Though some banks are fixing up foreclosure properties, the vast majority are sold as is, hence these institutions have no obligations to disclose flaws and typically don't know exactly what the defects are, anyway. Moreover, banks are under no obligation to fix as-is homes, and they tend to provide only a very narrow time frame for inspections as well.
So it's usually up to buyers to do a thorough due diligence. As your pal discovered, it's not a stretch to suspect that the previous owner of a distressed home let maintenance slide. Further, many such homes are vacant for months with no caretaker. Plumbing and sewer problems result.
Unfortunately, your friend found out the hard way that getting the power restored is a must when examining a foreclosure. Granted, getting that done is not always easy. Banks often state upfront in their special addendums that they won't be responsible for having utilities turned on to allow inspections.
And little wonder: Electric companies often remove a home's electric meter after terminating service, which complicates the whole process. Depending on the site and city, it might cost money to have a meter reinstalled, a permit fee may be required, a county inspector may have to inspect the meter post, plus an electrician may even have to conduct an inspection to make sure the house won't burn down when power is restored.
In short, some would-be owners find themselves forking out $400 to $900 just to get an inspection. As a result, some will drop the deal. Others, like your friend, simply choose to forgo that part of the inspection entirely.
One cheaper way is to secure a foreclosure inspector who can power the entire home with a portable generator to check the furnace, heat pumps, condenser, water heater, appliances, lighting, outlets and any electrically operated well, as in your friend's case. A call to such an inspector will let you know if this is allowable in your area.
Let this serve as a cautionary tale. As tempting as it is to go it alone in an effort to save some bucks, a foreclosure buyer is always wise to hire a real estate agent experienced with bank real estate owned, or REO, deals and their nuances, get that power turned on and use a seasoned foreclosure home inspector to give it the twice-over.
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