Like giant vacuums, investment companies have been buying up vacant homes in recent months, often negotiating rock-bottom prices in exchange for speedy, all-cash sales.
"Investors are purchasing lots of foreclosed properties, often at huge discounts and right on the courthouse steps. If a home's location is favorable, they'll even risk buying it sight unseen. Then they'll fix the house up for quick resale at a huge profit," said Ashley Richardson, a veteran real estate agent.
Granted, not every neighborhood has leftover vacant homes still going through the foreclosure pipeline. Some areas have become so competitive that almost all the distressed properties already have been taken, and multiple bids for the remaining stock are common.
But in many other neighborhoods, savvy and tenacious homebuyers can snag a decent deal on a vacant property, one with good bones that needs only cosmetic upgrades to regain its luster, said Richardson, who's affiliated with the Council of Residential Specialists (www.crs.com).
According to Richardson, the key to finding a bargain among vacant homes is to look for one that lacks the kind of staging that would show off its visual potential.
Merrill Ottwein, a real estate broker and past president of the National Association of Exclusive Buyer Agents (www.naeba. org) estimates that 80 percent of vacant properties now for sale are in fair to good condition. But he cautions that the rest includes "dregs" that have been neglected or abused by their owners.
He urges those considering the purchase of any vacant home to make sure they're getting a true deal rather than a money pit that could require large amounts of cash to bring it up to a livable standard.
Here are a few pointers for homebuyers:
Seek out information on a home's former occupants.
It can be hard to obtain details on a property that's been vacant for months if its owner has moved to a faraway state. It's still tougher if the home has fallen into the ownership of a bank.
"Sometimes agents clam up about a home, especially if there's negative stuff in its background," Ottwein said.
To find out about the history of a vacant property you like, he said your best sources are often neighbors.
"It's advantageous to find out if the people who lived there were fastidious about upkeep and had pride of ownership," Ottwein said.
Think about a "pre-inspection" of a vacant place.
Has a vacant property you like gone unsold for so long that you're nervous about hidden problems? That being the case, you may not wish to bid until you can garner more information from a home inspector who takes a preliminary look at the place.
Ottwein said he had a client who was so worried about a crack in the foundation of a colonial-style house that he spent $200 for an abbreviated home inspection. The inspection revealed the crack signaled a serious problem with the home's foundation. Knowing that, he walked away from the colonial and bought a nicer house in the same neighborhood.
"The sooner you know about any serious problems with a property, the quicker can you walk away and find something better," Ottwein said.
Make sure the utilities are on when an inspection is done.
Dorcas Helfant, a former president of the National Association of Realtors (
), said cost-conscious banks that own residential property often turn off the utilities, including gas, electric and water, to save money. But without functioning utility services, home inspectors find it hard to perform their job, she said.
"With the utilities off, you really can't tell if all the systems are working properly," Helfant said.
Even if you have to pay to get utility service restored for an inspection, she insists it's worth the expense.
"Make sure your utilities are on or your home inspection could prove worthless," she said.
Review neighborhood sales before making an offer on a vacant home.
"It doesn't take long for the buyers' agent to assemble information on neighborhood sales. With just two or three clicks, we can find out the price history of the 20 properties closest to the home you like," Ottwein said.
He said that ideally you'll want to review at least three similar properties that have sold in the immediate area in the past three to six months, adjusting for differences, such as a larger garage or a second fireplace.
It's always wise to take a home's condition into account when judging its market value. But Ottwein recommends against seeking out-of-proportion discounts to compensate for relatively minor flaws, like a bedroom painted an unpleasant color.
"Don't get carried away when judging these small issues," he said.
Keep your emotions in check when bidding on a home you love.
During the recent financial crisis, many vacant properties owned by banks were given extremely low prices to clear inventory. And while banks are now pricing many repossessed homes more realistically, Ottwein said it's still possible to find a bank-owned home marked below market.
He said the current risk for many buyers is that knowing they're likely to face competition from other bidders they'll overshoot a property's true market value to beat out rivals.
"If you're crazy about the house, you'll be especially susceptible to overpaying for a property. So keep your emotions under control," Ottwein said.
Ellen James Martin, a former real estate editor at The Baltimore Sun, gives advice for anyone buying, selling or financing a home.