With the rising price of real estate, buying a new home has become a distant dream for many. That being said, many people have found a way out by buying an abandoned home for cheap. As the name suggests, abandoned homes are properties that remain uninhabited by their owners. This negligence results in the house being run-down and in need of major repairs and renovations—an attractive opportunity for those looking for a fixer-upper.
Types of abandoned homes
When it comes to abandoned properties, there are two main types one must know about.
Distressed properties
These homes are in poor shape due to negligence and lack of maintenance, which may result from the owner’s financial hardships.
Off-market properties
Often, agents try to make a sale without listing the homes online. This could be done to maintain privacy or attract specific buyers.
Steps to buying an abandoned property for sale
The process of buying an abandoned home for sale is the same as buying a regular home. That being said, buyers must exercise extra caution and weigh the risks involved before putting down a down payment.
Check financial situation
Even though these tend to sell for cheaper, abandoned homes can be a significant investment—both in terms of purchasing and repairing them. Before setting out to buy a new home, it is a wise idea to check one’s financial situation and ensure that one can budget for it.
Apply for pre-qualification
People generally rely on financing options from banks and lending institutions for big purchases. If one is planning to rely on these methods of payment, it may be better to apply for pre-qualification. This will give one a better estimate of the loan they are eligible for and help them pick better. It will also help smoothen the sale/buying process.
Find an abandoned home for sale
While the real estate market is full of property options, abandoned homes may be more difficult to come by. They are generally listed separately. While they are not the most beautiful or aesthetically pleasing, they can be rather affordable.
In most cases, these homes are on their way to foreclosure, but the bank has not initiated the process yet. As a result, many sites list them under the foreclosure or pre-foreclosure section on their website. Kickstart this search by looking for terms like “abandoned homes near me” or “abandoned homes for sale near me” on the browser window. Other specific search terms that could get one closer to finding a cheap abandoned home for sale near them include “immediate possession,” “must sell,” “cheap,” “below market value,” and “under appraisal.”.
These homes can also be found at local auctions, wherein they are sold for way less than their asking or listed price. While this may sound enticing to many, it is important to note that properties sold at auctions cannot be inspected beforehand and are generally sold in an as-is condition. This means the buyer will have less information about the repairs required to get the house up and running. A drive to the property before the auction may give individuals a better idea of what they are getting into compared to judging the space by pictures alone.
Alternatively, one can directly talk to their real estate agent. Since these agents’ expertise lies in the local real estate market, they can guide individuals toward abandoned or foreclosed homes in the area.
Suppose one runs into abandoned property in their area that has not been listed for sale. In that case, they can also head to the county clerk’s office to find more information regarding the house’s owner, current appraised value, liens, taxation status, etc. This can help individuals track down the owner and convince them to sell the property.
Consider the risks involved
It’s highly unlikely that an abandoned home will be free of risks, problems, or complications. The long periods of negligence and lack of maintenance have likely resulted in major issues around the home. The most pressing, perhaps, is the cutting off of utilities such as water, gas, and electricity. The home could also have wiring problems, water leaks, or structural issues, which can be expensive to fix.
That’s not all. Obtaining insurance coverage for an abandoned home is more challenging. Most companies would be unwilling to provide a policy without a complete inspection from one of their professionals. This is due to the increased susceptibility of an abandoned home to various issues such as vandalism, fire damage, broken roofs and pipes, stolen wiring, pest issues, and mold, all of which can significantly increase the costs involved. That being said, some companies may be willing to provide a policy if certain requirements for fixes and renovations are taken care of beforehand.
Place a bid
After shortlisting a home, it’s time to place a bid on it. While doing so, be sure to account for any additional costs it may take to make the house functional again. Factor in expenses such as professional maintenance inspections, renovations, appraisal fees, pest and lead inspection fees, title insurance, closing costs, and other legal fees. Work with the real estate agent to come up with an appropriate bid amount for the property and file the paperwork accordingly.