About 80 properties in Columbus currently for sale have either already gone through foreclosure or are listed by owners trying to escape debt and avoid losing their homes, statistics show.
These range from dilapidated 780-square foot properties built in the early 1930s to 3,500-square-foot homes built in the late 1990s, according to real estate aggregator Zillow.com.
Prices vary from as low as $54,000 near downtown to as high as $300,000 in newer housing areas north of 25th Street.
When damaged or neglected properties are abandoned by homeowners who owe more than the home is worth or are left to decay when given back to the bank, these varying properties take on a common name: Zombie homes.
Brad Grayson has been buying and rehabbing foreclosed properties for more than 25 years. When he started in the business, an average of four homes per month were sold at sheriff’s sales, he said. There are far more today, even though the number of foreclosures has dropped since reaching a peak locally in 2010.
The types of homes that Grayson bought often have been in rough condition.
Even before they are sold during foreclosure, many homes have been without adequate maintenance for years, Grayson said.
Beyond neglect, some owners actively strip foreclosed homes of valuable items and fixtures before being forced out.
Grayson has purchased homes with no cabinets or flooring, copper wiring torn out, bathroom and light fixtures removed — describing zombie homes.
One home he recently purchased had more than nine tons of garbage stuffed inside. It cost him more than $2,000 to haul the trash away, he said.
“People see these shows on TV and get excited thinking these houses are a way to get rich,” Grayson said. “But these homes often have a lot of issues.”
Legally, there is little banks can do to prevent this kind of damage, said Brad Davis, Centra Credit Union chief sales and marketing officer.
If the foreclosed property comes with liens from the city or costly code violations caused by a previous owner, those issues also become the bank’s responsibility.
Banks are in the business of recouping as much money as possible from these properties. Consequently, they often place a protective bid at a sheriff’s sales to prevent foreclosed properties from selling for a fraction of their investment in the property, Grayson said.
Often times, this includes the value of the original mortgage, plus the value of any liens on the property and attorney fees accumulated during the foreclosure process. In many cases, this adds up to more than the real value of the home, Grayson said.
As a result, the vast majority of foreclosed properties revert to bank ownership, rather than going to private buyers or developers, Grayson said.
Back in 2008, this was a big problem, said Annette Donica Blythe, a Columbus real estate broker and co-owner of RE/MAX Real Estate Professionals.
Banks were flooded with foreclosed properties and many were unable to maintain or sell these homes, she said.
Today, banks are better equipped to handle foreclosed property, Donica Blythe said.
Not only are they faster in responding to potential buyers, but many banks are now making an effort to better maintain properties in their portfolio, she said. The standard has shifted from quickly selling properties in questionable condition to securing homes, Donica Blythe said.
Once the bank takes possession, windows are secured, locks are replaced, pipes are drained and winterized. Basically, the bank wants to prevent any condition which could create more expense, Davis said.
But some banks are now taking things one step further, Davis said.
If a property can be restored to livable condition for a reasonable price, then selling directly to homeowners is usually more profitable, even if this means paying for updates and repairs, he said.