Selling a Vacant House: Costs, Insurance, Security, and Selling Options

Vacancy changes the risk profile

A lived in house gives someone a chance to notice a leaking pipe, failed furnace, broken window or roof problem quickly. A vacant house can let the same issue sit for days or weeks. That is why owners should think beyond the mortgage payment when calculating the cost of holding.

Typical carrying items include property taxes, insurance, electric or gas service, water, lawn care, snow removal, pest control, security, periodic inspections and repairs. A single freeze, sewer backup or intrusion can overwhelm months of hoped for price appreciation.

Insurance deserves an early phone call

Do not assume an existing homeowners policy treats a long-term vacant property exactly the same as an occupied home. Policy terms and insurer requirements vary by carrier and state. Tell the insurer the actual occupancy situation and ask what changes, inspections, endorsements or vacancy provisions may apply.

If the property has become vacant, tell the insurer the actual situation and ask what the policy requires. If lender required insurance lapses, lender placed coverage may be more expensive and may protect the lender more than the owner.

Vacant-property rules vary by city — an Omaha example

Omaha Municipal Code Chapter 48 includes a Vacant and Abandoned Property Ordinance. It is aimed at properties showing evidence of vacancy, neglect or deterioration, not at every clean house that simply happens to be empty.

The ordinance defines evidence of vacancy broadly enough to include conditions such as overgrown vegetation, accumulated trash, visible deterioration, graffiti and other circumstances suggesting the property is not occupied. It also defines a neglected building using more serious conditions such as repeated violations, repeated lack of security, substantial deterioration and certain fire, wind or water damage that remains unaddressed.

Registration and fees can matter after city notice

Under Omaha Municipal Code section 48-148, the responsible party for abandoned real property, a neglected building or a vacant parcel is required after written notice from the Permits and Inspection Division to register the property within 30 days. The registration calls for ownership and lienholder information, a property manager or responsible contact, an expected vacancy period and a plan for compliance, repair, sale, rehabilitation or removal as applicable.

Section 48-149 sets a $500 registration fee for an abandoned real property or neglected building and another $500 for each additional 90 day period, subject to the ordinance's reduction or waiver provisions. Those fees can become liens against the premises. This is one reason an owner who has received an actual city notice should not treat it like generic junk mail.

A vacant structure can also be ordered secured

Omaha Municipal Code section 48-72 allows the code official to order a vacant structure that is unfit for habitation to be closed and secured so it does not become an attractive nuisance. If the responsible party fails to secure it, the city may arrange the work and charge the cost against the real estate.

For an owner, the practical point is simple: broken windows, open doors and visible abandonment can turn a passive holding decision into an active compliance problem.

Do not shut off every utility without thinking through the building

Reducing utility expense can be sensible, but the property still needs protection from the climate and systems risks where it is located. In cold climates that may mean protecting plumbing and maintaining heat; elsewhere it may mean humidity control, storm preparation, sump pumps, security systems or periodic inspections.

Do not ignore private sewer or septic responsibilities just because the house is empty. Backups, root intrusion, collapsed laterals, failed pumps or septic problems can create major damage while a property sits unattended. Responsibility for the private portion of the system varies by location; Omaha, for example, places responsibility for the private service lateral on the property owner.

How long should you hold a vacant property?

There is no universal number of days. Use a monthly net cost instead. Add every recurring cost plus a reasonable reserve for maintenance and risk. Then compare that amount with the realistic additional net proceeds you expect from waiting.

For example, if vacancy costs $1,100 per month and the owner waits six more months, the property needs to produce at least $6,600 of additional net value just to offset those carrying costs. That does not include a surprise repair or another price reduction.

Vacant house checklist

• Confirm the insurer knows the property is vacant and understands its use.
• Keep doors, windows and other access points secure.
• Create a regular inspection schedule rather than relying on drive by checks.
• Protect plumbing, heating and sump systems for the season.
• Keep vegetation, snow, trash and exterior maintenance under control.
• Open and respond to any City of Omaha notice promptly.
• Track the true monthly carrying cost.
• Compare that cost with a realistic sale timeline and net proceeds.

Omaha and Nebraska reference sources used in this guide

Omaha Municipal Code Chapter 48 contains the city's Property Maintenance Code and Vacant and Abandoned Property Ordinance, including sections 48-72 and 48-141 through 48-162. Nebraska Department of Insurance homeowner guidance discusses lender insurance requirements and lender placed coverage. Omaha Public Works sewer information explains responsibility for private service laterals.

Related DTB guides

See the real cost of holding a property longer than planned, what to do when a house needs major repairs, and selling a house with code violations.

General information only. Insurance coverage, municipal requirements, property condition and transaction obligations vary by property and circumstances. DTB Property Group does not provide legal, tax, insurance, appraisal or financial advice.