Are you thinking about buying an abandoned home? Although some abandoned homes may be in decent condition, there are several things you should consider before making an offer on an abandoned home. Whether you want to invest in a property or purchase a family home for yourself, these five steps will help you make a smart, informed decision.
Review your finances
Perhaps the most crucial first step to take before making an offer on an abandoned home is to make sure you can afford the purchase and are ready to make an offer. Unlike the traditional home-buying process, making an all-cash purchase is common when buying abandoned property.
If you choose to apply for a mortgage, make sure to get a pre-approval letter from your lender. You’ll also need to be prepared to have a significant down payment, ideally 20% or more of the property’s value.
Find homes for sale near you
Once your finances have been settled, it’s time to explore potentially abandoned homes you could buy. Finding these properties may not be as simple as browsing online listings, but several methods exist for identifying potentially abandoned properties. For example, you could:
- Walk or drive through your area to spot an abandoned home
- Talk with a real estate agent about any abandoned homes in your region
- Ask your family, friends, and professional connections for any potential leads
- Call the local tax office to ask whether there are any homes in the area with unpaid property taxes that may be for sale
Confirm the property is abandoned
Before purchasing a property, it’s important to understand the difference between abandoned and vacant property. In some cases, a home that has not been lived in for decades and is starting to fall into disrepair may be obviously abandoned. However, in other cases, the house may be in good condition, and the status may not be as clear.
In general, pre-foreclosure or foreclosed homes are considered abandoned. These homeowners may have missed property tax or mortgage payments or may have borrowed against the house without being able to repay the loan. In these instances, the home may be considered abandoned. However, if you purchase this type of abandoned home, the owner may have the right to repurchase it in the next three years, depending on state laws.
Inspect the property and carefully calculate the offer
The condition of abandoned homes can vary widely, and the price you offer for a property may depend on how much you’ll need to invest in repairing the property. Make sure to:
- Request a property inspection
- Use the report to calculate a fair offer price
- Put in your offer
Take over the abandoned house as the owner
If your offer has been accepted, congratulations! Once you take over as the owner, you have several options to consider. You can fix and flip the property, turn it into a rental property, keep it as an investment property, or renovate it for personal use..
All in all, there are a few takeaways to remember before buying an abandoned home.
- Save up a significant down payment or prepare to make a cash offer
- Identify potential properties to purchase
- Confirm that the property you’re interested in is abandoned
- Get a property inspection and make a reasonable offer
Purchasing an abandoned home, whether for a real estate investment or to live in yourself, involves different considerations from a typical home purchase. If you’re interested in an abandoned property in your area or simply want to learn more about the process, these five basic steps are essential to your success.