Say a bank forecloses on a house and the occupants move out. How much does it cost the bank per month or year for the house to sit vacant?
I ask because (around here at least) there are no ‘fire sale’ type prices on foreclosed houses owned by the banks. Are upkeep costs low enough that banks are just holding on to houses while waiting for prices to improve?
We looked at one that had been on the market for six months for which the bank was paying no upkeep costs at all, other than (presumably) property taxes.
The yard was totally overgrown and the water in the toilets had receded until sewage had started flowing out of them (happens quite often in FL).
Interesting. Was it priced any cheaper than a comparable house in similar condition? Was there any indication that the bank was more motivated to sell than a private owner?
The cost can depend on location and local government. Some localities are passing laws that if the bank lets the house go down the city will come in and clean up. Then send the bill to the bank. If the bank does not pay the city will foreclose on the property.
My agent’s company is responcible for one banks properties, they are the listing agents. The bank requires them to keep the property clean. Remove any tagging and such. The agency pays for the work as necessary, puts a lein on the property and when the property sells they get their commision and repair expences.
Yes, to your first question. Not really, as to the second. I mean, I suppose they might have thought that to some buyers, a house that came with all the raw sewage you could eat was a dream home.
Not so much to us, though.
We actually wound up buying a non-foreclosure a block down the road, and as it happened the bank sent a team in to gut and refurbish the place a few months later.
I don’t think this article from the Chicago Tribune has the photos of the print edition (my browser is being grouchy ATM), but the first paragraph has a pretty good description of how little upkeep is done on some of these places: “The house at 1691 Paul Ave. in Glendale Heights needs a lot of work. Its interior walls are covered in ice, its ceiling tiles have crashed to the floor and a 2-foot-high water mark reveals a former flood.”
From what I know, most long-abandoned places just get boarded up eventually to prevent squatters/theft of metal inside - if that much attention - and they slowly turn into wrecks.
In some parts of Florida, banks are turning a blind eye to homeless organizations putting families into foreclosed houses, because the families are taking care of the houses. One wonders if its such a problem, why the banks are bothering to evict people to begin with.
I doubt it costs them much. Because they don’t do much.
I’ve been looking at condos for a couple of months. Many were foreclosures. Basically it seems as though the bank does nothing except keep the heat just high enough to prevent the pipes from freezing (usually 50 F).
You talk of an overgrown lawn? Hell, most of the foreclosures I saw they hadn’t even bothered to clean the place. Appliances ripped out, crayon on the walls, dust and filth everywhere. You’d think they’d want to present the place well to get it to sell, but nope.
Fortunately I found a place. Or rather - my business manager has a place he is desperate to sell. He’s selling to me at a real steal. I move in in a week.
Yeah. When we were looking to buy a house in fall of 2007, we looked at a couple foreclosures in our neck of the woods…horrible.
One house especially came to mind. From the outside, a really nice house, although the driveway was insanely steep (as are a lot of driveways in Hidden Valley Indiana).
It was a warm day, our realtor escorted us into the house, and BAM…cat urine odor so overwhelming that my Mom had to wait outside while Dad and I looked at the place. It was built in the late 1990’s, had 4 BR, was actually once a really nice home, but the previous owners had trashed the place.
There was the insane cat urine odor (meaning all the carpets would have to have been ripped up and replaced), water damage to the baseboards in the basement (warping), all the appliances were literally ripped out with no care as to their fittings and connections, the place had a clear “as is” foreclosure notice on the front door…
So we bought that house and…OK, we passed, it was terrible.
We found another house in the same subdivision that met our needs.
That freaking house we looked at though…the bank clearly wasn’t interested in selling the property AT ALL. Sounds like a common issue with foreclosures, for obvious reasons.
I guess you missed the part about the raw sewage covering the entire floor of the home.
I work for what’s called a Field Services company. The lenders/banks hire us to inspect and maintain their properties. From some of the comments earlier in the thread, it’s obvious that not all lenders are overly concerned with the condition of the houses they own or will soon own. My post will deal with the lenders who care or appear to care about the condition of their assets.
The process doesn’t start at foreclosure. Lenders will order an inspection for various reasons usually when the borrower is late on their payments or from circumstances surrounding bankrutpcy. The primary reason is to determine if the house is occupied or vacant.
Houses become vacant a number of ways. The borrower can just leave without notifying anyone. Some of these people vent their frustration by damaging the property before they leave. To discourage this some lenders have ‘cash for keys’ program where they will pay borrowers to turn over their keys and leave the house in good condition. Other borrowers stop making payments but stay in the house until they are evicted by the sheriff.
If the house is abandoned it will be secured by rekeying or replacing the locks and boarding broken windows. Any damages that could become worse such as a leaky roof or burst pipes are addressed.
Once they have started and loan payments have not resumed inspections are typically continued on a monthly basis at an average cost of $10 to $30 per month.
Once the lender has assumed responsibility for the property, depending on the location they have to take care of the yardwork and/or winterizing. Yard work can range anywhere from $15 for a small yard to hundreds of dollars every other week for large acreages with bushes. Winterizing cost depends on the type of heating system and whether the utilies will remain on with their associated cost.
At some point in the process any damages will be addressed. That can range anywhere from holes in the walls to a cracked foundation.
If the lender goes to forclosure, among other things they have to clear out any garbage and debris and put anything of value into storage for the owner to claim. Costs can range from tens to thousands of dollars.
Some cities are starting Vacant Property registration programs. I’ve seen one-time fees ranging from $40 to $2,000.
Those are just some of the costs associated with maintaining the property itself. I don’t know how property taxes are handled and I don’t know what court costs are assoicated with eviction and/or forclosure.
If you’re still interested, give me a state or section of the country and I’ll ask around work next week to find a typical cost per year.
Interesting. I had no idea that banks were neglecting properties in other areas too. I thought we were an anomaly! A nice house here in town was foreclosed when the owner died (before making a payment). The city tried to talk with someone at the bank but no one returned calls or responded to certified mail.
So the city cuts the grass, and the mayor shut off the water (from the outside) hoping to keep the pipes from freezing. It’s been almost two years. The house is still empty. The previous owner would like to buy it back but nobody at the bank will talk to him, or his lawyer. They’re not gonna get their money back that way. It’s bizarre.
Have your friends check with a lawyer and see if you can put together an “adverse possession” case. You’ll basically need to drop by every week to maintain the place, pay the taxes, and continue depositing the mortgage payments in the same escrow account the original owner was paying into. It’s a more aggressive version of squatter’s rights that (depending on your lawyer and the law in your state) has a better chance of working than trying to talk to a bank that won’t talk.