The word “zombie” doesn’t typically generate a feeling of opportunity. (Most of our minds jump to the staggering, undead corpses from Night of the Living Dead.) However, in real estate—and particularly in markets where the inventory levels are low—“zombie properties” can provide a unique opportunity for buyers who are willing to think outside the box.
So, what is a zombie property? According to REALTOR® Magazine, “a home title becomes known as a ‘zombie’ title when the bank decides to cancel the foreclosure process on a home after the homeowner has moved out.” Why wouldn’t a bank follow through on a foreclosure? In some cases, making all the improvements needed to get a home into a sellable condition might cost too much money. In other cases, the homeowner may not even be aware that the bank has pulled out, meaning they’re still responsible for the upkeep and for paying taxes on it.
Still not feeling the spark of opportunity? Here’s where YOUR buyers come into the picture.
Zombie properties, which are oftentimes rundown and neglected, can provide a great opportunity for several reasons.
- They typically sell for well below market value. Most cities want these homes to be sold and updated quickly so that the surrounding area doesn’t lose value.
- If buyers are interested in entering the house-flipping industry, zombie properties can be a less-expensive place to start.
- If a buyer is qualified to do home repairs themselves, zombie properties have the potential garner a significant profit.
Just as the brain-eating zombies of The Walking Dead bring risk, so do zombie properties. Your buyers should be aware that these homes are often in need of extensive rehab. It’s also possible that there are unpaid taxes and fees that will fall on the new owner of the property. In addition to a qualified inspector, those who purchase a zombie property may also want to consider hiring a real estate attorney to help them navigate the process.
If your buyers put in the proper research, inspections, and elbow grease, zombie properties can be a real Thriller.