It sounds unbelievable, but it takes years for banks to foreclose on a house in Buffalo. The protracted process—which is more than double the national average—means that instead of “For Sale” signs being placed in front of homes with immaculate whitewashed fences, eviction notices and police tape cover vandalized properties that have been left abandoned for years by their owners and not maintained by the bank. These zombie homes have become a plight that is affecting communities across the city.
Just one abandoned house is enough to make a neighborhood become immediately more unsightly, decrease property prices, and attract crime and vandalism. And there are thousands of these homes all over Buffalo. Last Year, there were an estimated 800 zombie houses in Erie County with a value assessed at $58 million. But new foreclosures are being made every day and in September, New York State Assemblyman Michael Kearns estimated that there were over 2,000 abandoned or vacant homes. While Buffalo’s residents may see these homes as a pockmark on their otherwise charming communities, experienced investors should see them for what they really are—a tremendous opportunity. With careful planning and knowledge, you can navigate the minefield that surrounds purchasing and renovating one of Buffalo’s zombie homes and turn a significant profit on these neglected and undervalued properties.
How To Purchase a Zombie Home in Buffalo
Purchasing a zombie home isn’t a straightforward affair. Not only is it difficult to find a worthwhile lead in New York City in the first place—zombie homes are typically in very poor condition—it can also be tricky to actually purchase the property that you want. That’s because the legal owner of the property isn’t always clear. And, if it is, they aren’t always easy to contact. To add another layer of complexity, how you purchase the property is determined by what stage of foreclosure the property is in.
Before Foreclosure: Because banks are facing a huge backlog of foreclosed properties throughout the country, many lenders are reluctant to risk their reputation by starting the foreclosure process on even more homes. This means that there are plenty of zombie homes that you can purchase before they go into foreclosure by following these steps:
- First, check the real estate records to see if the property has actually been foreclosed. You can also call the REO department to see if a bank is listed as the owner.
- If the bank hasn’t foreclosed, then you will have to go through the borrower to buy the property.
- Once you track the owner down, you will have to convince the owner to negotiate a short-term sale to obtain the deed. Approaching a distressed homeowner can be a delicate situation.
- Explain to them that the property is still their responsibility. That means their credit score is at risk, the bank will likely come after them in the near future to foreclose, and if this happens, they will struggle to obtain a new mortgage to buy a home.
This process can become convoluted, and only the most experienced and thorough investors will have the diligence to purchase a property in this manner. But, in patiently navigating these complicated steps, you will be able to purchase a property.
During Foreclosure: Unfortunately, it isn’t possible to purchase a property that is in the middle of the foreclosure process. That being said, when foreclosure is finally completed, these properties will be available to buy at auction. As a result, there is no reason you can’t keep your eye on a selection of properties that you think may be potential gems. In fact, by doing so, you will be able to get an edge on the competition.
Thanks to legislation passed in the middle of the year, keeping track of zombie homes in Buffalo has gotten a little easier. There is now a state registry for zombie homes that is maintained by the State Department of Financial Services and a toll-free number for the public to make complaints about zombie homes in their communities. Most importantly, however, banks are required to maintain properties that are stuck in the foreclosure process, with a $500 fine when they don’t. That means that properties shouldn’t be in too bad of a condition once they are put up for auction.
After Foreclosure: Once the foreclosure has been completed, the property can be bought at a public auction or through a real estate agent. If you don’t already have your eye on a property that is coming to the end of the foreclosure process, you can find a list of foreclosed properties on Zillow.
Remember that foreclosed homes are priced to move quickly. That means there’s plenty of value to be had, but don’t rule out negotiating completely. There may still be wiggle room in the asking price. Bear in mind, however, that because you are negotiating with a bank, the process may require several levels of approval and therefore take more time.
Finding Opportunities with HomeVestors
Ultimately, the toughest challenge with investing in zombie homes is finding the right property to purchase. When homes have been abandoned for so long, it can be difficult to identify all of a property’s problems. And there’s nothing worse than restoring a house only to find that the damage you thought was superficial is far more extensive.
As a HomeVestors® franchisee, you have access to the tools and resources to ease the process. From our development agents, who are on-hand to mentor you and offer advice when needed, to our proprietary system for evaluating properties, you will have resources at your disposal to help you create positive equity on a zombie property this year. Our strong brand awareness can even help you to purchase properties before the bank forecloses. For more information on becoming a HomeVestors® franchisee, call us at (888) 988-0575 or click here to request franchise consideration.
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