Buy the Vacant Foreclosure Next Door?

By Teke Wiggin

What would you do if the vacant foreclosure next door was falling into disrepair and threatening your own home's value? If you're like Homosassa, Fla., resident Lisa Cocuzza, you'd try to buy it and fix it up.

That was Cocuzza's plan five years ago when a for-sale sign went up at a vacant foreclosure across the street. Worried that the property would continue to deteriorate and soon blight her neighborhood, she offered to pay its full asking price of $69,000. But three days before the deal was to close, she said, it fell through because of problem involving the lenders who owned the home.

This seems to be a typical story line for homeowners across the country -- many of whom are growing so desperate to preserve their neighborhoods that they're willing to buy the foreclosure next door -- only to fail. The foreclosures then tend to continue to sit empty and chip away at the surrounding homes' values.

An estimated 1.5 million homes in the U.S. are bank-owned or in some stage of foreclosure, according to online foreclosure marketplace RealtyTrac. But the complications of buying one can make them difficult, even impossible, for an average homebuyer to purchase.

In Cocuzza's case, there was more than one mortgage on the foreclosed home that she was trying to buy. A second financial institution had a $14,000 lien, or claim, on the home, which meant that this unpaid debt would have to be tacked onto the $69,000 asking price. This didn't come to light until Cocuzza was about to close on her purchase. That's when she found out she'd have to pay $83,000 for the home -- an amount she couldn't afford, she said.

Ever since that deal fell through five years ago, Cocuzza said, the home has remained vacant and hasn't been re-listed for sale. She's continued to do what she can to keep the property from total disarray, she said. She clips bushes, pulls weeds and has hung a bird feeder and wind chimes.

"I kind of go over there if I see any trash that might have blown into the yard," said Cocuzza. "I put out little decorations and keep it up as best I can."