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How can a buyer avoid spending money for a home inspection on a bank owned REO, when a bank later de

 heard of buyers paying for all sorts of inspections, then the deal falls through when the bank cannot convey a clear title.
  • August 07 2012 - Staten Island
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Answers (2)

I wouldn't try to avoid inspection on a bank owned property.  I would say "you have to pay to play" in that arena.  Regardless, on a bank owned property, clear title is an absolute since the bank ownes the property now.  Your escrow officer and title company will assist in that process.

  • August 27 2012
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Profile picture for DebraKroon
See if it is possible to determine if bank has clear title prior to scheduling inspections. 

Freddie Mac homes (HomeSteps.com) have usually had a title search completed prior to listing; listing broker would be able to verify if any title questions exist or if it has been cleared.  (Some title 'issues' are minor and easily corrected during escrow; those which cannot be corrected will keep the transaction from closing.) 

You can always have your agent contact the listing broker and question them about title issues, regardless of whether it is a Fannie Mae, Freddie Mac, or other institutional owner, prior to writing an offer.

Remember, the purpose of inspections are to protect you and let you know more about the property you are purchasing. 

When there is a title problem (which does occur but only on a small percentage of REOs), the bank is not going to own that property forever; eventually, it will be on the market, with conveyable title -- keep watching the property for when it returns. While new inspections will be recommended, you at least would have more information about past condition prior to preparing your offer -- and would either be more confident about going forward with the purchase or know it was a property which was not of interest to you.  Even the latter has value to you.

  • August 27 2012
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