Bank Owned Properties – What you NEED to know.

Bank Owned Properties – What you NEED to know.

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A home buyer should not depend on a bank appraisal to protect them from structural problems in a house. Appraisers are looking out for the bank’s interest and not the buyer’s. Also, appraisers are not trained or licensed as home inspectors.

In order to qualify for an FHA loan, for a bank owned property, the federal agency requires an “inspection” and an appraiser is hired. The appraiser is expected to do both. An appraisal determines the value of the property and a home inspection determines the structural integrity of the property. These are two separate and distinct services which should be performed by two different people.


The house featured in the story below had a broken sewer line under the house which was not discovered until after the house was purchased. A professional home inspection would have revealed this defect. Inspectors have complained about this problem for years, appraisers doing home inspections, but HUD doesn’t listen. The link leads to a story of a horrific health hazard missed by the “appraiser Inspection” which would have been caught if a real home inspection had been performed.


Banks also are not very educated about the problems with the houses they are refurbishing for sale. This is another trap a home buyer could fall into with-out a professional home inspection. On a recent inspection of a bank owned property, HUD was busy painting, installing carpet and installing laminate flooring in the house but did not notice any of these defects with the property.


The water supply piping and the drain piping had been poorly installed. The PEX plastic piping was not properly supported and leaking. When the water was turned on water leaks caused a large amount of water to accumulate in the basement. The original vents for the drain system had been changed and either the vents were eliminated or were terminating in the attic.


The gas furnace in the house had a cracked exhaust inducer fan and the furnace would not operate during the inspection. A subsequent inspection be a furnace contractor also revealed a damaged heat exchanger.


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11410 NE 124th ST, #186, Kirkland, WA 98034



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