Investor-Owned Homes Are Driving Up Zombie Foreclosures (Summary)
Investor-owned
Vacancy
ATTOM Q3 2025
The Short Version
- What Realtor.com reported: Investor-owned properties are a growing share of homes that become “zombie” foreclosures—houses abandoned mid-foreclosure—particularly in several Midwestern and Southern states.
- Why this matters: Zombies pull down comps, attract blight, and slow nearby sales/rents. If you’re holding inventory or flipping nearby, this can kneecap your ARV and days-on-market.
- Fresh datapoint: In Q3 2025, 222,318 homes were in foreclosure; 3.38% of those were abandoned “zombies” (7,519), up from 3.14% a year earlier. :contentReference[oaicite:0]{index=0}
- Investor angle: About 24.9M investor-owned homes exist nationwide; 3.6% of those investor homes are vacant (~882k). That pool feeds zombie risk in certain states. :contentReference[oaicite:1]{index=1}
“Zombie” = owner walks away after a foreclosure start, but the title stays in their name until the process completes. (That limbo is where properties decay.)
Where Investor Vacancies Are Highest
States posting the highest investor-owned vacancy rates in Q3 2025—where zombie risks can concentrate—were: Indiana (7.2%), Illinois (6.1%), Oklahoma (5.9%), Alabama (5.9%), and Ohio (5.8%). :contentReference[oaicite:3]{index=3}
| State | Investor-owned vacancy rate | Why it matters |
|---|---|---|
| Indiana | 7.2% | High investor vacancy raises odds that pre-foreclosures go dark. |
| Illinois | 6.1% | Legacy distress pockets + long timelines can strand properties. |
| Oklahoma | 5.9% | Also among overall highest vacancy rates this quarter. :contentReference[oaicite:4]{index=4} |
| Alabama | 5.9% | Localized weakness can hit comps in older subdivisions. |
| Ohio | 5.8% | Rust Belt supply overhangs still show up in select metros. |
Trend at a Glance
ATTOM, Q3 2025. :contentReference[oaicite:5]{index=5}
What to Do if You’re Buying, Flipping, or Holding Rentals Nearby
- Scan for zombie risk within a half-mile: code violations, boarded windows, tax liens, long DOM. Pull ATTOM/MLS overlays or drive it.
- Stress-test ARV/rent comps by discounting for a zombie on the block. Don’t try to out-optimistic the market.
- Budget for block-level fixes (dumpsters, mowing, lighting). It’s cheaper than letting curb appeal kill your resale or lease-up.
- Paperwork > promises: Confirm foreclosure status and ownership before bidding. Zombie = title still in the owner’s name.
Sources
• Realtor.com Trends coverage on investor-owned homes and zombie foreclosures (summary of ATTOM data).
• ATTOM Q3 2025 Vacant Property & Zombie Foreclosure Report (national vacancy 1.3%, zombies 3.38% of pre-foreclosures; investor stock/vacancy; state & metro lists). :contentReference[oaicite:7]{index=7}
• National Mortgage Professional summary of the same ATTOM report (24.9M investor homes; 3.6% vacant). :contentReference[oaicite:8]{index=8}
Numbers change every quarter; always check the latest local data before you wire funds.
Don’t get blindsided by zombie risk.
Definition note: A “zombie foreclosure” is when an owner vacates after a foreclosure starts, but the title is still in their name until completion—so upkeep/taxes can still be on them.