There are different ways an investor or an individual can buy an abandoned house or building. These properties become available through tax deed sales, foreclosures, bank sales, escheatment or through redevelopment projects.
1. Tax deed sale
Municipalities depend on their real estate taxes to pay for public services. When a homeowner does not pay his or her taxes for a number of years, they can recoup the money owed by selling the property via a tax auction. Many times, it has been abandoned real estate for the same reason the taxes were not paid. When it is bought, the new owner will be free of any liens or mortgages that had previously clouded the title.
A foreclosure is when a mortgage or loan was taken out on the real property. The owner did not pay his or her monthly payments. This causes the lender to sell it at auction to the highest bidder so that it can recoup the monies lost. Sometimes, before the foreclosure takes place, the owners will simply pack up and leave. This can cause the abandoned property to deteriorate and contribute to urban blight.
3. Bank owned sales
There are times when very few people, if any, show up to bid on foreclosed houses or commercial properties. The lenders or banks become stuck with them. In an attempt to get their monies back, they hire local realtors to sell at steep reductions.
This happens when the owners of vacant properties cannot be found and the property becomes unkempt and is deteriorating. Investors and individuals can have it escheated after the owner is presumed dead by the state and no heirs are found.
5. Redevelopment projects
City owed properties can sometimes be bought by individuals inexpensively. For example, in Binghamton, N.Y, the “One Dollar Healthy Homes” initiative sold abandoned real estate for a dollar each. These parcels of abandoned properties were in neighborhoods that were the most blighted.
However, whoever applied had to commit to at least $25,000 of private money and have a plan for redevelopment to even be qualified. Every redevelopment project had to be completed within a year. Eight individuals were chosen. After completion, they bring new life into the neighborhood, nurturing it for years to come.
Most think that by locating and talking with the owners they can reach a purchase agreement. Many times, the owners do not have the ability to do so. Because of loss of income, medical problems or death, vacant properties can linger for years until municipalities, investors and or individuals take the steps for urban renewal to spread.