In a housing market where prices are falling and buyers are offering cars with every purchase, there are many good deals to be made. There are also housing deals you want to avoid. Many houses priced cheaply are filled with mold, maggots and piles of smelly trash. Beware these vacant homes for sale – you’ll be glad you did.

Cheap isn’t always good

Part of the reason that prices of homes for sale are going down is because three out of ten houses are in terrible condition. Most are foreclosed properties that have been ignored while they fall into disrepair. The lenders are overwhelmed with thousands of vacant homes and simply cannot keep up. When these houses eventually sell, they’ll go for bargain basement prices. This hurts home values throughout the neighborhood.

Properties that are in squalid condition normally sell for more than 10% to 40% below nicer, well-maintained homes. In turn, homes that are not in foreclosure are also seeing prices drop. Vacant homes with overgrown lawns and dropping values hurt everyone.

Crime scene

The people who leave these vacant homes for sale to later rot are often not leaving the house in a decent condition to begin with. They sometimes leave behind quite a mess and people who visit homes with the hopes of finding a good deal quickly become discouraged.

Vacant homes for sale can also become home to transient criminals who don’t clean up after themselves. Bank-owned homes send in realtors who quickly find that the houses are not in a condition to be shown to prospective buyers. They tend to get vandalized with ruined carpets, destroyed ceilings, green pools, bug infestations and other nasty conditions.

These are places you don’t want to visit during daylight hours, much less live in with your family. In states like Florida and Texas, where foreclosures are rampant, vacant homes rot rapidly in the high heat and humidity.

If garbage and food are left behind, they quickly fester. The homes smell and you often find maggots. The lawns dry up and look horrible. Some neighbors try to keep up and help trim the eyesore but give up amid the pressure to keep their own properties up to speed. 

Other times these homes have been looted. People who leave the house often take kitchen appliances, cabinets, countertops, bathroom fixtures, and lights with them.

Many realtors refuse to show such properties because they contain holes in the walls, soiled carpets, and the banks are too overwhelmed to send in crews to clean up the messes. Indeed, as foreclosures rise and homes are abandoned, the banks put them back on the market with the tagline “as is.”

People are still buying

Despite all this, more and more foreclosed homes are selling every year. This doesn't include short sales, which happens when a home is sold for less than the mortgage balance. In a short sale, the lending institution forgives the unpaid balance and these types of sales are on the rise as well.

So who’s buying such properties? Often the buyers are individuals or companies that buy vacant and damaged homes at rock-bottom prices and then fix them up. They fix holes and damaged carpets, often replacing stolen items and updating problem areas like roof leaks and outdated appliances. They make such an investment with both their time and money because they are hoping to make a profit when the market rebounds.

If you don’t have that kind of time and money, you’d be better off looking elsewhere for the house of your dreams.

A growing problem

With the number of vacant homes going up, there seems to be no end in sight to prices that are going down. These abandoned eyesores might be a good deal, but people still aren’t jumping in to buy. In a declining market, there just aren’t that many people willing to risk it all on a damaged house.

That might change once the market hits rock bottom and begins the slow but steady road toward recovery. When that happens, more people might see the value in purchasing a home for less money and then selling it a year or two down the road for a nice profit.

Before that can happen, the population in certain areas will have to rise and absorb all of the housing inventory that’s hanging around. Only then will supply and demand get in balance again.

While we’re waiting, we sometimes have to look toward Washington. Congress has legislation and tax dollars pending to prevent lending institutions from dragging down nearby neighborhoods. They must keep those vacant homes in good condition and that makes them eager to sell them off as soon as possible.

Realtors, lending institutions, and banks are waiting like everyone else for market events to play themselves out. They also hope for the construction of new homes to stop and stay below the replacement rate for a good amount of time. Decent and affordable homes are out there. Unfortunately, vacant homes for sale will continue to drive prices down throughout the nation.