Becoming the detective; How to find and purchase abandoned homes

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Published Date 9/27/2021

If you were around for the real estate bubble in the recession/early 2000s, you may remember driving through neighborhoods with so many abandoned homes that there were tumbleweeds drifting down the streets. But how do you find them now that real estate is at a premium?

Realtor’s Angela Colley says you won’t find them by looking for “for sale” signs. But abandoned properties that are unclaimed by their owners are potential low-cost purchases that may actually be attractive to prospective home buyers. “An abandoned property is usually a property whose original owner is no longer in possession of the home,” says Colley. “Due to the owner’s financial difficulties, the house is run-down and in need of repair. If the law in your area allows you to claim this type of home, it might be worth investigating.”

Not all these properties are in dire shape, however. Some turn out to be in remarkably good condition, with the owners merely trying to unload the property before foreclosure. “This could provide the right buyer with an opportunity to purchase the abandoned property or unclaimed home at a discount—and possibly a significant return on investment if you later flip it,” says Colley.

She advises first to review your financial situation. “Remember, there will be additional expenses over and above the original sale price of the property. A pre-qualification from your bank or lender will help you estimate what mortgage amount you qualify for. Many banks also require pre-approval letters, so you can make quick decisions on the property you wish to purchase.”

She goes on to say that most abandoned homes are on their way to foreclosure, but the bank is not yet involved. So you have to put on your super-sleuth hat to find them. Look for homes whose listings contain certain phrases that may indicate an abandoned property, such as “immediate possession,” “must sell,” “below market value,” or “under appraisal.”

Enlisting the help of a Realtor may help tremendously, as agents have valuable knowledge of abandoned properties in the area. They can often provide you with a selection of homes about to be foreclosed on by the bank. “Some properties may look abandoned, but are not listed for sale. You might also check into the laws regarding unclaimed property and whether there is a statute of limitations on its return,” says Colley.

Next steps? If you run across an interesting unclaimed property like this, visit your county clerk’s office for information about the homeowners, the home’s current appraised value, liens, or tax issues. Then try tracking down the owners and asking them to sell their property. If the property has had liens or tax problems, the owners might be more willing to sell.

If all else is assumed (you have found a potential home, have the cash, and/or have been pre-approved for the purchase), you will want to figure in the costs that will be needed to get the home into good condition. Colley recommends getting a thorough maintenance inspection performed on the property, and note what needs to be fixed and how much it will cost. “Claiming a property like this also involves adding in the cost of the appraisal fee, pest and lead inspection fees, title insurance, closing costs, and other legal fees,” she says.

Then do a final crunch to the numbers before you consider offering a bid to the owner. “A real estate agent can also accompany you to the house and point out the extra expenses you will incur after the purchase of this property,” says Colley. “The agent can also help you figure out how high your bid should be. Look for the right opportunities, and you will find the home that is just right for your budget.”

Realtor, TBWS

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