Learn how to spot bank-owned property schemes
A corner of carpet is pulled up to reveal water stains
In the past, I've spoken to my customers of “the bank rehab routine.” That’s when the bank sends in their repair people to make “quick and fast” repairs that offer little value and can even create more harm than good. As a matter of fact, in my opinion, these “repairs” reek of deceit and fraud.
Then, under the flag of total immunity, they fail to disclose major defects. I’m here now to tell you that time has not healed all things. It’s quite the contrary, my friends. I’m particularly perturbed, because I’m the first one found guilty for missing a concealed defect. Listen up and consider this article your personal real estate investor bailout.
The bank’s favorite rehab routine: The drive-by paint job
With total disregard for surface preparation, color is sprayed on the walls of a house in order to enhance the home’s curb appeal. Within just weeks or months, the new paint is peeling off the wall. To illustrate my point when I describe this condition to my clients, I will wipe my fingers on the surface under the new paint.
Then I take a picture of the chalking on my fingertips next to the peeling area. This is typical of failed resin (glue in the paint), and the pigment (color in the paint), wiping off. Despite real estate contracts that depict paint as an aesthetic feature, I insist that the paint is a function of the building envelope, and the wall assembly will not perform as intended (key words here) without it, or when it is not in good condition.
Beware of mold
So, who cares? Well, water intrusion happens with even small/short rains. Because of science, we don’t necessarily have the quantity of moisture to pass all the way through a wall/window assembly and let it manifest itself on the interior. Water intrusion can happen, and if not dried/evaporated quickly, fungal growth is not far behind.
Growth behind the baseboard and on the backside of the drywall goes undetected because it’s not visible. If it’s out of sight, it’s out of mind. Could mold be a problem for you? Here are a couple of easy techniques you can employ to prove your point:
Head to the garage and/or laundry area
These interior walls usually don’t have drywall, so if you can find moisture stains on the interior side of the wall, you have just proven your point! You tell the BPO agent, mitigator or seller that this condition could exist in other rooms but it’s just not visible because of the drywall, baseboard and carpet.
These products have cellulose content (food) in which fungal growth can thrive. Also: take a walk around exterior walls, from the interior, and look for delamination to drywall and baseboard.
Look for water stains on the sides and top of windows
If “the bank painter guy” has also painted the interior, use your official investors’ leatherman tool and pull up corners of carpet and under windows and look for stains to the tack strip. Look for new baseboard: a definite dead giveaway. Find it once and you have proven your point. On a similar note, if the paint doesn’t stick, neither will the caulk. So the previous leaks that have been “repaired” may not be.
Watch out for cosmetic concealing
Recently, my business partner was inspecting a 2004 home in Baldwin Park. At first glance, the place was beautiful: all new interior paint, tile and carpet. He happened to step on something that felt like someone had left an item under the carpet during the rehab.
As he continued to the kitchen to set up his laptop, he started to notice that the counter tops were way out of level. “Hey look, the cabinets aren’t the same height! And hey, neither are the baseboards that have all- new caulk and paint!" Long story short, after the carpet was pulled, and he really started to look at the place, it was discovered that some apparent major structural settlement had been concealed.
Even the newly laid tile was cracked and dis-bonded from the floor! How would you like to be the buyer who didn’t get this thing inspected? Our buyer obviously opted out and we didn’t get sued. Guess what? Yep, it’s back on the market. That little piece of information may just have saved one of you from a catastrophic financial burden. You’re quite welcome. I’ve said for years that if we all stick together, nobody gets burned.