{"id":184535,"date":"2025-09-02T12:52:08","date_gmt":"2025-09-02T18:52:08","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=184535"},"modified":"2025-09-02T12:52:12","modified_gmt":"2025-09-02T18:52:12","slug":"zombie-foreclosures-are-on-the-rise-in-these-states-q3-2025","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/zombie-foreclosures-are-on-the-rise-in-these-states-q3-2025","title":{"rendered":"&#8220;Zombie Foreclosures&#8221; Are Creating Great Deal Opportunities in These States"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Sometimes, real estate investments are like bad marriages: The buyer starts with good intentions before running for the hills amid a combination of overwhelming expenses, bad tenants, or no tenants. Their abandoned homes are known as zombie foreclosures.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Unlike movie zombies, though, they don&#8217;t have to turn future buyers into zombie owners, too. <\/span><span data-preserver-spaces=\"true\">In fact, they <\/span><span data-preserver-spaces=\"true\">can often<\/span><span data-preserver-spaces=\"true\"> represent good investment opportunities.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Rust Belt Is Rife With Zombies<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">According to a new report by<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.prnewswire.com\/news-releases\/zombie-foreclosures-tick-up-as-us-vacancy-rates-holds-steady-302535081.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> ATTOM<\/span><\/a><span data-preserver-spaces=\"true\">, a real estate data and analytics provider, out of 24.9 million investor-owned properties nationwide, 3.6% (882,336 homes) were vacant in the third quarter of 2025. The states with the highest number of zombie foreclosures were in the Rust Belt and Midwest, except Alabama:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">Indiana: <\/span><\/strong><span data-preserver-spaces=\"true\">7.2%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Illinois: <\/span><\/strong><span data-preserver-spaces=\"true\">6.1%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Oklahoma: <\/span><\/strong><span data-preserver-spaces=\"true\">5.9%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Alabama:<\/span><\/strong><span data-preserver-spaces=\"true\"> 5.9%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Ohio:<\/span><\/strong><span data-preserver-spaces=\"true\"> 5.8%<\/span><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">ATTOM featured 135 metros in their report with a population of at least 100,000 residential properties and 100 in the preforeclosure process. Of these, 57% (77 areas) had zombie foreclosure rates that were below national numbers.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Investor homes have a higher chance of becoming abandoned eyesores due to the risk factors associated with <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/how-to-flip-houses\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">flipping<\/span><\/a><span data-preserver-spaces=\"true\"> and renting. That hasn&#8217;t deterred other buyers from attempting to turn one person&#8217;s junk into another person&#8217;s treasure.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">ATTOM CEO Rob Barber said in a press release:<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">&#8220;Vacant and zombie homes can hurt the value of surrounding properties and start a negative spiral in a local housing market. While we&#8217;ve seen the rate of zombie homes tick up a tiny bit this quarter, the overall rate of vacant homes and homes in the foreclosure process has remained remarkably steady. While there remain some markets with worryingly high rates of vacancies, as a whole, it appears that the nation&#8217;s buyers are quickly filling homes that become available.&#8221;<\/span><\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Some States See a Rise<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Although increases in zombie foreclosures were generally in the single digits in 23 states, some saw a dramatic rise in numbers:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">Colorado:<\/span><\/strong><span data-preserver-spaces=\"true\"> Up 115%\u2014A jump of 25 to 58 zombie homes<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Washington: <\/span><\/strong><span data-preserver-spaces=\"true\">Up 114%\u201429 to 62<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Iowa:<\/span><\/strong><span data-preserver-spaces=\"true\"> Up 84%\u201464 to 118<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">North Carolina:<\/span><\/strong><span data-preserver-spaces=\"true\"> Up 80%\u201450 to 90<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Oklahoma:<\/span><\/strong><span data-preserver-spaces=\"true\"> Up 72%\u201443 to 74<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Common Reasons Why Zombie Foreclosures Occur<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">So what causes homes to go all undead? There are a few reasons.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Financing<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">High interest rates have hurt buyers with adjustable-rate mortgages that have come due.<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cnn.com\/2024\/07\/01\/business\/adjustable-rate-mortgages-higher-payments\" target=\"_blank\" rel=\"noopener\"> <span data-preserver-spaces=\"true\">CNN reported<\/span><\/a><span data-preserver-spaces=\"true\"> that<\/span><span data-preserver-spaces=\"true\"> data from Intercontinental Exchange, a global provider of technology and data, <\/span><span data-preserver-spaces=\"true\">showed<\/span><span data-preserver-spaces=\"true\"> 1.7 million homeowners have bought homes with adjustable-rate mortgages since 2019.<\/span><span data-preserver-spaces=\"true\"> Often, investors involved in flips and <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/brrrr-method-for-beginners\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">BRRRRs<\/span><\/a><span data-preserver-spaces=\"true\"> utilize short-term financing, which requires <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/how-to-refinance-your-mortgage\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">refinancing<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Legal issues<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Code violations, landlord-tenant disputes, title issues, and partnership disagreements are just a few of the legal issues that can cause a real estate investment to go awry, resulting in landlords walking away from their properties.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Tenants trashing the home<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Many landlords have had to deal with bad tenants trashing their buildings upon being evicted. One of the most egregious incidents I have personally experienced was a tenant who poured cement into the toilets and the sewage pipe, creating a financial nightmare.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Bad contractors<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Investors can sink or swim based on <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/rookie-206\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">the contractor they use<\/span><\/a><span data-preserver-spaces=\"true\">. Shoddy work that needs to <\/span><span data-preserver-spaces=\"true\">be redone<\/span><span data-preserver-spaces=\"true\"> or contractors stealing money are common complaints that can cause an investor to fail on a project.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Lack of tenants<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">A shortage of qualified tenants can cause holding costs to outweigh the benefits for landlords.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Irresponsible investors<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Sometimes, investors are the architects of their own downfall due to failing to keep up with repairs or not responding to a tenant&#8217;s needs, which can lead to an escalating problem.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Wider Ramifications<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">A vacant house is an eyesore in a community, and multiple abandoned homes can cause bigger problems.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">&#8220;Vacant and zombie homes can hurt the value of surrounding properties and start a negative spiral in a local housing market,&#8221; Rob Barber, CEO of ATTOM, said in his <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.realtor.com\/news\/trends\/investors-owned-homes-zombie-foreclosures\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">report<\/span><\/a><span data-preserver-spaces=\"true\">. &#8220;While we&#8217;ve seen the rate of zombie homes tick up a tiny bit this quarter, the overall rate of vacant homes and homes in the foreclosure process has remained remarkably steady.&#8221;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">How to Buy a Zombie Foreclosure<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">There are a few ways to locate a zombie foreclosure. First, it&#8217;s essential to understand the legal definition of it. <\/span><span data-preserver-spaces=\"true\">Usually<\/span><span data-preserver-spaces=\"true\">, <\/span><span data-preserver-spaces=\"true\">it consists of<\/span><span data-preserver-spaces=\"true\"> a rental home in the process of being foreclosed upon, where the investor has walked away <\/span><span data-preserver-spaces=\"true\">from the <\/span><span data-preserver-spaces=\"true\">home<\/span><span data-preserver-spaces=\"true\">, often believing the bank has taken title to it.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">When the foreclosure has not yet <\/span><span data-preserver-spaces=\"true\">been finalized<\/span><span data-preserver-spaces=\"true\">, the house is in a state of legal limbo. No one is maintaining it, and the bank does not own it.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">There are a few main steps to buying a zombie foreclosure:<\/span><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Track down the ownership status through property and court records.\u00a0<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">See if the homeowner or the bank still controls the title. A title search helps.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Negotiate directly with the owner, or wait for the property to <\/span><span data-preserver-spaces=\"true\">be auctioned off<\/span><span data-preserver-spaces=\"true\"> at foreclosure. Foreclosure listing sites, such as<\/span><a class=\"editor-rtfLink\" href=\"http:\/\/auction.com\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> auction.com<\/span><\/a><span data-preserver-spaces=\"true\"> or ATTOM, also display the foreclosure status.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">If you haven&#8217;t already ordered a title search, do so now, and consider ordering an inspection (if permitted).<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Prepare to make a cash offer and have the <\/span><span data-preserver-spaces=\"true\">funds available<\/span><span data-preserver-spaces=\"true\"> to <\/span><span data-preserver-spaces=\"true\">start<\/span><span data-preserver-spaces=\"true\"> a rehab project.<\/span><\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">A zombie foreclosure went bad for a reason. Determining the cause will help you decide whether to proceed with buying it. If the property <\/span><span data-preserver-spaces=\"true\">is located<\/span><span data-preserver-spaces=\"true\"> in an area with limited rental activity or high crime statistics, it might be best to stay away.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">However, if it was due to a partnership dispute, divorce, or the investor running into financial problems unrelated to their rental ownership, there&#8217;s no reason another investor might not succeed with the same home.<\/span><span data-preserver-spaces=\"true\"> Unfortunately, it&#8217;s not easy to find out this information. Talking to neighbors and local <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/agent\/match\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">real estate agents<\/span><\/a><span data-preserver-spaces=\"true\"> can help determine what went wrong.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Zombie foreclosures can be a great source of deals for future investors, both for flips and long-term rentals. However, just because it&#8217;s abandoned and can <\/span><span data-preserver-spaces=\"true\">be purchased<\/span><span data-preserver-spaces=\"true\"> at a discount does not automatically make it a good investment.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Sometimes, real estate investments are like bad marriages: The buyer starts with good intentions before running for the hills amid a combination of overwhelming expenses, bad tenants, or no tenants. [&hellip;]<\/p>\n","protected":false},"author":613725,"featured_media":184537,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-184535","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/184535","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613725"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=184535"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/184535\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/184537"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=184535"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=184535"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=184535"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}