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I'm currently trying to buy a home (that happens to be a foreclosure), and the bank who owns it is allowing us an inspection period, however they are unwilling to accept our offer until after the inspection instead of signing it with an inspection contingency.

My Realtor says he's never seen this before and that it seems unusual, but believe that the seller has good intentions. The seller said that they are changing the listing status to pending, and they are getting the utilities turned on for the inspection.

So I'm left with three questions:

  1. Why would a bank with good intentions (to not sell under me during this period) refuse to accept my offer with the inspection contingency?

  2. Based on this action, what other frustrating or odd actions should I expect from a seller who does this?

  3. Is this a bad deal, am I likely to waste money on an inspection for a home that won't be sold to me?

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They don't want to be on the hook to fix whatever the inspection turns up if they want to sell the house. They may want to benefit from what turns up in the inspection without going through the initial portion of the sale process until you do.

The Realtor is not on your side. He wants to move things forward to a closed sale so that he gets his commission. Basically, no one is on your side in this process unless you're paying them outside of the buying process.

I bought a foreclosure, and as soon as I said -- as in verbally uttered -- that I'd buy the house, the clock started ticking, and I was hit with this long, involved, very restrictive and binding sales addendum that I had no wind of prior to that. I was jerked around until the very last minute, and the seller wasn't even at the closing table, so I couldn't so much as glare at him. Very unsatisfying.

Anyway, if you have a knowledgeable friend that can tell you what the problems are, that will help a lot. I have such a friend, and I've taken him out to dinner as a thank-you for keeping me from making big mistakes.

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    I have one or two people that are involved in hvac, plumbing, and construction. Are you suggesting to have friends look at the property to help decide if an official inspection is even worthwhile? And aside from that, do you think the bank is likely to back out on me if I approve of the inspection? – andyortlieb Oct 8 '12 at 22:29
  • @andyortlieb The bank that is loaning you the money for the purchase will likely insist on a home inspection by a qualified home inspector even if the bank that is selling you the foreclosed property will be glad to get it off their hands on your friends' OK. – Dilip Sarwate Oct 8 '12 at 22:49
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    I was suggesting that you have people look at it that you know for sure are on your side. Have them take a peek and return the favor (if they'll do that for you). I don't know what the bank will do with the information, but they just don't want to enter a contract with a contingency. In other words, you can't back out of the contract because of a serious flaw in the property. That's what the inspection (pre-contact) should tell you. It's just the way they're doing it, unusual or otherwise. – mbhunter Oct 8 '12 at 22:52
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    @andyortlieb - If the bank gets a better offer before your offer is accepted then yes I would expect them to take that offer. – user4127 Oct 10 '12 at 15:28
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It appears the bank is trying to get one, and only one, offer from you. Normally, as you know, the buyer makes an offer which includes an inspection contingency. The buyer's offer can change based on the results of the inspection.

The bank may have received other offers that they accepted and the offers were later reduced based on something found in the inspection.

Not accepting the offer before an inspection is done places more financial burden on you since you must pay for an inspection without knowing if the bank will accept your offer. This is unusual and it would make me suspicious.

If I really wanted the house and the bank insisted on having the inspection done before the offer, I would insist the bank pay for the inspection since the bank is placing more financial risk on you. You could tell the bank you'll reimburse them for the inspection if they accept your offer. Otherwise the bank pays. If something like this or similar does not seem reasonable to the bank I would walk.

As mbhunter has stated, a knowledgeable friend is very helpful. I've used home inspectors in the past and I have not been impressed with the results for the price they charge. If you know a good contractor or handyman they can be just as good.

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