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Looking to buy a home for a low price? Maybe you’re interested in renovating that home and selling it for a significant profit. If so, buying an abandoned home might be the right choice.
However, buying an abandoned property comes with risk. The home you buy might need significant and costly repairs. You might be responsible for unpaid property taxes left behind by the home’s former owners. Government bodies, contractors or other entities may also be owed money, which you might be required to pay.
But what if you find the right property in the perfect neighborhood? An abandoned home could let you make the move from renting to owning without draining your savings.
What Is an Abandoned Property?
There’s no official definition for what makes a property abandoned. But in general, an abandoned property is any home or building that hasn’t been occupied for at least 1 year. Properties lost to foreclosure will also count as abandoned property if no one is living in these structures.
Abandoned homes aren’t always the same as vacant or condemned properties. Vacant properties, including homes, still belong to their owners. But these owners aren’t living in the properties. Condemned properties are those that local governments have declared unfit for habitation.
You can’t buy a vacant property unless its owners are willing to sell. You can buy a condemned property, but the repairs necessary to make it livable might be so extensive that you’ll struggle to sell the property for enough money to make a profit. The repairs might also be too costly if you simply want to buy and move into a home for a lower price.
Why do home buyers want to buy abandoned houses?
Why should you consider an abandoned property when buying a house? There are two main reasons.
Abandoned properties typically sell for below market value. In other words, that empty home might be priced low enough to get you into your preferred neighborhood.
Buying an abandoned property might also make sense if you’re a house flipper – someone who buys homes as investments, renovates them and then resells them for a profit. Because abandoned homes come with a lower price tag, it’s easier for investors to buy them and make a solid profit when they sell.
The challenge is making sure the cost of repairing an abandoned property isn’t so high that it outweighs the savings you’ll get when buying it. Some abandoned properties reach the market with serious damage. The repairs they need might be so expensive that buying the home isn’t a wise financial move, even at a discounted price.
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How Find Abandoned Properties for Sale
How do you find abandoned properties on the market? There are several approaches you can take.
- Hire a real estate agent: Working with a real estate agent who knows your market is the best way to find abandoned properties for sale in the neighborhoods where you want to buy. Many abandoned properties are on the edge of becoming foreclosures. Your real estate agent can help you find abandoned homes that haven’t been foreclosed on yet. This is a good time to get a bargain, since most banks and lenders would rather find buyers for homes before having to foreclose on them.
- Browse online listings: You can also search online home listings for properties that are abandoned. Some listings might explicitly state that a home is abandoned. Others might hint at this, using terms such as “immediate possession” and “must sell” that signal a property is abandoned.
- Attend a property auction: Government agencies, banks, lenders and others hold these auctions when they have real estate they don’t want. Their goal is to sell these properties quickly at an auction, meaning you might nab a good deal. You can find auctions by working with a real estate agent, checking with your local county clerk’s office or searching online listings.
- Drive around your area: It might be time-consuming, but you can also find abandoned homes by driving around the neighborhoods that interest you and looking for properties that appear vacant. You can look for overgrown yards, boarded windows and multiple for sale signs. But be careful: Never step onto the property or enter an abandoned house. Instead, take down the address and check with your local recorder of deeds office or county clerk’s office. These offices should have documents listing the last known owner of the property, which might be an individual or a bank.
How To Buy an Abandoned House in Five Steps
Purchasing an abandoned property can be beneficial to buyers looking for a bargain. But the process does take time and research. Here are the key steps you should take when searching for an abandoned home.
1. Find an abandoned property for sale
Finding abandoned properties can be challenging. Your best move is to work with a real estate agent familiar with your market. You can also search online listings, attend a property auction or drive through neighborhoods you’re targeting to look for properties with overgrown lawns, boarded-up windows or several for sale signs.
2. Determine whether the house is abandoned
Again, working with a real estate agent can help you determine whether a house is abandoned or simply vacant. Never step onto the property or enter a home you think is abandoned.
3. Contact the property owner
You can find the most recent property owner of an abandoned property at the office of your county’s recorder of deeds or your county’s clerk. Your real estate agent can also find the contact information of the last known owner. Depending on the home, there are different types of property owners for abandoned houses. The most recent owner might still be the home’s individual buyer. But if the buyer lost the home to foreclosure, a bank or lender might own the property. If the former owner didn’t pay their property taxes, a local government might own the home. Whoever the owner is, you should contact that person or entity to start the buying process.
4. Make a bid or an offer
Once you reach the owner, it’s time to make an offer on the home. A real estate agent can help you make the right offer by looking at comps in the area. You might hire an appraiser to determine the current market value of a property.
It’s also important to order a home inspection. An inspector can tell you if there are serious, and costly, problems with the property or repairs that might be so expensive that they outweigh a lower sales price.
5. Close on the house
If you and the owner agree on a sales price, it’s time to close on your mortgage. This process can be time-consuming. You’ll need to provide your lender with copies of documents that verify your income and other assets, including copies of your bank statements, income taxes and paycheck stubs. Your lender will also check your credit score and credit reports to make sure you can afford your mortgage and that it’s in your best financial interests.
Pros and Cons of Buying an Abandoned House
There are several benefits and challenges involved with buying abandoned homes.
PROS of buying an abandoned house👍
Abandoned homes typically sell at below-market prices.
If homes are too expensive in a community where you’d like to live, you might get into the neighborhood by buying an abandoned property at a lower cost.
Most buyers aren’t interested in purchasing a property that requires extensive renovations. So your odds of getting into bidding wars are lower when buying an abandoned home.
CONS of buying an abandoned house👎
Many abandoned homes reach the market with serious damage. Repairing these homes, or just making them livable, might cost tens of thousands of dollars – or more.
Abandoned homes aren’t marketed as extensively as other properties. You might have to work with a real estate agent or search out property auctions to find these homes.
If the previous owners of your home stopped paying their taxes, you might be required to pay the bill. That’s because unpaid property taxes stay with the real estate, not with the owners. If other entities have liens or ownership claims against the property, such as contractors who’re owed money or a bank that’s owed mortgage payments, you might have to pay off these lienholders before taking possession of the home.
An Abandoned Home Could Open the Door to Homeownership
Buying an abandoned property can come with serious cost savings. It also comes with risks. But for the right buyer – especially investors hoping to make a quick profit – abandoned properties might prove lucrative.
