December 30, 2011 [USA Today]
Non-profits are getting more donated homes in the wake of the housing market collapse, and the trend is likely to grow given the ongoing foreclosure crisis.
The homes, typically low-value ones, may be refurbished and resold or demolished to rid neighborhoods of blight.
By donating, mortgage owners free themselves from the cost of maintaining homes they can’t sell. The bigger benefit is that cleaned-up neighborhoods help stabilize values of surrounding homes, banks say.
“It’s a win, win, win” for the neighborhood, the bank and the investor, says Rebecca Mairone, head of Bank of America‘s donation program.
BofA donated 150 homes in 2011. It plans to donate more than 1,200 next year, Mairone says. Wells Fargo donated more than 1,120 homes this year, up from 295 last year, it says.
Nationwide, Habitat for Humanity rehabilitated 1,210 homes that it received as donations or bought at distressed prices in the year ended last June. That’s nearly twice as many as Habitat rehabbed a year before, says Sue Henderson, vice president of U.S. operations.
Charities can net thousands of dollars — or more — from donated homes, says Charles Konkus, president of the Illinois-based Real Estate Donations. It handled 117 donated homes in more than a dozen states for charities this year, Konkus says. Before the housing collapse, it got about 20 a year.
Some homes are given by homeowners who receive charitable tax deductions in return. “People see this as a way out if they can’t sell,” Konkus says.
While rising, the number of donated homes is tiny relative to the size of the foreclosure problem. Nationwide, more than 6 million homeowners are late on their mortgages or already in foreclosure, Lender Processing Services says.
The Cleveland-based Cuyahoga Land Bank gets about 120 donated properties a month, up from 80 a year ago, President Gus Frangos says. Cuyahoga County has 22,000 abandoned single-family homes, he says.
Most donated homes are in such bad shape that they’re demolished, Frangos says. Often, properties are then turned into community gardens, sold to neighbors for $100 or returned to cities.
Removing a neighborhood eyesore “almost immediately stabilizes property values,” Frangos says.
In some higher cost areas, homes aren’t donated as much as they are sold at discounted prices.
Habitat for Humanity of Greater Los Angeles bought 80 distressed homes in the past year, marking its first venture into buying vs. building, CEO Erin Rank says. The homes, typically worth about $200,000, were sometimes discounted by 25% to 30%, Rank says.
Habitat resells the homes it fixes to eligible families. They get livable homes and neighborhoods where Habitat has built other homes are strengthened, too, Rank says.
Home donations don’t always work for charities. The East Bay Community Foundation in Oakland, Calif., has rejected three offers of donated homes in recent years. The properties couldn’t readily be turned into cash, which the foundation uses to make grants, spokesman John Pachtner says.