Home Warranties and Inspections - Home inspection and questions

After months and months of looking for a house I have found one that I am very interested in. I have been looking at new construction for the most part but I came across a 2004 model of the house that I want to have built. It is a bank owned forclosed home that really looks brand new but is has one major problem that I need some advice on. The bank turned off all the utilities (Ohio winter) which includes the sump pump in the basement, which in turn flooded the basement with 3" of water. The realtor didn't really have much info on it other than the pump didn't work because of no electricity. The basement has a little bit of standing water but the hot water tank looks completely rusted at the bottom. The furnace looks "ok" but I didn't do a real good inspection. The plumbling has been winterized but there are signs of mold on the window sills and it has me worried. I wonder if the carpets have mold in them as well as the heating/cooling ducts? The bank doesn't look like they are going to clean anything in the home so it is up to me and a good inspector to find all the problems that this new home might have. Your adivce is appreciated. Sean

Also, it doesn't appear that the bank will turn the heat back on unless the home is getting inspected. I wonder if the sump pump plumbing is froze solid??

Again, thanks for your advice
Sean

In a home like this I think I might bi-pass a "home inspector" and hire seperate trades people to do the inspection.

I would do both - I would have an experienced home inspector go through the property, and I would tell them "if you are doubtful about the condition of any system, please err on the side of caution in recommending additional evaluation".

My logic here is that a good inspector is a generalist who is skilled in catching a lot of problems that don't normally fall into the diagnostic purview of the major skilled trades (for example exterior cladding, window, door and flashing defects, spotting water damage, various kinds of carpentry, structural and foundation defects common in new construction) and should also have the experience to determine when "further evaluation" by a specialist is necessary.

Another thing I would do if possible is knock on the doors of other homes of the same model/builder and ask the owners "what sorts of problems have you had?"

Also, as you have no recourse with a bankrupt builder, I'd consider the possibility of a obtaining "homeowners warranty insurance" on major components, and carrying it for at the first year or two.

More info:

I will have only the history on this house since the bank has owned it from the previous owners. This should take care of the water damage and how it occured but I will never know if the original owners had problems with the house. They were not very coopertive with the bank that was throwing them out of the house. My main concerns are the mold so I will hire a mold specialist as well has a home inspector. Do you think I should hire someone that specializes in water damage since it is only in the basement?

This is not an attractive situation, so avoid seeing it as a bargain.

Since it was taken back by the bank, the previous owners were short of money. When they had some money, it went to the bank to keep the property and maintenance and repairs probably suffered.

The effects of no power are obvious and there are probably many other things that are not right and have caused other problems that will surface after it is put in regular use.

You will have to assume that everything in the basement (carpeting, sheetrock, framing, etc.) will have to go. The water heater is peanuts. The furnace could be in bad shape even if the water was not too deep because of the moisture and humidity.

If the bank does not want to maintain the property then that is a red flag. I would not even bother hiring inspectors and tradesmen to check out the house. The bank is hoping to sell it to keep any profit they made on the original occupants and do not want to invest anymore into it. You will still have to pay for the inspectors and tradesmen for their time even if its all bad news.

But if this property means that much to you, then you should come out on top in negotiating a price for the house.
That includes taking away the banks profit. Your inspector and tradesmen will determine just how much damage was done to the house since the former owners had it and what it will cost to remedy. The deduct these costs from the fair market value plus a bit more for your trouble, as it is you that is investing in the property. If the bank tries to play hardball, then walk away from this one.

Update,

I talked with the realtor again last night after she talked with the selling realtor. The house has been in forclosure since December 2006 and the power has been shut off since April of 2007 of which it has flooded twice. The second time it flooded (due to the sump pump not working) there was 7" of water in the unfinished basement. There has been no clean up effort in this house. I'm sure that it has or will have a mold problem once the heat is turned back on. The bank will turn on all utilities for the home inspection but it is up to the buyer to pay and have the water winterized again. I am going to walk on this one. The bank is killing a new house and it's a shame as this was a really nice house and can be a really nice house again if the bank would put forth some effort now. I think that this one will sit on the market for a long time if it remains in this condition. Too bad...

You might find some of the comments on making an off on a REO at

http://www.zillow.com/forum/site/ViewThread.htm?tid=16447

of interest.

The house sounds like a good fix it upper for a tradesmen like a person with good skills in carpentry, hvac and drywall installation.
If I were this tradesman, I would suggest to the seller that all the drywall needs to be ripped out whether it looks good or not on the surface. When water has been sitting in the basement for a long time, there's got to be mold. The heating system and possibly some of the ductwork should also be replaced along with the hot water tank.
The flooring in each room must be carefully inspected.
There may be more problems not readily noticeable.
I would put forth all this information to the seller and then make an offer based on value of the house minus cost of materials, labor and profit.
You are doing the right thing by walking away.