Finding Foreclosed Land Properties for Sale

Foreclosures are a hot commodity in the real estate market, but what about foreclosed land properties? While a little more difficult to find, there are better vacant plots of land that are either in the pre-foreclosure process, or bank owned. And if you act quickly, you’ll be able to snag a great deal on a piece of valuable land.

But how do you find foreclosed land? Why does land wind up in foreclosure in the first place? What are the benefits of buying foreclosed land?

Why Does Land Wind Up in Foreclosure?

Land may wind up in foreclosure for a variety of reasons.

  • A builder may purchase land to develop homes, but the project goes bust and the builder loses the land to the bank.
  • Although not technically a foreclosure, there are plots of land that are repossessed because of back taxes owed. 
  • An investor gets in over his head, and loses the land because he cannot afford to pay his monthly loan payment on the property (rare, but not entirely uncommon).

Many of these reasons are similar to the reasons why real estate goes into foreclosure. And acting quickly to buy foreclosed land can provide you with a number of benefits.

The Benefits of Buying Foreclosed Land

There are numerous advantages to investing in foreclosed land. 

For starters, the land may be extremely valuable. Perhaps the plot is located in an area that’s quickly growing, and land is in high demand. You may be able to buy a foreclosed plot, and flip it at a much higher price to a builder or commercial developer. Alternatively, you can hold on to the plot and enjoy a higher return.

Foreclosed land also comes at a bargain rate. You won’t pay full price for the plot, so you’ll save money on your investment. This will provide you with more capital to invest in your project.

How to Find Foreclosed Properties

If you’re ready to invest in a foreclosed property, you may be wondering how to actually find them. Just like with home foreclosures, the process can be a bit tricky – and you need to act quickly. Not all properties will be listed through an agent, and bank owned properties can be difficult to find.

Here are some tips to help you find foreclosed land:

Look for Bank Owned Properties

Bank owned properties are often listed through an agent, so check with your agent to see if there are any available properties. 

Some REOs are not listed through an agent, so you may consider searching local property records in the county you hope to invest in. If you have the option to search by name, input the names of major national and local banks, such as Chase, Bank of America, Citi or Wells Fargo.

This method may take a little bit of extra effort, but you might be amazed by what you find. It’s not uncommon for REO properties to not be listed with a real estate broker, so check local property records to see if there are any available properties your agent may not be aware of.

Check Tax Sales

Tax sales are another great place to find properties, although they aren’t technically considered foreclosures. These are plots of land that the previous owner failed to pay property taxes on. 

The taxing authority repossesses the property, and attempts to capture delinquent property taxes through either a deed auction or a lien auction.

Tax Deed Auction

In the case of a deed auction, the property itself is sold. The minimum bid on the property is typically the amount of back taxes that are owed, including interest and costs associated with selling the property. 

Titles from tax deed sales are typically transferred through either a quitclaim deed or limited warranty. 

It’s important to keep in mind that some jurisdictions do allow a redemption period after the sale, which gives the former owner a specific period of time to reclaim the property by repaying the bid amount plus a penalty fee. For this reason, you’ll want to avoid making major improvements on the property until after the redemption period has ended. Otherwise, the improvements will become property of the original owner if he or she chooses to reclaim the land.

Tax Lien Auction

When acquiring property through a tax lien auction, you are not technically purchasing the actual property. What you’re purchasing is the lien on the property. The lean is typically the amount of delinquent taxes owed plus accrued interest and costs associated with the sale.

If you’re purchasing tax liens, you’ll need to wait a specified period of time (redemption period). During this time, the lien, including fees and interest, may be repaid. You will not be permitted to contact the property owner during the redemption period.

Once the redemption period has expired, you will then be able to initiate the foreclosure process. The foreclosure proceedings may allow you to acquire the property’s title, or hold a tax deed sale of the property where you will have the right to make the first bid.

Tax sales can be tricky, but if you understand the process, this can be a great way to acquire property at a bargain price.

Ask the Local Planning and Zoning Department

Another way to find foreclosed land is to check with your local planning and zoning department. Ask the office if they are aware of any approved lands with plans that haven’t been started, or have already been started, but have gone bust. 

The next step would be to look at plot plans and parcels, and then search through the deed records to find the owners of the property. You can also find out who loaned money for the land through security deeds.

Foreclosed land isn’t easy to come by. More often than not, properties are sold through cash deals. However, there are some cases where builders will lose the land to the bank when subdivision plans go wrong, or the bank extends a loan that the current owner simply cannot afford. Although it’s not as common as real estate foreclosures, you may be surprised to find a lot of vacant plots in foreclosure if you know where to look.

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