Like most other types of financial investments, there are both benefits and risks associated with buying condemned properties. Having multiple code violations is the primary reason a house will be condemned. A local government agency will seal the house and post a sign that forbids anyone from living there.
There are a few other reasons a property may be condemned. The owner is given the opportunity to clean up and repair the property and then appeal to have the property inspected and declared fit for occupancy. If the repairs are not made within a specific period, the local government will seize the property. A condemned house list provides the addresses of condemned properties within a specific area.
It may also include the name of the owner or property taxpayer as well as the date of condemnation and the reasons the house was condemned. Prospective buyers can look at the exteriors of homes on the list but typically are not allowed inside.
This is where real estate agents, appraisers and contractors have an advantage over less experienced buyers since they have a better understanding of structural issues.
Cities and counties that manage condemned properties make lists available to the general public, either free or for a small fee. The first place to check is with the local building department. Some jurisdictions provide a website that lists vacant and condemned properties. Many cities and counties also provide reverse searches so you can provide an address and find out if a property is condemned or about to be condemned. Purchasing a condemned property is very similar to buying any other piece of residential property.
Buyers make offers through real estate agents. The process may be complicated if the property is owned by a bank or government agency. An experienced agent can explain condemned house rules and regulations and may be able to help find financing. If a condemned house is in foreclosure, you will probably have to wait until it has been foreclosed on before you can buy it. You may also have to pay outstanding property taxes.
But, have you ever wondered how a property ended up in that condition or what can be done with such a property? A house is condemned when the government deems it to be unfit to live in. No one is allowed to live in or use the property because it is a safety hazard. If there are occupants living in the house at the time it is condemned, they will need to move and cannot return unless necessary renovations are made to the house to address the reasons it was condemned.
If homeowners make all the necessary repairs, the house can usually be removed from condemned status. Usually, a house is condemned because of repeated housing code violations over the safety of the building. A house may be abandoned for a certain amount of time and pose a safety risk. But not all properties become condemned because they were left vacant.
Sometimes the owner has decided to renovate the house, and an inspector later finds one or more serious violations. Permits may be missing or not displayed correctly. Work being done on it may not be up to code or an inspector may deem conditions unsafe. There are other reasons properties become condemned. Some houses are condemned due to a lack of sanitary living conditions. This could occur if the plumbing is not working or the home is allowed to accumulate so much clutter as to cause infestations.
Houses can also be condemned due to the presence of black mold or because they have undergone significant structural damage. A property can be condemned for other reasons as well. For example, the governing entity may have determined that the street needs to be expanded or perhaps there are plans for some other public improvement or facility. When this occurs, the house can actually be seized by the government, even if there are no violations. This is known as eminent domain.
In these cases, the owner is compensated for the property at current market value. If you own a condemned house, your possession is seized by the government. Owners and other occupants are forced to leave immediately and signs warning that the dwelling is unfit for anyone to live in are posted in a public spot, usually on the front door. If an owner refuses to make repairs or the house is irreparable, the government may force the owner to have the house demolished at his or her expense.
They might have specific advice for whether you can make repairs or whether you should hand the property over to someone else. It is possible to buy a condemned house—and they often come at steep discounts — but there are also drawbacks to investing in this type of property. First, there will be more regulations to overcome in the buying process.
You will need to check for any liens on the property that the previous owner never paid, like property taxes and other bills. Lenders might not be willing to finance the purchase of the property. You will need to either finance the purchase with cash or work with a private lender who understands your goals. Finally, you will likely need to clear the purchase with the city. You may need to prove how you plan to remediate the condemned house to make it safe again.
However, once these barriers are cleared, you should be able to purchase the property and start improving it. Along with the lengthy process to get approved for the sale, there are some drawbacks to invested in condemned units. The main issue is that you will need to cover the costs to repair the home, so it is livable again. Sometimes, the house may need to be completely destroyed and built from the ground up. Even if you walk through the property and identify potential issues, you may discover new problems as you start remodeling that can drive up your costs and push you over budget.
These new repairs can also be time-consuming. While you are remodeling your home, you will need somewhere else to live. This could mean renting an apartment in the short-run or paying two mortgages until the renovation is complete. That being said, there are multiple opportunities for buyers who want to invest in condemned buildings. First, you can get a deal on the property. You could get a nice piece of land in a good area by looking at condemned properties. Furthermore, if you have the ability, you buy a condemned building as a second home.
Oftentimes, buyers take on these properties as pet projects to either restore a historic landmark or to practice home-flipping as a hobby. This takes the pressure off of you to renovate quickly so you can move in. Buying a condemned building can be a great financial opportunity.
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