How to buy an abandoned property: A step-by-step guide

Driving through your neighborhood, you might spot a house with boarded windows, overgrown weeds, and peeling paint. 

These properties may be neglected, but they often present unique opportunities for savvy buyers who are willing to put in some work. If you can learn how to buy an abandoned property, you could access homes at below-market prices, whether you're looking for an investment opportunity or your first home.

Purchasing abandoned homes comes with both potential rewards and serious risks. While you might secure a property for less money upfront, you'll need to prepare for inspection challenges, legal complications, and potentially extensive renovations. Understanding the process before you start can help you make informed decisions and avoid costly mistakes.

What is an abandoned property?

An abandoned property refers to real estate left vacant by its owner for an extended period, typically showing signs of neglect like structural damage and overgrown yards. Property becomes abandoned when owners stop maintaining it for various reasons, from financial hardship and death to relocation.

Legal definitions vary by state, so take some time to research your local laws. Local authorities may declare abandoned properties based on unpaid property taxes, building code violations, or extended periods without utility service.

Real estate agents might have better insight into what it takes for jurisdictions to consider a property abandoned, so reach out to someone in your area for more information. 

The difference between an abandoned property and a vacant property

While both types lack current occupants, vacant properties are temporarily unoccupied but maintained by owners who intend to sell, rent, or return. These homes typically remain in good condition with utilities connected and regular upkeep.

Abandoned properties, on the other hand, show clear signs of neglect and owner disengagement. For whatever reason, owners have walked away, leaving properties to deteriorate. You'll often find broken windows, damaged roofs, overgrown landscaping, and accumulating liens or tax debts on truly abandoned homes.

The difference between an abandoned property and a zombie property

Zombie properties represent a specific subset of abandoned homes stuck in foreclosure limbo. When homeowners receive foreclosure notices but abandon their properties before banks complete the legal process, these homes become "zombies”—technically still owned by the homeowner but heading toward bank ownership.

Zombie properties create unique legal challenges because they aren’t exactly abandoned. Banks haven't yet taken possession, but the original owners have disappeared, leaving the properties in a legal gray area. 

During this extended process, zombie properties often accumulate significant debt from unpaid taxes, HOA fees, and municipal fines. Eventually, the bank will foreclose on the house, and it will become a viable property again. 

How to find an abandoned property for sale

Finding abandoned properties for sale requires a multi-pronged approach. Use both traditional and creative search methods like these:

— Work with a real estate agent: Experienced agents often know about distressed properties before they hit the market and can help you find abandoned homes through MLS searches and professional networks.

— Search online databases: Websites like RealtyTrac, Auction.com, and local government sites list foreclosed and tax-delinquent properties that may include abandoned homes.

— Attend property auctions: County courthouse steps, online auctions, and estate sales frequently feature abandoned properties sold to recover debts or settle estates.

— Drive through targeted neighborhoods: Look for obvious signs of abandonment such as boarded windows, overgrown yards, accumulated mail, or missing address numbers, then research ownership through county records.

— Contact local government offices: Building departments, code enforcement, and tax assessor offices often maintain lists of problem properties they want sold and improved.

How to purchase an abandoned home

If you’ve found an abandoned home you think will make a good investment or project, you can put an offer on it. But unlike traditional real estate transactions, you should know a few things about purchasing an abandoned home.

Contact the owner

Before making any offers, you must identify and contact the legal property owner. Use county assessor records, title searches, or hire a title company to determine current ownership. Owners might be individuals, banks, government agencies, or estates, each requiring different approaches.

When reaching out, be respectful and direct about your interest in purchasing. Some owners may welcome the opportunity to sell, while others might be unaware that their property appears abandoned. Be prepared for various scenarios, including owners who owe more than the property's worth or complex estate situations requiring probate court involvement.

Make an offer

Once you've contacted the owner and confirmed their willingness to sell, research comparable sales to determine fair market value. Remember that abandoned properties typically sell below market rates due to their condition and the seller's motivation level.

Consider financing options early in the process. Better offers various mortgage loan types through its digital platform, making it easier to explore financing possibilities. Use our mortgage calculator to estimate monthly payments and determine how much you can afford, factoring in renovation costs alongside the property price.

...in as little as 3 minutes – no credit impact

Get the home inspected

Professional inspections become even more critical when buying an abandoned house. Schedule comprehensive inspections covering structural elements, electrical systems, plumbing, HVAC, and potential environmental hazards like mold or lead paint. Many abandoned properties have hidden damage from weather exposure, vandalism, or deferred maintenance.

If initial inspections reveal serious concerns, budget for multiple specialists. Structural engineers, mould specialists, or environmental consultants might be necessary to assess the property's condition and renovation needs.

Secure financing and close

Traditional mortgages may not work for severely damaged abandoned properties. Some lenders won't finance homes that aren't habitable, and you might need extra funds for renovation loans. Work with Better's loan specialists to explore options that fit your situation and property condition.

Complete all due diligence before closing, including title searches, lien investigations, and ensuring all taxes are current. Consider purchasing title insurance to protect against unknown claims or ownership disputes that sometimes arise with distressed properties.

Handle legal requirements

Research local laws regarding abandoned property purchases. Some jurisdictions have specific notification requirements or redemption periods. 

Consider hiring a real estate attorney familiar with distressed property transactions. They can help navigate complex title issues, ensure proper legal procedures, and protect your interests throughout the purchase process.

Pros and cons of purchasing abandoned homes

An abandoned home purchase can be a great deal but comes with its own risks.

Pros of buying an abandoned house

— Lower purchase prices: Abandoned properties typically sell well below market value, giving you immediate equity and potential profits if you renovate successfully.

— Investment profit potential: With innovative renovations and improvements, you can often sell these properties for substantial profits or generate rental income in desirable locations.

— Reduced competition: Many buyers avoid abandoned properties due to their condition and complexity, meaning less competition and better negotiating positions for prepared buyers.

— Neighborhood improvement opportunities: Rehabilitating abandoned homes can improve entire neighborhoods, increase surrounding property values, and create positive community impact.

Cons of buying an abandoned house

— High maintenance and renovation costs: Abandoned properties often need extensive repairs that can quickly exceed your budget, from roof replacements to complete electrical overhauls.

— Hidden structural problems: Years of neglect can create serious issues like foundation damage, water damage, or pest infestations that aren't immediately visible during initial inspections.

— Legal complications: Title issues, outstanding liens, code violations, or ownership disputes can delay closings, increase costs, or even prevent successful purchases.

— Financing challenges: Many lenders won't finance properties in poor condition, forcing buyers to seek alternative financing options that often carry higher interest rates or stricter terms.

Find your financing solution for abandoned properties

Purchasing an abandoned property can offer unique opportunities for buyers willing to take on additional risks and challenges. While finding abandoned properties requires extra research and buying them is more complex than traditional home purchases, the potential for below-market pricing and investment profits makes them an attractive option.

Better's digital mortgage platform can help you explore financing options and calculate potential monthly payments as you evaluate these unique real estate opportunities. Whether you’re looking for your first home or building an investment portfolio, understanding how to buy abandoned property opens doors to deals that other buyers might overlook.

...in as little as 3 minutes – no credit impact