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DIY Guide to Inspecting a Foreclosed Home for Flooding or Freezing Damage

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With the number of foreclosures in the country at an all time high, it may be a good time for purchasing a home that has been foreclosed. When a home can be purchased for a fraction of its true ultimate value, the real work can begin. In this environment with banks being subsidized to off load non-performing loans, great deals may be had for those persistent enough to keep shopping. But prudence is needed.

With foreclosed homes, usually the water supply, the heat and often the electricity has been turned off for variety of reasons. Generally, an owner, bank, lending institution or holding company, will turn the utilities back on in a house for a pre purchase inspection. If the utilities are not turned on and restored, this is often a warning sign that serious underlying problems have occurred.

In the recent past, many mortgages were bundled together and sold as a security. While some of these bundled or packaged mortgages are being kept by banks in the US, (believing their own marketing as to what great investments these were), many are held by foreign banks and other lending institutions. With different homeowners’ mortgages being bundled together into a package, foreclosure proceedings may take a considerable length of time, while unwinding the package. Many of the original homeowners have literally walked away from the house a long time ago as a foreclosure procedure was underway. The utility company supplying the fuel for the heat source, whether natural gas, oil, propane or electric, may have simply shut off the services or refused delivery. With no direct oversight, a significant number of the foreclosed homes were subject to freezing temperatures this winter with related damage. When heat is not supplied to a house in the winter, many precautions are needed to insure certain systems do not freeze and become damaged. The home needs to be winterized and many were not.

When water freezes and turns to ice, the ice expands. When water is confined in a container of some type, that system or component expands, becomes stressed and cracks, like a can of soda in the left to long in the freezer. When a house freezes, if the water has not been drained from the water supply system or hot water or steam heating system, extensive damage occurs. Depending on the conditions within the house, after the system starts to freeze and burst, water may continue to flow. Flooding and serious water damage often occur but sometimes these conditions may not be entirely obvious to the inexperienced for many different reasons.

Winterization is a process to remove the water from components within a home to insure that damage does not occur. Winterization includes water supply piping and water heaters being drained and water removed from the system. The sanitary waste piping is drained and/or antifreeze placed to prevent freezing of traps and toilets. Hot water and steam heating systems must be drained of water from all components. Washers, water treatments systems, ice makers, and dishwashers need to be drained and protected. If the house was under pressure when frozen, the damaged systems may have allowed water to spray and water has probably run continuously, uncontrolled for perhaps many hours, days and even weeks. Broken disjointed piping, cracked toilets, cracked radiators, sometimes are evident, but some evidence may have been removed or repaired. Drywall that has become moisture laden becomes heavy and generally falls from ceilings and, often, walls. Wood structure in the house may have been saturated but often this too may become more difficult to evaluate. If heat has been restored without simultaneous moisture removal, mold and fungus growth becomes a risk. Dehumidifiers must be operated simultaneously when restoring the heat to remove the moisture from the structure.

Past flooding, whether from burst piping, uncontrolled basement leakage or the power supply to a sump pump being turned off, is common. The basement and crawlspace areas may tell of flooding with water lines present on the walls similar to that ring around the bathtub most have seen. Evidence of a continuous water staining or a dirt line is visible in basements or crawlspaces even as high as the floor joists. But basement walls often have been cleaned where water lines were visibly present in the past. Evidence of water/dirt lines at the interior of water heaters, furnaces, boilers and electric service panels may be present where the water/dirt line was not cleaned but forgotten.

If a home design is a slab on grade, a concrete floor throughout the house, extensive damage to piping under the concrete floor may be present. Generally, with a slab on grade design, water supply piping is installed under the concrete slab prior to placement. If piping under the slab has frozen and become damaged, the only way to repair it is by removing the concrete in areas with a jackhammer or at the least, very creative piping networks.

So if water, heat and electricity cannot be restored in a home, price in defects that may need repair or replacement. While it may sound like all is lost and gloomy, nothing could be further from the truth. Priced right, a foreclosure could be a diamond in the rough. Most buyers, other than the most competent DIY’ers, need professional, unbiased advice from a reliable real estate agent, a home inspector, contractors and an appraiser when purchasing a foreclosed home. Without professional advice, a truly satisfying experience could result in financial loss and significant stress. With the cost of foreclosure and the number of foreclosures available, a low bid, even if it seems ludicrous, may be a one time buying opportunity for success.

One of the most important ideas to remember is that you do not want to become emotionally attached to any given property. Auctioneers learn very soon that people become emotionally attached to certain items, and people will a price bid up, to get what they want. The same concept applies to houses, so everything must be kept in perspective. Once a home buyer becomes emotionally attached to a property, blind money wasting decisions are often made. The whole idea is to get a bargain and remember that other inexperienced buyers may pay a lot more than a house is ultimately worth. Listen to reason, keep a steady pace house shopping, anticipate the unexpected , obtain professional advice and keep bidding very low. Ultimately, the right deal will come your way if persistent enough.

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Posted on Aug 1, 2009

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Peter H. Schaming

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