Tips for Buying an Abandoned Property
Though not attractive to most people, buying an abandoned property is a great bargain. Besides the difficulties of finding abandoned properties, you can’t be certain about the property’s condition. Nonetheless, abandoned properties that remain unclaimed by owners are low-cost purchases that can attract prospective buyers.
If your state laws allow for purchases of these properties, either directly from the owner or cash home buyers tasked with selling an abandoned property, below are a few things to consider for a fruitful purchase.
Why Do Homeowners Abandon Their Homes?
Most homeowners abandon their homes for the following reasons:
- High repair and renovation costs – Home maintenance, repairs, and renovations, especially termite and mold problems, are incredibly expensive. Most cash-strained homeowners are forced to move out of their properties until they can source enough funds to conduct these renovations. Unfortunately, a big percentage don’t return, leaving their home to fall into further despair.
- Families reluctant to sell – Some properties also sit abandoned for years if the owner dies. Some families struggle with the loss, making it hard for them to manage the estate. Homes also remain abandoned during the probate process.
- Natural disasters – Natural calamities, such as hurricanes, floods, and tornadoes, and ecological disasters, such as air and water pollution, can also force homeowners out of their homes. Most homeowners don’t prepare for natural disasters, and repair costs can quickly add up, especially if they don’t have insurance.
Buying an Abandoned Property Near You
Buying an abandoned or unclaimed property follows the same real estate buying process. Before searching for the property, you should organize your finances. You can start by applying for mortgage prequalification from banks or lenders. With this, you can easily shop for abandoned properties knowing your mortgage limits.
If you have been preapproved and found the potential property, you should figure out how much you need to return the property to good condition. While abandoned properties are sold cheaply, they present serious repair and maintenance challenges. Most abandoned properties require extensive repairs.
You should conduct a thorough inspection to identify what can be fixed and what should be replaced. Besides the expensive repairs, you should prepare for remediation, especially for old homes that used asbestos materials for insulation. Most, if not all, abandoned homes also have dilapidated plumbing, electrical, and HVAC systems that require complete replacement.
Extensive inspection also reveals abandoned homes with significant structural damage from water, mold, or termites. You shouldn’t be satisfied with the exterior appearance of the house. You should look closely and inspect thoroughly before making an offer. Generally, you should have an extra budget to cover appraisal fees, title insurance, legal fees, pest, lead inspection, and closing costs.
Abandoned homes are generally sold below the market value, which makes them attractive to potential homebuyers. However, before you invest in an abandoned home, you should evaluate the basics. Worth noting is the condition of the house. While these homes are priced fairly, you shouldn’t invest in a property that requires very costly renovations. If the property is in an upcoming neighborhood, tearing up an extremely dilapidated house and building a new one is prudent.