How to Buy Land Bank Property
If you’ve watched shows like Bargain Block on HGTV or follow Cheap Old Houses or similar Instagram accounts, you’ve probably noticed that some old houses, especially those that tend to require a lot of work, are up for sale. at incredibly low prices. . They are often (but not always) sold by the local land bank.
For example, the hosts of the Bargain Block program, set in Detroit, regularly purchase and restore land banks, some of which they acquired for as little as $1,000 (at least according to the show). So what is a land bank and how to buy property from it? Here are the basics.
What is a land bank?
Land banks are local organizations that acquire, own, manage, and develop real estate such as vacant lots, abandoned buildings, or foreclosures. While they are often run by local governments, some are independent non-profit organizations.
Land plots are generally not of interest to your average commercial developer – usually because some combination of their location, structural condition, liens and title defects means they are unlikely to be a good (profitable) investment.
When land banks purchase this property , they do so with the intention of returning it to productive use, so they create affordable housing (or other neighborhood assets such as a community garden), increase the value of the neighborhood property, and generate tax revenue.
Where are the land banks located?
According to the Center for Community Progress (CCP), the national land banking organization, there are currently more than 250 land banks and land banking programs in the United States.
Many of these are the result of 17 states passing laws allowing 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 CCP provides more information about land banks and their locations.
How to search for real estate in the land bank
Because land banks operate locally, their rules, policies, and purchase procedures may vary. So, the first thing you need to do is find a land bank in your area or where you are interested in buying property and then check out their website. Once there, you can easily find their available properties.
If you look at several different land bank websites, you will quickly find that some are much more user friendly than others. While some provide interactive maps or a detailed listing of homes with photos, information about the history of the home, and estimates of how much repairs needed will cost, others simply provide a photo and address of the home with instructions to call the land bank for more information. Information.
How to buy property in the land bank
Let’s say you find a house owned by a land bank that you want to purchase. What’s next?
Check the fine print first
It is not uncommon for houses on land banks to come with certain conditions, such as that the house must be occupied by the owner (at least for a certain period of time) or that any restoration/repair must take place within a certain period of time. Before you go any further, make sure you can meet these requirements.
Understand what you’re getting into
Homes on land are usually sold “as is” meaning you get what you see. You are the one who is responsible for any necessary repairs and improvements.
While some homes sold as is are technically habitable (i.e. have a roof, you won’t fall through the floor, or likely come into contact with anything hazardous or hazardous), others will require work before you even think about moving (or in some cases see the whole house).
Houses may or may not have electricity, running water or a kitchen, but some do. In fact, it all depends on the object. This shouldn’t make the houses sound repulsive – just to clarify that you should expect to put some time, money and sweat into them.
View house
If you’re serious about real estate or two, check out the list to see how to see it for yourself. Sometimes there are open days, and sometimes you need to contact the land bank to arrange a time to see it.
Apply for a house
While some land banks list homes at specific prices, others set a minimum price and put the property up for auction. Either way, you will likely need to fill out an application to begin the process.
The information required on the initial application varies, but as you progress through the process, you will most likely be asked to provide some sort of work plan (including schedule, repairs you will be doing, who will be doing the work, what you plan to do with the house, etc.) .d.), as well as confirmation of the availability of funds not only for the purchase, but also for repairs.
If your application is approved – and everything else is settled – the land bank will guide you through the home buying process. Since the land bank wants to make sure that the work you propose is actually done, your work plan can become part of your sales contract.