspection contingency being the most common followed by financing contingency and others. See other foreclosure mistakes not to repeat the same in your foreclosure property purchases.

Other foreclosure inspection contingencies are:

Approval of your partners, relatives, company, or an agency.
Inspection by your own contractor, handyman, or other professional (electrician or plumber).
Any other contingency that you may think of.

About the Author: John Anderson worked as real estate agent, Realtor® in Florida and Virginia and certified home inspector in California. He publishes foreclosure newsletters on bank and government owned foreclosures.

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