Southern NH Bank Owned Pitfalls

We often get asked questions about buying southern NH bank owned homes and what potential pitfalls there could be. While it’s hard to know in advance exactly what you’ll face, being prepared for almost anything is a wise idea. Some bank owned homes offer excellent opportunities for the prepared buyer and others can be a nightmare. With the $8,000 tax credit expiring soon many buyers are out actively trying to find a home and ban owned homes are very tempting.
I published this article back in April and thought it might be wise to republish it.

Pitfalls of Buying a Southern New Hampshire Bank Owned Property

There are a few pitfalls when buying a New Hampshire Bank owned property that you should be aware of. Currently the Bank REO (real estate owned) side of real estate is thriving. There are literally hundreds of bank owned homes on the market in New Hampshire and more coming daily.

A recent question sent to us via e-mail really had me thinking that maybe people really don’t know the risks involved.

This is part of an e-mail question I received…

“We found a two year old foreclosure home that appears in great shape. I know that looks can be deceiving. Anyways, the Owner/Bank only has “As Is” on all the disclosure paperwork and not allowing me to have an inspection done. By the way, a few weeks ago they finally went to de-winterize the place and found out that the furnace wasn’t done correctly and now needs replaced. Is there a requirement that I can find out what is “As Is”???”

My answer is… I’m not an attorney and you might want to hire one. But let’s look at “As Is” from my real estate agent perspective. Repeat after me…Monika is not an attorney, she is not advising anyone…get an attorney if in doubt.

Okay now “AS IS” usually but not always means that the Bank/Seller mostly likely has never lived in the home and is clueless about its condition.

Typically the buyer has the right to have a home inspection by a qualified person within a specified time frame. “AS IS” would mean that the Bank/Seller may not fix anything or renegotiate the price in the event anything turned up during the inspection. AS IS clauses are usually clearly spelled out in the agreement.

Sometimes the Bank/Seller will require the buyer to de-winterize the property at the buyer’s expense and then re-winterize it after the inspection. Often times a HUD foreclosed home will also require the buyer to turn on the unities in their own name and then turn off utilities and put them back in HUDS name afterwards….all at the buyers expense. Sometimes that can include putting fuel in the tank to be able to run the heating system for inspection…again at the buyer’s expense.

Being asked to sign a contract with an “AS IS” statement is pretty common when buying a New Hampshire foreclosed home but usually there is also an inspection clause allowing the buyer the right to inspect and to walk away from the home if the home inspection is unacceptable. An ” AS IS” clause not allowing an inspection no matter how good the place looks would make me run away.

I’m not sure if the person asking the question had a buyer agent representing them or if they bought directly from the Bank’s agent but buying a bank owned home without representation is not wise in my opinion. There are things a buyer agent can do that the listing agent simply cannot.

We closed on a bank owned home recently, after some investigation we were able to track down a former owners property disclosure of the property and while it was from a former owner and held no legal weight it still gave us a glimpse at some information we would otherwise have never known. Don’t expect the listing agent to do that for you. They won’t. Can you expect a buyer agent to try and track that information down? Yes… but realize that sometimes it’s simply not to be found. But a good buyer agent will make every effort to help their client make the right decisions.

Buying a New Hampshire foreclosed home or short sale can be a fantastic opportunity to own a home at a greatly discounted price but please don’t go it alone. Representing yourself sometimes can be a costly mistake.

Jay and Monika McGillicuddy, NH REALTORS
603-548-7728 or 603-548-7685

New Hampshire Real Estate Blog

Jay and Monika McGillicuddy

Prudential Verani Realty

2 Main Street Hampstead NH

603-327-0246 direct line

603-434-2377 office