Are buyers allowed inspection on Fannie Mae foreclosure?

jane_d_1950April 13, 2014

We're looking at an older house and the realtor just told us it is sold as is, so no inspection is necessary.

It's in an area of town (Amarillo, TX) that is selling quickly, and I don't know if that includes Fannie Mae or if that is something that will drag out forever. I am not working with a realtor, just called the listing agent. I don't know if we put in a bid and then if we are accepted, that's it, or if at that time we can hire an inspector.

I would hate to spend a lot of money on inspectors now and then make an offer only to find it's been under contract all this time.

How does this work?

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kashka_kat

My understanding of "as is" is that if you made an offer, it could not be contingent on the results of an inspection and the purchase would be "as is." But you could certainly hire someone before you made the offer and have that information inform you about how much you'd want to offer or whether you even wanted to make an offer at all. Presumably, you'd be getting a good deal to make it worth the added hassle and risk.

    Bookmark   April 13, 2014 at 12:38PM
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function_first

We bought a Fannie Mae foreclosure (Homepath) at the end of 2011, and we were able to put an inspection contingency into our offer. The realtor that we worked with was very familiar with the Homepath purchase process, as she worked for an office that had listed quite a few of them. I would highly recommend getting a buyerâÂÂs agent working for you, and because these purchases are a little different, IâÂÂd go to an agency that has experience in listing these properties, though not the office that is listing the one youâÂÂre interested in. While our realtor told us we could use the inspection contingency to get out of our offer if there were extensive problems, she said they likely would not fix anything we found -- however, we found the hot water (which was part of the furnace system) was not working, and they did fix that, which involved bringing a repair person out multiple times until it was finally fixed (antifreeze put in to winterize had killed a pump). Thus our inspection was well worth the money it cost us. I guess this is to say that they do fix some things, at least in Massachusetts at the end of 2011 they did, so itâÂÂs possible that is still the case even in TX.

    Bookmark   April 13, 2014 at 1:58PM
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weedyacres

We bought a Homepath property a year ago. It was as-is, but we put a contingency in to get an estimate on basement structural work. We made it clear that the contingency was because we had a deadline to get our offer in as an owner-occupier, and the basement people couldn't get in there quickly enough. We just needed to confirm that the price wasn't going to be more than X. So we could walk away if it was going to be too expensive.

They accepted our offer with the contingency, the basement people were there within a week, and since the quote was within our budget we removed the contingency shortly thereafter.

The house has a basement, so we were able to inspect all the systems ourselves and had already planned to replace all the plumbing and electrical. So we weren't really worried that there was something we couldn't see that would kill the deal.

We also just used the listing agent, who specializes in FNMA foreclosures. I felt like we got good representation, they knew the process, etc.

    Bookmark   April 13, 2014 at 7:31PM
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ncrealestateguy

First, get a buyers agent. The listing agent has already lied to you. You will be given a certain amount of time, after the contract is executed, to do any and all inspections. During this time, you can terminate the contract for any and/or no reason and get your deposit back. After that time period. probably anywhere from 7 - 15 days, if you back out, you will lose your deposit.
All "As - Is" means is that the seller prefers not to do any repairs, and they are letting you know this up front. Buyers always have the right to do inspections.

    Bookmark   April 13, 2014 at 7:39PM
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nosoccermom

From the Homepath web site (read last paragraph):

"Has Fannie Mae fixed everything in the house?

Fannie Mae may make some repairs to increase the home's marketability but other repairs may be needed. Fannie Mae sells each property in "as is" condition, which means that the buyer accepts the property "as is." Fannie Mae is not responsible for fixing any problems after settlement.

Keep in mind, even if the house has fresh paint, brand new carpet, new appliances, perhaps even a new roof or siding, it doesn't mean everything in the house is new, or even works. Fannie Mae does not warrant or guarantee any work that may have been done on the property, whether as part of its efforts to sell the home or pursuant to conditions in the purchase contract. Where a home warranty is available, you may wish to buy it at your own expense.

You should also consider hiring a qualified professional to inspect the property, whether it has been repaired or not. Hiring a home inspector is a recommended practice, no matter what type of home you buy. "

Here is a link that might be useful: Homepath FAQs

    Bookmark   April 14, 2014 at 10:12AM
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kashka_kat

nc reg - that's good info as Ive heard various other definitions about "as is." Are you saying that there is a legal obligation for sellers to allow inspection contingencies... under any and all circumstances..... or only that the buyer has the right to make such an offer (which then the seller could choose to accept or not accept).

I myself always prefer to re-negotiate price rather than have them make any repairs anyway so if "as is" only means no repairs - that works for me.

    Bookmark   April 14, 2014 at 10:27AM
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nosoccermom

In Maryland at least, there's no legal requirements that a seller has to allow an inspection. Inspection contingency and "as is" are basically two different unrelated parts:
1. Inspection contingency: (a) yes, (b) no
2. (a) Either "As is", meaning no negotiations for repairs, or (b) "renegotiations" for repairs after the inspection.

So, you can have three different combinations:
1a, 2a;
1a, 2b
1b, 2a is allowed in my state

    Bookmark   April 14, 2014 at 3:37PM
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ncrealestateguy

Anyone can write a contract with any wording they feel like. All I am saying is that I have NEVER seen a contract (short sale, foreclosure, resale, vacant lot...) that does not give the buyer the right to perform an inspection. But having the right to do an inspection does not mean that they will negotiate repairs. And if you ever run into a contract that does not give an inspection contingency, then counter back with a 15 day due diligence period (or whatever time period is reasonable in the case), where you have the right to terminate the contract for any or no reason. if they balk at that, then I would recommend not signing the contract.

    Bookmark   April 14, 2014 at 5:53PM
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nosoccermom

Right. The question was whether there was a legal requirement that a seller has to allow an inspection. I don't think there is.

However, the due diligence clause won't be of much use if you can't have access to the property to perform an inspection.

    Bookmark   April 14, 2014 at 6:59PM
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ncrealestateguy

I think your point is moot, as I have never seen nor heard of a contract written up that way.

    Bookmark   April 15, 2014 at 7:09AM
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nosoccermom

Gee, the question was whether there's a legal requirement. No, there isn't.
And you know, I actually know of contracts that were written without inspection. I guess there's always a first :)
However, pls go ahead and have the last word on this one.

    Bookmark   April 15, 2014 at 11:35AM
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gmatx zone 6

Jane - Welcome to Amarillo if you are new here. We live just south of town. It is to your best interest to obtain a buyer's agent. Sellers can disallow any inspections, but most of them don't, especially if they see you are sincerely interested. Generally, those who are selling a property "as is" will not accept financial responsibility of paying for the inspections. Depending on your lender, some inspections are mandated prior to their completing the loan. I believe that FHA requires a radon test and I think that all lenders require the termite test.

Please contact me through My Page email and I will visit with you more on this.

    Bookmark   April 18, 2014 at 2:32PM
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pachick

We bought a Fannie Mae foreclosure in Sep 2012. We had a buyers agent- thankfully! She was excellent. We put in an inspection contingency, including septic. Glad we did because the original septic was destroyed. So we eventually got the house for much less money, with a rehab loan that allowed us to get a new septic. It was worth it! Good luck!

    Bookmark   April 22, 2014 at 9:14PM
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