Vacant or foreclosed homes can diminish an area's quality. As they deteriorate from neglect, these homes become eyesores that drag down the property value of other homes in the neighborhood. Luckily, you don't have to sit back and watch a foreclosed home fall apart. You can take actions to protect your neighborhood and your property value. (Learn the tactics you can use to prevent your home from being repossessed, read Saving Your Home From Foreclosure.)
TUTORIAL: Mortgage Basics
The Danger of Doing Nothing
According to NeighborWorks America, a national nonprofit providing financial support, technical assistance and training for community-based revitalization efforts, vacant homes take an economic, physical and social toll on a neighborhood. Empty houses tend to attract trespassers and squatters, as well as becoming a haven for illegal and dangerous activities. It's possible to prevent these problems by taking steps to safeguard and invest in your neighborhood.
What Occurs to Neighborhoods
The 2007 mortgage crisis provides some important clues as to how your neighborhood could be affected by empty homes. Many properties sat empty for more than a year because the foreclosure process was delayed. Banks were overwhelmed by the number of troubled homeowners. Some properties were bought by investors with the intention of flipping them for a profit, meaning these residences were vacant to begin with, and have remained vacant since.
No Longer a Piggy Bank
In early 2011, RealityTrac Inc. reported that 27% of home sales in foreclosure or "short sales" were sold at an average discount 27%. According to the Center of Responsible Lending, an estimated 69.5 million homes nearby foreclosures saw a price drop of $7,200 per home in 2009. This led to a $502 billion total decline in property values in the same year. Also, this would all cause the tax base to become smaller. Low home values mean less equity. People depending on the value of their home to achieve investment goals, such as retirement or college, have seen those goals delayed. (Learn how to spot hot properties that you can turn around for a profit. Check out Foreclosure Opens Windows For Investors.)
Crime is a major concern with these vacant homes. Unkempt lawns and dilapidated roofs advertise to thieves that the home is empty. Many of these opportunists will rob the home of copper pipes, copper wiring, appliances and fixtures. The vacant home can also become a magnet for vandalism, drug dealers, prostitution and violent crimes. Minority and poor communities are especially hard hit because they have fewer resources to make improvements compared to residents of more affluent areas.
The vacant homes also lead to increased municipal costs because of the need for more services, such as police, fire and code enforcement. Funding these services can take away from property tax revenue.
What You Can Do
Take measures to stabilize your neighborhood before your home loses value. Organize or host foreclosure-prevention workshops. Request a community-based organization to come to your neighborhood and hold a meeting. Contact local lenders, loan servicers and housing counselors to find out whether they are able to hold a workshop at your home or local community center. The workshops could give your quietly struggling neighbors the assistance they need.
When you notice a property going astray - such as grass height not meeting the appropriate community standards or obvious damage - locate the owners of the property so they can immediately handle the situation and reduce the financial loss. To find out who owns the home, you can contact the homeowners association, community managers or your local housing and inspections department. Call the realtor who is listing the property with your concerns if the home is up for sale.
Some More Tips
Organizing a neighborhood watch is a great way to prevent crime and vandalism. Try to learn who's moving in and who's leaving so you know which homes are at risk. Identify block captains to monitor these homes until the situation is resolved. It helps to create a checklist for housing issues such as:
- signs of running water
- lights left on
- trash, debris and other items left outside
- broken doors or windows
- structural damages
Some active measures suggested by NeighborWorks include:
- parking cars in the driveways of vacant homes to give the appearance that the home is occupied
- maintaining the lawn
- painting the boards to look like doors and windows
- clearing trash and organizing neighborhood clean-up projects
Other creative techniques for you to try include:
- hanging curtains and blinds in the windows
- using deadbolts for the locks
- using baby monitors
- installing motion detectors, flood lights and cameras to catch burglars
Before you attempt any of these more creative options, make sure you talk to the owner or a representative of the bank holding the property title. Making alterations to a property, even positive ones, can be construed as trespassing.
Additional community efforts can involve grass roots strategies, such as pooling funds from community groups and local government to buy foreclosed properties, renovate the homes or tear them down to create community spaces. Some mortgage companies may hire a property preservation company to check in on and handle the maintenance of a foreclosed home. The company may contact you to let you know that they are checking on the home and may ask you to contact them if a situation arises. The company sticker will usually be placed on the door of the home indicating that it is frequently being looked after.
The Bottom Line
When foreclosed homes are left unattended it affects you and your community. They lower property value, invite crime and create health hazards. It's important that the owners of the property are held accountable if the property is not looked after. Take action early to stop problems from occurring or keep them from getting any worse. Help a financially troubled neighbor by holding a foreclosure prevention workshop. Organize a neighborhood watch. Take active and creative measures to preserve the property's aesthetics and prevent crime. Report any suspicious activity or code issues to the proper authorities, such as local law enforcement or community government.
The following organizations can provide some additional informative resources and help: the National Housing Institute, National Vacant Properties Campaign and Neighborhood Works America. Remember that by taking active steps to protect the value of foreclosed properties, you are actually protecting your own home's value too. (Get to know what factors influence your home's value in Top 4 Things That Determine A Home's Value.)