Learn how to spot bank-owned property schemes

Learn how to spot bank-owned property schemes
A corner of carpet is pulled up to reveal water stains

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.

About this Angie’s List Expert: Jon Bolton, the Inspectagator, is a professional home inspector and has performed several thousand home inspections since 1998 and now sets a vigorous pace as a market leader transforming the direction of Professional Home Inspections. As an ASHI member, a FABI Registered Professional Inspector and with a degree in construction from the University of Florida, Bolton is an invited speaker at radio stations, real estate offices and real estate investment clubs. He specializes in home Inspection in the Orlando area. 

As of July 30, 2014, this service provider was highly rated on Angie's List. Ratings are subject to change based on consumer feedback, so check Angie's List for the most up-to-date reviews. The views expressed by this author do not necessarily reflect those of Angie's List.


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Hiring a quality home inspector is one of the most important aspects of buying a new home. Ask these questions to insure you make an informed decision.

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