If you’ve watched shows like HGTV’s Bargain Block, or follow Cheap Old Houses or similar accounts on Instagram, you’ve likely noticed that some older homes—especially ones that tend to need a lot of work—are listed for almost unbelievably low prices. These often (but not always) are being sold by a local land bank.
For example, the hosts of Bargain Block, which takes place in Detroit, routinely purchase and renovate land bank houses—some of which they acquired for as little as $1,000 (at least according to the show). So what, exactly, is a land bank, and how do you buy property from one? Here’s are the basics.
What is a land bank?
Land banks are local entities that acquire, hold, manage, and develop properties like vacant lots, abandoned buildings, or foreclosures. Though they are often operated by local governments, some are independent nonprofits.
Land bank properties are typically ones that your average for-profit developer isn’t interested in—usually because some combination of their location, structural condition, liens, and title defects means they’re unlikely to be a good (profitable) investment.
When land banks acquire these properties, they do so with the aim of returning them to productive use, so they create affordable housing (or other neighborhood assets, like a community garden), increase neighborhood property values, and generate tax revenue.
G/O Media may get a commission
Where are land banks located?
According to the Center for Community Progress (CCP), a national organization focused on land banking, there are currently more than 250 land banks and land banking programs throughout the United States.
Many are the result of the 17 states that have passed laws enabling land banking (New York, Michigan, Ohio, Georgia, Nebraska, Missouri, Tennessee, Alabama, Delaware, Virginia, West Virginia, Indiana, Pennsylvania, Kentucky, Connecticut, New Jersey, and Maryland). This interactive map from the CCP provides more information on land banks and their locations.
How to search for land bank property
Because land banks operate locally, their rules, policies, and buying procedures can vary. So, the first thing you need to do is find a land bank in your area, or wherever you’re interested in buying property, and then take a look at their website. Once you’re there, you should easily be able to find their available properties.
If you take a look at a few different land bank sites, you’ll quickly learn that some are far more user-friendly than others. While some provide interactive maps, or detailed listing for houses with photos, information on the home’s history, and estimates of how much the necessary repairs will cost, others simply provide a photo and address of a house with instructions to call the land bank for more information.
How to buy property from a land bank
Let’s say you’ve found a land-bank-owned house you’re interested in purchasing. What next?
Check the fine print first
It’s not uncommon for land bank houses to come with certain stipulations—for instance, that the house must be owner-occupied (at least for a certain period of time), or that any restoration/renovations must take place within a particular timeframe. Before going any further, be sure that you can meet those qualifications.
Understand what you’re getting into
Land bank houses are usually sold “as-is”—meaning that what you see is what you get. You’re the one responsible for making any and all necessary repairs and improvements.
While some homes sold as-is are technically habitable (i.e. there’s a roof, you won’t fall through the floor, or probably come in contact with anything dangerous or hazardous), others will need work before you can even think about moving in (or in some cases, seeing the entire house).
The homes may or may not come with working electricity and plumbing, or a kitchen, but some do. It really all depends on the property. This isn’t supposed to make the homes sound off-putting—only to clarify that you should expect to put some time, money, and sweat equity into them.
See the home
If you’re serious about a property or two, check the listing to find out how to see it for yourself. Sometimes open houses are held, and other times it’s a matter of contacting the land bank to arrange a time to see it.
Apply for the home
While some land banks list houses for specific prices, others set a minimum price and put the property up for auction. Either way, you’ll probably need to fill an application to get the process started.
The information required on the initial application varies, but as you make your way through the process, you’ll likely be asked for some type of work plan (including a timeline, repairs you’ll make, who’ll be doing the work, what you plan to do with the house, etc.), as well as proof of funds not only to make the purchase, but also the repairs.
If your application is approved—and everything else worked out—the land bank will walk you through purchasing the house. Because the land bank wants to make sure the work you proposed actually gets done, your work plan may become part of your purchase agreement.
Credit: Source link
Leave a Reply