3 Risks to Consider When Buying a Vacant Home

An unoccupied home may be the best bargain on the block, as vacant homes often are listed for sale at a reduced price. Yet, potential buyers should beware: vacant homes can experience problems due to neglect, lack of maintenance, aging, natural and human damage, and other factors.

Whether a home became vacant because of death, divorce, relocation due to employment or another life event, here are three things to consider when you are thinking about buying one.

  1. Lack of Utilities Limits Home Inspection

Potential homebuyers typically have a professional home inspector evaluate a house’s condition to assist with the purchase decision. Yet unoccupied homes often have had their utilities turned off. With no way to check the water, electricity, gas, heating and cooling systems, and appliances, even a professional home inspector will be unable to thoroughly evaluate the house. There could be wiring problems, water or gas leaks or other defects — any of which would be very costly to repair.

While it might be possible to have utilities turned on temporarily, that can be a hassle and requires paying a deposit and putting the utilities in the prospective buyer’s name. Even if utilities are turned on, a potential buyer may have to accept some things as-is, such as a swimming pool, because you’re unlikely to get the entire system running just for an inspection, according to Bankrate.com.

On the other hand, without utilities, forgoing major system inspections is a big risk.

  1. More Maintenance May Be Necessary

Even after a home inspection, unoccupied homes still face additional risk. If the previous owners abandoned the home or lost it to foreclosure, they probably did not pay much attention to routine maintenance tasks. Costly repairs could crop up sooner than expected. Make every reasonable effort to ensure that there are no expensive problems in the house that must be corrected. Also, don’t forget to budget for future repairs.

  1. Obtaining Insurance May Be Challenging

Most insurance agencies will not insure a vacated house without their agent inspecting it. This is significant because the insurance agent might require costly repairs before issuing a policy.

If the agency issues a policy, the premiums usually will be significantly higher for an unoccupied structure. With no one watching over a home, it is more likely to suffer vandalism or other crime, and fire or other damage. Furthermore, such damage is far more apt to go unchecked, resulting in greater loss. Vacant homes can suffer broken pipes or leaking roofs with resulting water damage, stolen copper wiring or soffit and fascia, mold, rodents, termites and other pests, and damaged appliances.

While the list price of vacant home may be attractive, potential buyers need to be cautious. The time to discover issues with a home is before the purchase. With any home purchase, you never really know what problems could be hiding behind the walls, and unoccupied homes may have even more skeletons lurking in the closets.

Courtesy of Realtor.com