Many boarded up, abandoned and dilapidated houses are seen as eyesores in communities that are flanked with beautiful homes with manicured lawns. The term “zombie property” is said to have been coined from news outlets researching information on the phenomenon of homeowners who were under the assumption that they lost their home to foreclosure, only to receive bills relating to that home years later.
When a home is in zombie foreclosure, the owner receives a notice, move out in hopes that the bank or a potential home buyer will pick up where they left off. Often times this isn’t the case and the homes are left to languish with the homeowners’ name still attached to it.
These zombie homes are often left to rot and deteriorate due to lack of maintenance. They can also bring property values down in the neighborhood and are sometimes used for illegal activity such as squatting or illicit drug use.
According to RealtyTrac, there are over 300,000 foreclosed zombie properties nationwide. The housing data company that analyzes foreclosure activity came up with the figure after cross referencing addresses of homes in foreclosure within the first quarter of the year with vacant property data from the Postal Service.
Properties owned by banks were not included in this figure. In fact, 35% of all foreclosed properties were seen as abandoned or the owner had moved out thinking they were free of any liability of the home.
Florida leads the nation with the highest number of zombies, over 90,000. This was followed by Illinois with over 31,000 and California with 28,000. The zombie trend is a fairly new one and research is constantly ongoing.
Banks may not follow through with the process of bearing the responsibility of zombie properties for a number of reasons. The property is a high liability, the wait time to process a filing is time consuming and the bank may be responsible for property taxes and other costs with the home.
The previous owner is also subject to harsh penalties, risk being sued for back maintenance fees or jail time if the zombie home isn’t in compliance with zoning laws.
Not all zombie properties are destined to be a detriment. They actually can provide the opportunity for agents and house hunters alike to snag these houses from distressed homeowners via a short sale.
RealtyTrac has a feature on its site which will identify zombie properties. It’s important that the previous occupant be aware of their status once they leave the property.
Homeowners shouldn’t assume that they’re not accountable for the costs associated with the property unless the title is transferred over to the new owner.
If you’ve experienced this, follow up with your local municipality to make sure your name is no longer attached to the property. Hire a professional real estate agent who can assist in selling your property.
A homebuyer can sometimes find a gem, and cash-in on a zombie property, provided they take the necessary steps to ensure all issues are resolved with the home. Would you consider buying a zombie property?