Abandoned, Deteriorating Homes … Just Let Them Burn?

By Melissa Dittmann Tracey, REALTOR® Magazine

Foreclosures left abandoned for weeks, months, or years at a time can take a big toll on nearby home values. In the end, everyone in a neighborhood can feel the fallout.

Can some of these foreclosures be saved? Investors in recent weeks are certainly snapping up foreclosures in bulk and turning them into profitable rentals. But what about some of the foreclosures left lingering … the ones that no one seems to want?

A Morgan Stanley’s analyst recently estimated that nearly 95 percent of distressed homes are in such bad shape and not even suitable for renting.

In Detroit, which has been plagued by foreclosed homes the last few years, firefighters there are proposing a controversial new plan: Let the homes burn.

If the vacant building is more than 50 percent on fire and does not pose a risk to nearby structures, they propose to let it burn, and in the meantime, help save the city money … and maybe save nearby property values too?

The proposal comes at a time when Detroit is experiencing a series of suspicious arson fires, which has led to dozens of vacant buildings and homes blazing.

“We are in no way looking to ‘let the city’ burn, this is about saving lives and money,” Donald Austin, Detroit’s executive fire commissioner, told WDIV-NBC in Detroit. “My department is strapped, the budget is strapped, and it’s time to look at a new way of doing things.”

The proposal still has to win approval from city officials. Some argue that the buildings are uninhabitable and will eventually be torn down so firefighters might as well let them burn instead of wasting more money trying to salvage the unsalvageable. But others argue the vacant homes should not be able to burn unless they are on a predetermined demolition list.

Detroit has an estimated 80,000 vacant homes and buildings, according to a new documentary, “Burn,” about Detroit firefighters. The fire department estimates that 40 to 60 percent of the city’s fires are in vacant structures too. Some of these fires are being caused from scrapping, in which thieves remove metal piping or other building materials from a home leaving it vulnerable to catching fire.

Several cities across the country aren’t leaving their eyesores to flames but instead a bulldozer to chip away at its deteriorating foreclosures. For example, this past summer, Bank of America announced it would donate some of its foreclosed home inventory–homes that were deemed uninhabitable–to local agencies for demolition in Cleveland, Chicago, Detroit, and other cities. Other banks announced similar steps. The land in many places will then be used for new development or open space.

“There is way too much supply,” Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization Corp., told Bloomberg News back in July. “The best thing we can do to stabilize the market is to get the garbage off.”

What do you think? Can a deteriorating home still be saved, or are they better left to demolition or ash?

Melissa Tracey

Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine, writing about home & design trends, technology, and sales and marketing. She manages the magazine's award-winning Styled, Staged & Sold blog.

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  1. Yes, I think abandoned & derelict homes are a burden to the neighborhood and should be dealt with. In Winnipeg, Manitoba Canada there is a policy that any property that has been abandoned & derelict is to be torn down. The city will come in and shut off services (gas,water & electricity). The city hires a crew to demolish the home and regrade (level) the property. The cost of this is added to the property tax bill. The owner has 2 years to pay the bill. If the owner defaults on the payment, the city seizes the property & sells it to cover it’s cost. It is a bit of a lengthy process, but it does help!!

  2. Tim

    Tied to short sell a badly deteriorated property, but the offer was rejected after the appraiser came back with an unrealistic value. It is uninhabitable, and the potential buyer was going to demolish it for use as added green space to his adjacent property. Poor choice on that lender, now they’ll just sit on it!

  3. It’s a shame that first time homebuyers who qualify for the program with no down payment money, can’t get an increase in their loan so that some of the issues can be addressed… in the lower end price point, sometimes they need a new roof, gutter repairs, paint inside and out, new appliances and flooring. All things a new buyer can’t afford. Housing is out there. It’s just in poor condition. BTW, it’s not necessarily foreclosures that are in this condition, it’s short sales and re-sales as well that I am seeing. And in some cases, a good thorough cleaning of the interior and exterior can make a huge difference in making a property show better.

  4. The is a huge market for REO properties if the banks would only list them for sale. We have 50 buyers for every house. Pent up demand is ridiculous. Mutilpe offers are rampant, with as many as 37 offers on some houses. Most is not all sell over list the first 72 hours. Simply list them for the sake of the US economy.

  5. Yes. Saving foreclosures will save lives and money!