How to Buy Abandoned Property
Abandoned property is typically sold for a much lower sales price than market value, but be sure to account for repair and renovation costs!
Written by Abbey Orzech
Reviewed by Melanie Reiff
To buy an abandoned property, identify the owner, assess the property's condition, and work with a bank or lender to make sure you can properly finance it. Abandoned properties often come with a price tag way below market value—but potentially high renovation and repair costs may cause you to think twice before making a purchase.
For the right kind of person, buying an abandoned property can be a huge success. Others may want to steer clear of all the extra work involved.
Before you decide to purchase an abandoned house, make sure you take the proper time to consider all the potential expenses and extra actions necessary to really reap the benefits.
To help you decide if buying an abandoned property will be a good move for you,
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What constitutes an abandoned property?
A property is considered abandoned when the owner walks away and forfeits all rights to it, or the property went into foreclosure. This can happen in a few ways:
- The owner is too far behind on their mortgage payments to feasibly catch up.
- The owner borrowed against the property but at a much higher amount than the property is actually worth.
- The owner died and left behind debts on the house that have been transferred to their heirs, who can’t or don’t want to pay the mortgage.
Since these conditions often lead to the home deteriorating, you’re likely to need to commit to a lot of repairs in order to make this house attractive and livable again.
MORE: How to buy a foreclosed home
How to buy abandoned property
Although much of the buying process for an abandoned property is similar to a regular property, you’ll have to do a bit more work to buy an abandoned property. Here are the extra steps.
Identify the owner
One of the hassles you'll face when trying to buy an abandoned property is identifying the owner.
Abandoned properties often don’t have clear ownership. The bank or mortgage lender may own the property if it was repossessed, it may be in the process of foreclosure, or it may be owned by the previous owner’s next of kin.
Once you’re able to locate the true owner, reach out to them to begin negotiations.
Analyze the condition of the property
You'll want to get as much information as possible about the condition of the property before deciding on a purchase.
Many abandoned property sellers won’t allow a property inspection before purchase, so be aware that you may be going in partially blind. Unsurprisingly, abandoned properties are typically marked with damage and disrepair due to neglect.
Getting an idea of the property’s condition (however you can) will help you decide if the purchase is worth it. Just make sure you’re not trespassing in the process!
Consider financing challenges
The low sales price of abandoned property can seem very enticing, but unless you’re able to offer a cash payment, you may have a hard time getting a loan.
Mortgage lenders aren’t eager to provide loans for properties with structural damage and major liabilities.
You may be able to finance the property through the bank that owns it or your bank, but you’ll probably face a much higher down payment requirement than you would for non-abandoned properties.
Also, keep in mind that the total expense of buying abandoned property depends primarily on the state of the home, so it’s hard to predict a specific number.
Finding abandoned property
Abandoned property isn’t advertised as readily as regular property, so it can be a bit difficult to find what you’re looking for.
You could (and many people do) journey around prospective neighborhoods looking for abandoned property. The main problem with this method is that you won’t know who the property’s owner is right away.
If the idea of a hopeful drive doesn’t sit well with you, local real estate listings can be helpful as long as you input the right keywords. Try searching for properties listed with “immediate possession,” “must sell,” or “foreclosure.”
Consider also getting in touch with a local real estate agent. They’ll have the inside knowledge about the properties in your area and the law regarding how to buy abandoned property in your state.
Another option would be to check with your county’s tax office to find properties that have missing property taxes or advertisements for tax deed sales.
Be aware, however, that your state may have laws in place that make it legal for the original owners to pay their back taxes and debts within a certain time frame in order to reclaim the property—even if the deed had been sold already.
Abandoned, vacant, or condemned?
If you want to buy an abandoned property, it will be helpful to know the differences between abandoned properties, vacant properties, and condemned properties.
A property is considered abandoned when the owner leaves and forfeits all rights to it. Property is vacant when the owner isn’t around but still legally owns it (no matter its condition).
Property is condemned only when a government entity declares it so. This will be in response to unsafe or otherwise unlivable conditions, and no one will be able to officially inhabit that space until repairs have been made.
Pros and cons of buying abandoned property
Buying an abandoned property to flip into your new home or rental property is an exciting prospect—but it’s crucial to weigh the pros and cons before you lock in to a purchase.
Pros:
- Low sales price on the property
- Less buying competition
- Potentially high return on investment
Cons:
- More legwork involved
- Very expensive repair and renovation costs
- Fewer financing options than normal
- Lack of information about the property
- Possible assumption of the previous owner’s debt
Ultimately, the decision of whether to buy an abandoned property will depend on your financial situation and your willingness to potentially take on a lot of work.
Be sure you think through all aspects of the project—such a big investment deserves the proper consideration.
How to easily find home insurance
Sometimes a place just grabs you and makes you immediately see its potential. That abandoned property could be your future dream home with a little (maybe a lot) of patience and TLC.
If that’s the case for you, you’ll want to make sure your dream home is protected with a great home insurance plan.
But let’s be honest, choosing the correct coverage can be overwhelming—and it’s not exactly ideal to add stress to an already-stressful project. That’s where
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FAQ
Where can I buy abandoned property?
There are several options for finding abandoned property to buy. You can drive around your area looking for potentially abandoned property and try to find the owner, check your local real estate listings for keywords like “foreclosure” and “immediate possession”, ask a local real estate agent, or head to your county’s tax office for any advertised tax deed sales.
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