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Buying 'as is' and Inspections
Some of the homes on the market are being sold "as is". This is especially true with bank owned properties.
Buyers don't always understand what 'as is' means. It does mean that the sellers are not going to fix anything and it also means that sellers are not responsible for property defects that they don't know about. They are still responsible for disclosing anything that they do know about the property. With bank owned properties it is safe to assume that the bank has never seen the property and that they do not know anything about it.
Buying "as is" doesn't mean that a buyer can not have a home inspection and it doesn't mean that a buyer can not write an inspection contingent offer. Buyers should have home inspections, so that they know what they are buying. If the home has some problems that are two expensive to fix the buyer should be prepared to move on.
With bank owned properties sometimes the water is turned off. Often this is because no one paid the water bill, so the water is turned off at the street making it impossible for any party to the agreement to turn it back on. It is not possible to have a complete home inspection with the water turned off. Complete means an inspection of all of the systems which includes plumbing and heating. I have never met an inspector who could do a complete home inspection with the water turned off.
It doesn't hurt to add some wording to the purchase agreement stating that the water and electricity and the gas must be turned on for the buyers inspection.
Buyers should not accept no for an answer when they ask to have the water turned on. They should not have to ask to have the water turned on but often it works that way. It might be a good idea to check for utility services before submitting an offer. The water can be turned on and it must be turned on for a complete home inspection.
For FHA financing the FHA appraiser will not do an inspection if the water has been turned off which means that the property can not be financed through FHA.
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This is especially true like you said about REO properties. Most times the banks can care less about the homes or whats wrong with them even if their told. They just want to sell them quickly, all buyers should be very carefull to fully inspect REO properties fully before going through with a purchase.
Doing your diligence is always a good idea, but REO properties have to be expected to be in worse condition that a the average home.
Here in New Jersey we have the added condition of the buyer being responsible to get what is called a certificate of occupancy. This can be a major pain since in many towns it is impossible to close a real estate transfer without a C of O. Often the buyer of as is property will find themselves having work done in a home they do not own yet, in order to get the C of O.
In Florida, at least here in the Tampa area, many of the utility companies will turn on the power and/or water for a 24 hour period to allow you to complete the home inspection. The problem is it can sometimes take more than 14 days to get the utilities turned on, so you need to adjust your inspection period to accommodate the additional time.