Impact A Vacant Foreclosure Has On A Neighborhood

There are those suggesting that anyone not paying their mortgage be evicted immediately must realize what’s left behind is a vacant house. And that vacant house seriously harms the surrounding houses and the neighborhood as a whole. We are already at above historic norms for vacant property.

Let’s take a look at the affect vacant property has on surrounding homes.

Vacant Foreclosures have deferred maintenance which makes them readily noticeable. That leads to a whole plethora of challenges for the neighbors. Pests move in, and in many cases, so does crime.

Studies have shown that just one vacant Foreclosure in a neighborhood can cost the other homes 1% in value. In a neighborhood of fifty homes worth $250,000, each innocent homeowner looses $2,500. If you multiple that by fifty, the neighborhood lost $125,000 in net worth.

According to http://www.responsiblelending.org

A California home that neighbors a Foreclosure has lost an average of $51,174! Don’t worry were not the worst, our neighbors Nevada are at $54,676.

One way to prevent all of these vacant Foreclosures is by doing a Short Sale.

Distressed properties sell at discounted values: Foreclosures at 65% of full value and Short Sales at 85% of full value. Typically with a Short Sale the home owners stay in there house until it sells. Doing 2 things, keeping a vacant home out of the neighborhood and sell for 20% more money then a Foreclosure. Thus not affecting your neighbors and community quite as much. Also with a Short Sale, if it’s considered your primary residence you can be eligible for a program called cash for keys. Which is between $2,500 and $3,000 dollars. Don’t forget the credit consequences by doing a Foreclosure. With a Foreclosure your credit will suffer 200-300 points vs a Short Sale your credit will suffer 80 to 100 points.

Before you decide to do a Short Sale or Foreclosure make sure you talk to your accountant or a lawyer. Also make sure who ever helps you with a Short Sale is either a reputable person or company. There are a lot of companies and individuals trying to take advantage of home owners.

I wish everyone the best of luck.

Related articles

• Bank of America to resume foreclosures (money.cnn.com)