We all know that 2020 has changed the way that we look at the world. It has also changed the way that banks look at lending. I know that banks requiring inspections has not happened over night, but it is slowly changing. A year ago banks hardly ever asked for an inspection to be done on a property. This year that number has grown 300% in our experience. Why? When I asked a bank that same question this was the cliff notes of that conversation. After the banking world experienced the bursting of the housing bubble back in 2006-2008, banks started making changes to the way that they lend.
Banks started to look at more then can the buyer afford to make the payment on the home. They started to look at how much money does it take to maintain a home. Will the buyer have to replace the roof or the water heater in the next 2-5 years? How much will that cost? Will the buyer have the money to pay for that or will they have to finance it? These are all things that started to concern the banks. When large amounts of foreclosures started to hit the market and the property values plummeted, the banks looked at why the values took such a hard hit. Up on further investigation they found that the houses that they had lent on were returning to the market in substantially worse shape then they were when the lent on them.
This was a multipart issue.
1-The home buyer purchased a house that they could not afford to make the payment on.
2- The buyer could not afford the maintenance on the home that they bought. It might have been that the roof was leaking and needed replaced and the buyer was unaware of the cost to replace it. A lot of buyers where also encouraged to buy something that had damage because it "was a cheap fix" only to find out after the purchase that it was a major repair.
3- The cost of utilities, insurance, taxes, HOA fees, and general maintenance on the home as well as the other expenses that the buyers had already committed to. Be it student loans, car payments, or any other regular expenses.
Fast forward to 2020 and banks are starting to see the big picture, but it has taken years and years for them to make changes that better protect the buyers.
So if your bank still does not require an inspection ask yourself is it worth it to go into this investment with out knowing all of the facts about what you are purchasing.