How to Buy Land Bank Property

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photo: Sabrina Janelle Gordon (Shutterstock)

If you’ve watched shows like HGTV’s Bargain Blockor follow Cheap old houses or similar accounts on Instagram, you’ve probably noticed that some older homes — particularly those that tend to require a lot of work — are being offered at almost unbelievably low prices. These are often (but not always) sold by a local land bank.

For example the hosts of Bargain Blockwhich takes place in Detroit, regularly buy and renovate country bank houses – some of which were acquired for them as little as $1,000 (according to the show, at least). So what, exactly, is a land bank, and how do you buy property from one? Here are the basics.

What is a land bank?

Land banks are local entities that acquire, hold, manage and develop Real estate such as vacant lots, abandoned buildings or foreclosures. Although often run by local governments, some are independent non-profit organizations.

Land bank properties tend to be ones that meet your average profit oriented Developer isn’t interested – usually because a combination of location, structural condition, liens, and title means they’re probably not a good (profitable) investment.

When Land banks acquire these propertiesthey do this with the aim of putting them back into productive use, i.e. creating affordable housing (or other neighborhood Financial assets, like a community garden)increase the property value in the neighborhood and generate tax revenue.

Where are land banks located?

According to that Community Progress Center (CCP), a national organization focused on land banking, there are currently more than 250 land banks and land banking programs in the United States.

Many are the result of the 17 states that passed 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 of the CCP provides more information on land banks and their locations.

How to search for Land Bank Property

Because land banks operate locally, their rules, policies, and purchasing procedures may vary. So, the first thing you need to do is find a real estate bank near you, or wherever you are interested in buying real estate, and then take a look at their website. Once there you should be easy to find their available properties.

If you look at a few different land bank sites, you’ll quickly see that some are much more user-friendly than others. While some provide interactive maps or detailed listings of homes with photos, information about the home’s history, and estimates of the cost of needed repairs, others simply provide a photo and address of a home with instructions on how to call the landlord for more information receive information.

How do I buy a property from a land bank?

Let’s say you’ve found a house owned by a land bank that you’re interested in buying. What now?

Check the fine print first

It is not uncommon for Landbank houses to be subject to certain conditions – for example that the house has to be occupied by the owner (at least for a certain period of time) or that renovations/renovations have to be carried out within a certain period of time. Before proceeding, make sure you can meet these qualifications.

Understand what you are getting yourself into

Land bank homes are usually sold “as is” – meaning what you see is what you get. You are the one responsible for any necessary repairs and improvements.

While some homes that are sold as is are technically habitable (i.e. there is a roof, you won’t fall through the floor or likely come into contact with anything dangerous or dangerous), others will need repairs before you even can think about moving in (or see the whole house in some cases).

Houses may or may not have working electricity and water or a kitchen, but some do. It really all depends on the property. That’s not to make the houses sound repulsive – just to be clear that you should expect to put some time, money and sweat capital into them.

See the house

If you are seriously interested in a property or two, check out the listing to see how to see it for yourself. Sometimes open houses are held and sometimes you have to contact the Landbank to arrange a viewing.

Apply for the house

While some land banks list Houses at certain prices, others set a reserve price and put the property up for auction. Either way, you’ll likely need to fill out an application to get the process started.

The information required for the initial application will vary, but as you go through the process you will likely be asked for some sort of work plan (including a schedule, repairs you will make, who will do the work, what you plan to do with the home, etc.) as well Proof of financing not only for the purchase, but also for the repair.

If your application is approved – and everything else has worked – the real estate bank will guide you through the purchase of the house. Since the land bank wants to ensure that the work you propose is actually done, your work schedule can become part of your purchase agreement.

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