The bulk of the houses sitting on the shop shelves in the real estate market are foreclosed houses that banks have repossessed. Buyers are being wooed by the banks with huge discounts but purchases of foreclosed houses are laced with problems that need to be mulled over. Most of these houses have been standing vacant for a long time.

A trade group, the Home Warranty Association of California (HWAC) suggests that the potential buyer should ask for a house warranty and also the right to inspection before proceeding. David Goodwin of HWAC explains that during a traditional sale of property the seller provided the house warranty. This has been the procedure that has been followed in about 90% of the deals in California. Today the scenario has changed with the majority of the sellers of foreclosed units being the banks or mortgage bodies. They will be not willing to pay towards house warranty fees. Moreover a seller who is not in occupation of the house does not know the real condition of the unit – the details of its fittings, fixtures and amenities. As such it is not in a position to give this information to the buyers.

Taking into account the changed circumstances the buyers should insist on their real estate agent to arrange for the both inspection of the house and its warranty. A thorough inspection will expose the real condition of the house. Added protection will be provided by the warranty if unexpected repair costs surface during the first year of ownership of the house. Since the houses have been lying vacant for long periods of time the buyer should not expect the house warranty to cover the typical items of default that are noticed during a typical inspection. In a foreclosed house there is every likelihood of the plumbing to be clogged along with other problems relating to appliances, fittings and fixtures.

Goodwin warned that although there are some really bargain deals in a market that is dominated by foreclosed houses, one should not be blind to the lurking problems that might not be visible to the casual glance. The house warranty assures a peace of mind but it cannot be expected that the house will be in the shipshape condition prior to its foreclosure. The house warranty covers the important operating systems against sudden breakdowns in the first year of use and occupancy.

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