Buyer Beware: Understand 'as is' when buying a foreclosed home

When it comes to the housing market for foreclosures, buyer beware.

"One mistake that we see all the time is buyers going in and assuming all the mechanicals are working," said Brandon T. Johnson, president of GTJ Consulting in Roseville, Mich., which maintains foreclosed homes. "You have to be careful you don't get burned that way."

He recommends that buyers get private inspections on houses they want to buy to avoid surprises such as missing plumbing or water damage.

Here's a list of 10 things to watch for in foreclosed or vacant homes, from Ross Kollenberg of On-Site Specialty Cleaning & Restoration in Troy, Mich.:

 1.  Air quality tells a lot about the home's condition. Air and surface testing is a few hundred dollars well spent.

 2.  Black cobwebs, greasy gray residue on walls or a strong oily odor means soot damage points to a malfunctioning furnace and requires professional cleaning. It could be a tip-off that there was a fire.

 3.  Discolored subflooring, which can be checked from the basement by looking above for stains and small holes, indicates mold.

 4.  In an older home with extensive renovations, check with the city for permits, which will give remodeling details. Be sure disturbed asbestos or lead paint has been remediated by a certified specialist. If the home has four or five major changes, it may not be up to code.

 5.  Peeling, bubbling and discolored paint; swelling in walls or ceilings (especially around kitchens and bathrooms); and a musty odor indicate water damage and possibly moisture and mold.

 6.  Missing sinks, toilets and other fixtures could mean the previous owner took them and didn't shut off the pipes. If a pipe was cracked during the fixture removal, it could start a slow leak in the wall that is not easily seen.

 7.  Fungus growth inside cabinets, behind drawers and built-ins could mean water damage. Since water falls down, look for the source above the mold. One trick inspectors use to determine whether there could be hidden water damage is to pull out the kitchen drawers and look inside to see whether the back wall has been rebuilt. If it has, that could mean water damage has been covered up.

 8.  Excessive painting of every nook, cranny, door and floor may have been done to cover up mold. "When you go to a home that is 'landlord white' and the trim is flat, we tell people there is a reason the house was painted this way," Kollenberg said. "When we see it is over everything, it is a tip-off that it is just covering something up."

 9.  A heated house in winter months may show the home was winterized improperly. If that's the case, pipes will burst and cause water damage.

 10.  Blocked drains or pipes will cause problems and may have created sewage backups. Check for a telltale water ring in the basement, Kollenberg said.