In many popular neighborhoods, there's a significant shortage of fairly priced houses available for sale. But real estate specialists say open-minded purchasers can still sometimes track down a decent deal, even in a sizzling real estate market.
"Hidden gems are becoming further and further between. But they're still out there," says Daren Blomquist, a senior vice president for Attom Data Solutions (formerly RealtyTrac), which follows housing markets all over the U.S.
"There are still deals out there on bank-owned properties that have been in foreclosure for a long time and are sitting unsold and vacant," he says.
Besides bank-owned properties, Blomquist advises bargain-minded homebuyers to consider "stale" houses, properties that have languished unsold for a lengthy period. Often these are homes that have been shunned by potential purchasers because they were significantly overpriced when they first hit the market.
Joseph Schiro, a veteran real estate broker, says the mere fact that a home is vacant for a time can raise suspicions on the part of many buyers.
To assist his home-buying clients considering purchase of a vacant property, Schiro says he often seeks to determine if its owners have an outstanding mortgage on the place by looking at publicly available land records.
"Sellers with a mortgage who were overpriced in the past are usually a lot more motivated to sell than people who own a home free and clear," according to Schiro.
Because vacant property is superficially less appealing to a cross-section of buyers, Schiro says those with the vision to look beyond the must and dust of a vacant place can sometimes do well on price.
"When it comes to a vacant home, some buyers miss out because they lack the creativity to envision its potential," he says.
Here are a few pointers for buyers:
-- Attempt to learn about a vacant home's former occupants.
It's tough to gain details on a house that's been vacant for months, especially if its owners have already moved. It's still harder if the empty property has fallen into the ownership of a bank through foreclosure.
"The bank won't tell you anything," says Merrill Ottwein, a veteran real estate broker and past president of the National Association of Exclusive Buyer Agents (www.naeba.org).
To get the scoop on a vacant property that interests you, your best sources are often neighbors.
"Those still nearby probably know all the skeletons in the closet. They'll spill all they know and tell you if the people who lived there kept up the place before they moved out," Ottwein says.
Most people who must leave due to foreclosure don't deliberately damage their home. Still, their financial problems could mean they lacked money for crucial maintenance chores during their tenure in the property, he says.
-- Don't rule out a "pre-inspection" of a vacant place.
Perhaps the property you like has gone unsold for so long that you're nervous about hidden defects. In such cases, Ottwein advises you to consider hiring a home inspector to take a preliminary look.
He tells the true story of one of his clients, who wanted to learn more about a single-story ranch-style house that had gone vacant nine months before he spotted it. The house was listed at $50,000 below other comparable homes in the same neighborhood and he was suspicious as to the reason.
On his agent's advice, the client spent $200 for a cursory home inspection. This revealed that the house had a serious crack in its foundation, a very expensive problem to fix.
-- Ensure that the utilities are turned on when the inspection is done.
Dorcas Helfant, the broker-owner of a realty company, says cost-conscious banks that own foreclosed property often shut off utility service to the vacant homes they own, including gas, electric and water. But a lack of utility service poses a challenge to home inspectors.
"It's actually pointless to do an inspection when the utilities are off. You can't tell if the cooling, heating and plumbing are functioning correctly," says Helfant, a past president of the National Association of Realtors (www.realtor.org).
Helfant strongly recommends that buyers always have a home inspection on a vacant property -- if not before their bid is submitted, then after. And even if you have to pay to get utility service restored, she says it's worth the expense.
"It shouldn't be too costly to get the utilities restored for just a five-day period or so," she says.
-- Take neighborhood property values into account before making a bid.
"Before you shape your offer, you and your agent should take a careful look at the recent sales history in your neighborhood. In hot markets, it's imperative that you be extra vigilant to avoid overpaying," Ottwein says.
Ideally, you'll want to examine at least three similar properties that have sold in the immediate area in the past three to six months -- adjusting for differences, such as a larger garage or a second fireplace.
Although you'll want to take a home's condition into account when judging its market value, Ottwein cautions against seeking out-of-proportion discounts to compensate for superficial shortcomings.
-- Don't spend more than you can afford, even for a vacant house.
Brokers like Schiro worry that their home-buying clients, empowered by current low mortgage rates, will one day live to regret spending more than they can afford for a vacant house in a prestige neighborhood just because they bought it at a slight discount.
"No matter the discount, you never want to buy far out of your comfort zone," he says.
(To contact Ellen James Martin, email her at email@example.com.)