Did you get the memo from your local code enforcement office? New construction permits are way down, which means the code enforcement officers are looking for ways to increase activity on existing housing.
How can we use this reality to find more houses to buy? Homeowners with code violations on their houses are very motivated sellers.
What’s a Code Violation?
Localities have minimum standards for housing that include safety, sanitation, and suitability. When a housing inspector finds a house that does not meet these minimum standards, it will be tagged with a code violation.
There are various levels of code violations. The most severe is building condemnation. When a house is condemned, it typically receives a large red sign attached to the front door. When driving through neighborhoods, look for houses that have been tagged with a condemned sign like the one in this picture:
Homes can be tagged with violations for being unsafe, open to the public, or for a badly leaking roof. Code violations can also be for minor issues such as high grass, excessive trash in the yard, or even an unregistered car sitting in the driveway.
Regardless of the infraction, it creates an uncomfortable situation for the homeowner. The code violation must be addressed or the homeowner will face a judge in court and receive a fine.
Code violations on a house can be a great resource for finding motivated sellers. You can often track down the owners and make them an offer to buy their house. In most cases, the owners of the home are not intentionally neglecting their home, but simply cannot afford to keep up the with necessary repairs to keep it in safe, operational condition.
How to Find Code Violations
One way to find the code violators in your area is to go to the city or county offices and request it. Some localities have a list they will gladly share, since it is public record. This is true of one of the cities I like to visit just outside of Richmond, VA. They always have their “Red Tag” list printed and ready to give me.
Others localities may push back and say it is not available. If that is the case, you should cite the Freedom of Information Act and ask for the form to formally request it. Since code violations are part of public records, the localities cannot refuse to provide them to you.
The Freedom of Information Act is a federal law that was originally enacted in 1966 by President Johnson. It is a short and easy form to complete and forces the locality to release the information that you request.
Make Friends with the Inspectors
Another way to find the code violators in your city is to talk to the inspectors in the streets. If your path crosses an inspector on the street, it’s a nice opportunity to get the real inside scoop on the code violators. They can tell you who they have recently tagged and sometimes give advice on how to contact the homeowners
Once you have the list of code violators, drive by the homes and select the ones that interest you. Contact the owner by phone or letter. You can generally find the owner’s name and mailing address in the tax assessor’s online records.
Marketing for code violators is another guerrilla marketing technique for real estate investors. It is essentially a free source of motivated seller leads. This method works well for investors looking for rental properties to buy with seller financing, or flippers looking for discounted houses that need work, and it works great for wholesalers looking for houses to control.