Zombie foreclosures, the term given to properties that have been abandoned by homeowners because of a pending foreclosure, are still plaguing markets.
According to a recent RealtyTrac report done at the end of January, almost one in four homes had already been abandoned by an owner prior to being repossessed by the bank. Though the numbers of these zombie foreclosures have fallen 6% from 2014, 19 states, including California, have seen a resurgence.
Identifying Zombie Foreclosures
Zombie homes are often easy to identify. With uncut lawns, shuttered windows, and other obvious signs of neglect, they tend to turn away buyers.
“These are the sore thumbs in any neighborhood,” says Daren Blomquist, vice president at RealtyTrac. “The very visible signs of distress are there with these properties.”
Frustratingly for neighborhoods, they also drag down the value of neighboring homes.
Zombie Foreclosures Can Be a Good Sign
According to Blomquist, the increase in zombie foreclosure doesn’t necessarily mean a bad thing. Now that most of these zombie foreclosure homes are making their way through the foreclosure process, many of them are now closer to either being resold or demolished.
“Some of these have been sitting there and the bank hasn’t started foreclosure for years,” says Blomquist. “The fact that they’re entering into the public record data that we’re collecting is an indication that the banks are finally moving forward with them.”
Rising home prices are also helping banks to feel that they may be able to break even or come out ahead on defaulted loans, said Blomquist. He expects that a lot of these zombies will sell quickly because they meet a certain pent-up demand that exists in certain markets.
“They will probably still sell at discounted prices compared to a non-distressed property,” he says. “But there is demand and a lot of buyers are looking for this type of discounted homes.”
Source: CNN Money, Where zombie foreclosures are making a comeback, February, 6, 2015