I’m looking at an REO property to fix up and flip. However, I’d like to get a home inspection done to make sure most of the major stuff is ok, particularly the gas, water, and electric.
However, REO properties always have these items shut off. So my question is (for those who purchase REO properties) will banks have the utilities turned on so the property can be checked out, or is that something I’d have to go through myself.
Can you put contingencies in REO properties such as passing a home inspection?
This varies from lender to lender. I believe most will let you inspect and turn on utilities at your expense. I am not sure about HUD and Va and Fannie Mae. I usually figure in repair costs and estimate the possible needs like toilet repair and sinks leaking and a new kitchen faucet. I also figure a new water heater is the old one is really old and rusty looking. I add a misc figure too for unknown stuff. Buy them cheap enough and the small stuff is of no concern.
I’m not sure if REO rules are different state to state, but I’m in PA, so I’ll tell you my experience. I just bought a REO (closing in a week or so) and de-winterizing would be done, but I would have had to pay to have it done. Most of the REOs I’ve seen, this one included are strictly as-is… you want an inspection, they’ll sell to someone who doesn’t.
What I was trying to avoid is to buy an REO property, have the utilities put on and find out all of the wiring is bad, or the plumbing is bad, or there’s multiple gas leaks.
I’d be willing to hook up the utilities to do a home inspection, but if there’s major problems, I would want to be able to get out of the sales agreement.