Buying a repo "as is"

[IFallsRon]

What's the path of least pain to ensure that the septic and well meet certification on a repo property that is sold as is?

[heat checker]

I don't think it's legal to sell a property without the septic being certified and updated if needed.

[WingDing2]

With foreclosures the property is sold "as is" and the buyer is responsible to ensure the septic and well both are in working condition and will pass inspection. Remember its an REO "Real Estate Owned" and in the contract it clearly states "as is" about 20 times.

In a traditional sale, yes the seller must have well certified and septic pumped and inspected prior to sale.

[DrKen]

Call a local septic service/installation company and have them run a inspection on it. Well worth the cost. If it is bad they can then give you a estimate to fix/replace and you can use it in your negotiations. Under Minnesota Law, I believe they have to reveal all known defects in a home. Once you inform them of the defect they have to reveal it to all buyers. Also, some jurisdictions have a rule that a house has to be up to code at time of sale even if it is a repossession so look up the rules in the area where you are buying.

[WingDing2]

In all the forclosures I have worked on the disclosure is waived and the buyer agrees and signs off on this. so the disclosure of all relevent facts known about the property is irrelevent and and does not apply.

This is what most people miss about buying foreclosures is the fact there is NO warranties or disclosures.

[Big R]

Sounds like a lot of risk or a lot of money spent reducing risk in buying a forclosure.

[Tom7227]

The local government may have some data on it. I know where I live the city has info on when built, when pumped, stuff like that. You could check and see if there's anything there.

[MuleShack]

yes, there should be a permit filed for each time the system was pumped and that should be on record at the county.

What i was told for scott county was if they pump with the lids off it is every 3 years and thru the pipes it is supposed to be every year.

[Surface Tension]

Question is, Can you get a loan on a home without having the septic inspected? At some point it'll have to be done. If your ready to pull the trigger I'd have the inspection done.

If it passes I'd go ahead with the sale immediately before that new found info is used to jack the price up or used to make the property more attractive to potential buyers.

Which brings up another question, what if it fails?

Can this still be listed "as is"?

If your still interested in buying the home I'd negotiating the price, although from what I've found the price of an "as is" sale are pretty low and reflects that 'as is".

[hanson]

I recently bought an "as is" bank owned foreclosure this fall and what a treat that is.

It took us 3 separate closings over 2-1/2 weeks to finally close the deal. Every single time, it was us waiting for the settlement statement to get faxed back signed from the seller (a bank in California). The first two times it took them 3-4 days at which point all the closing papers were no good anymore and had to be reprinted and the whole closing process repeated again. Not fun. Anyway... it worked out and I got my house, definitely worth the pain as its a great house at a terrific price.

My offer was contingent upon an inspection, by a third party inspector that I hired. What you might consider is making your offer contingent upon an inspection AND a septic inspection. At that point you can get both an inspector and septic company to come out and check out the house. If there are then red flags, you can walk away.

In my case, my inspection went well and went through with the deal.

Because of the house being a foreclosure and sold "as-is", the City of New Hope also did an inspection to check for code and maintenance issues. Normally these upgrades are to be completed by the seller but when the house is sold "as-is", all upgrades will be up to the buyer. I then received their list of approximately 15 items that I (the buyer) had to have fixed within 90 days. The City also required that I put $2,000 into an escrow account that would be returned to me upon completion of the items and a reinspection by the building inspector.

My realtor said every city is a bit different with how they handle code and maintenance upgrades but it is ultimately up to the buyer to complete these repairs when buying an "as-is" property. Some cities will fine you if the repairs are not completed in time, some require the escrow deposit, some are a bit more relaxed so you'll want to look into this as well. It was a surprise to me to know I needed an additional 2 grand at closing for the city required repairs escrow deposit.

There are a lot of great foreclosures out there and there are a lot of bad ones as well. What I found is the good ones are not on the market very long and you'll have to move fast. I ended up offering on 3 separate houses before my offer was accepted on the 3rd house. The first house was on the market for 2 days and had over 9 offers in the first day. I ended up offering $5k MORE than the asking price as I knew there were other offers and still didn't get the property. The bad ones are still for sale, I drive by 2-3 other foreclosures that I looked at and they are still sitting empty.

Anyway... good luck to ya! These were some of my experiences I had when looking for and buying a bank owned "as-is" property. Not quite the smoothest transaction in the world but I'm glad I did it.

[Tom7227]

What does an inspection of a septic system include and what does it prove? From what I've learned they can go bad in as little as 15 years. Having someone look into the tank doesn't give you any idea what the drain field looks like? Rules on 'fixing' a failed system generally result in a whole new setup, very possibly a mound system if you have the room and they can run $15,000+ from what I've been told. I guess that if I was looking at a system more than 10-15 years old I would assume it had to be replaced and take that into consideration when buying a property. The real hook comes when you try and get a loan 2-3 years after moving in and find out that a home equity won't work cause you don't have any equity.

I live in White Bear Township and I think they pretty much required a new system when a house was sold. We ended up getting city sewer and water because it became such a hassle and there wasn't enough room for a second system many times.

[BobT]

The idea that the upgrades would be "up to the buyer" is a negotiable thing. If the seller advertises "as is" and their potential buyer is requesting or demanding inspections and disclosure, the seller should comply if he/she/it wishes to sell.

For example, suppose I want to sell my car and I advertise that my price is firm and it will be sold "as is." If a buyer comes along and says to me that he is interested but he won't hand over a dime until I agree to have the vehicle inspected by a mutually agreed upon mechanic. Now, the ball is back in my court. Do I agree to change my terms or hold out for another buyer.

Too often we let ourselves feel like victims. Don't let yourself be a victim. When it comes to the sale of property, all terms are negotiable up to the point where the sale will not go through. It comes down to how badly the seller wants to sell, how serious the buyer is, or some of both.

[IFallsRon]

When it comes to the sale of property, all terms are negotiable up to the point where the sale will not go through. It comes down to how badly the seller wants to sell, how serious the buyer is, or some of both.

That applies to anything.

Here's my research so far.

The seller (a bank) claims that there is a "conforming septic and well." The state requires a well disclosure; the county land use issues like installation, inspection and certification of a septic. The septic installer lives in the area and could easily be contacted to vouch for the condition/life expectancy.

About the property. It's a foreclosure in a rural area zoned for seasonal recreation. There previously was a mobile home on the property. The septic was installed in 2004. I don't have information on the well yet. The septic installer lives in the area. Tax statements show that the bank as owner for 2008 and 2009. The property has been on the market only this spring.

[MIKE IN lINO III]

"The seller (a bank) claims that there is a "conforming septic and well." "

Get the document from the bank that states the above. To be safe have it inspected anyway.

When we bought our house we had to install a new mound system, but I knew this going in. Cost was approx $7500. 8 years ago.

Check your options if you have to install a new system, I wish I would have. There are some out there that are not as intrusive as a mound.

Good Luck.

Mike

[WaveWacker]

Inspection would be to check to make sure the tanks are in good condition. No cracks, baffles in place, etc. etc. Then an investigation of the "treatment area". Inspection of this would be to determine if the system mainly has the correct seperation from the water table. If you can obtain any records of the system (from the county or whoever keeps septic records in the county) is a big help to inspectors to know what's going on out there.

Yes, many older systems will not meet the seperation criteria and then fail. Potentially there isn't enough septic tank capacity and another tank may need to be installed. It all varies.