Last week on Halloween, millions of little “ghosts” and “goblins” went door to door begging for sugary snacks from neighbors, in what has become a very popular annual tradition. Though I don’t personally celebrate the holiday, I realize I am definitely in the minority, as the National Retail Federation reports that annual spending on Halloween has risen 54% since 2005 to a staggering 6.9 billion dollars. But while those candy-grubbing munchkins and their parents were bilking their neighbors out of those billions of dollars, a much scarier phenomenon was occurring right under their nose. Unbeknownst to these trick-or-treaters, many of the doors they knocked on were “vampires” and “zombies” themselves.
Vampire foreclosures refer to homes that the banks have taken over through a foreclosure auction, and yet the previous owners still remain in the home. According to RealtyTrac, nearly 47% of all foreclosed homes are vampire foreclosures. Sometimes this occurs because the foreclosure is caught up in litigation from homeowners who think they were illegally foreclosed upon. However the most common scenario is that the bank just hasn’t gotten around to evicting the homeowner due to the massive glut of foreclosures on their books, or they simply don’t want to take on the expense of maintaining another vacant home.
Zombie foreclosures, on the other hand, are homes that are still owned by the distressed property owner, but they have vacated the home with the impression that the foreclosure was imminent, and that they needed to find a new place to live. However, in judicial foreclosure states like Florida, it can oftentimes take 5 years or more to finalize a foreclosure. Homeowners who have mentally moved on, are learning that they are still in fact on the hook for property taxes, homeowner association fees, etc…potentially causing even more financial harm to their families.
There is a huge opportunity for creative real estate investors to cash in on the vast number of zombie foreclosures, while also helping distressed sellers minimize the impact to their personal finances and credit rating. Through our direct mail and other marketing methods, it’s imperative that we explain to these “zombie” homeowners that they could still be responsible for expenses related to their home until it is foreclosed on by the bank, and that ignoring the problem will not make it go away. A savvy short sale investor can help expedite the sale of the home, which in turn will minimize the expenses and potential financial harm incurred by the current homeowner.
Have you incorporated this message into your marketing campaigns? If so, we’d love to hear how it’s working for you! Take a minute and share your thoughts in the comment section below.