Originally Posted At: http://www.bigbearilluminated.com/

I just wanted to relate something that happened to me last week in the hopes that it can be helpful to somebody else. With the large inventory we have at the current time, it can be difficult to sell a home. Lately, we have been seeing an increase in homes that are in an unfinished state and available for purchase. This can happen for a variety of reasons, but usually because a builder extended himself too thin and didn't have the funds to complete the project. In many cases, the homes get foreclosed on and go onto the market as unfinished bank owned properties.

When you are dealing with the bank, they don't have to follow the standard disclosure requirements because they would have no way of knowing them. Most times, the person at the bank in charge of the transaction has never even seen the place. Since the homes are sold " As Is ", the inspection and discovery period is more important then ever. As a buyer, the onus is entirely upon your shoulders.

Last week I showed a bank owned property to a client of mine who is a builder himself. It seemed like a very good buy. On our initial visit, the home looked like it was very close to completion. It was missing some cabinets and a few fixtures, but overall it was in great shape. It looked like it might need around $30,000 or less to get it into finished, salable condition. The home was listed at $315,000 and other comparable, finished homes in the same neighborhood are selling around $450,000 and up. My clients was planning on finishing it and living in it for at least two years and then selling it for a nice profit.

Knowing we have 17 days to do our inspections, we made the offer. Guess what? Somebody else thought it was a good deal and also submitted an offer. Now we were in a position to either give our best and final, or move on. Before he had to make his decision, I went to the city to get all the info on the house I could find to see if we could get a better idea of what kind of costs we were looking at. I'm glad I did. It turns out that not only was the permit expired, it had been for two years. In addition, there were pages of corrections that had never been signed off on. Many of them were inside the walls and foundation. I don't know what the builder was thinking, but we had no way of knowing if he had done the work correctly without tearing out walls and who knows what else. It turned out that the $30,000 could easily turn into $60,000 or $100,000. We passed on the offer.

I'm so glad that I took the hour to go down and do my investigation before this went through. I know we could have withdrawn within 17 days, but that would have been unfair to everybody involved. The other buyer would have missed out and had to buy something else. The listing agent would have to re-list it and redo all her advertising. Most importantly, my client would have wasted a great deal of time and so would I. I would have loved to sell my client a home. Just not this one. I'll just keep plugging away, and next time we will find exactly what we are looking for.