When you get into real estate, whether buying or selling, you’ll quickly realize there are many different types of homes. One type of distressed property is a condemned house.
A condemned property is one that has been determined to be unsafe or unusable.
A property or building is condemned when the government declares it uninhabitable due to specific problems. The local government or appropriate regulatory bodies will most likely make this decision.
If a home has been condemned, the municipality may require the owner to make necessary repairs and have an inspection before being allowed to live in it again.
Sometimes a house condemnation doesn’t mean there isn’t a chance for restoration. It will depend on the circumstances and why the house was condemned.
Houses that have been condemned can be a significant financial burden. For some people, it can mean the end of the road. For others, it can be the perfect opportunity to get into the real estate game.
Some condemned properties become abandoned houses, while in others, the owners will look to get back on solid financial footing and make the necessary repairs.
Let’s look closely at what to know about selling or buying a condemned property.
What Causes Homes to Become Condemned?
There are several reasons why local or state governments could condemn property. Here are some of the most likely reasons:
- The property has become unsound structurally
- Failure of the infrastructure
- Fire and water damage
- Hurricane damage
- Extreme mold present
- Living conditions that are unsanitary
When houses are condemned, the signs are usually obvious. Typically, the properties are boarded up, there is an abundance of junk on the property, the grass is overgrown, and it looks like a disaster area.
How is a Condemned Home Determined?
The agency responsible for determining whether a property is condemned varies depending on the level of government – it may be the county, city, or state.
Usually, a house is condemned when it poses a current threat to public health and safety. This usually happens when the occupants are at risk of serious injury. Local authorities often put in motion condemnation orders.
What to Know About Selling a Condemned House?
When a house is condemned, the new owner must decide whether to demolish the property or make repairs. This decision must be made carefully, as it will significantly impact the property’s value.
If the home is torn down, the buyer will be responsible for all the costs involved with the demolition and any expenses incurred if the property is repaired.
Condemned properties are often sold at a steep discount because the condemned status has significantly affected the property value.
Houses that are condemned due to building code violations or poor conditions may not be worth renovating.
If you’re looking to sell your home, it’s important to remember that you may not be able to sell it to a traditional buyer who will get a conventional mortgage. Condemned properties often attract real estate investors or contractors familiar with properties in deplorable condition.
These types of buyers know what they are doing when it comes to rehabbing properties. They will often make them look as good as new.
When the condemned building is removed, the owner could decide to sell the property as a building lot. In that case, a prospective buyer would need to either get a loan for construction or a land purchase loan.
What to Know About Buying a Condemned House?
Buying a condemned home isn’t always as straightforward as it might seem. There is a lot of due diligence needed for such a distressed property.
The best way to prepare for a condemned property sale is to gather as much information as possible. Researching a property’s history is always vital to do. This information may include architectural drawings, engineering reports, and photos. It is also essential to estimate the cost of repairs or demolition. Doing your due diligence ensures you get the best possible deal on a property that may require significant repairs.
Buying a condemned building is significantly different than a traditional house purchase. Ensure you do the proper research so you’re not stuck with unexpected problems.
Final Thoughts on Condemned Properties
Condemned houses can be an enormous financial burden, but they can also be the perfect opportunity to get into the real estate game. They offer tremendous appeal to real estate investors and contractors with the knowledge and ability to fix them.