Image: Demolished house © Mary Andrews, Alamy

Let's get rid of foreclosed homes. Demolish them. We'd be better off without them, and here's why.

Many of them are vacant or abandoned, and those homes attract squatters, rodents and/or criminals. Such homes often get stripped of appliances, pipes, windows, doors and other materials.

They quickly become a visual blight on a neighborhood. They rapidly decline in value and require money to pay taxes and upkeep, which can outstrip the return from a potential sale.

As they go, so goes the neighborhood, with homes nearby also losing value. As the neighborhood goes, so goes the tax base, lessening the revenue to the municipality where these homes are.

And in today's economy, there are plenty of unemployed Americans available to do the demolition.

'2 main considerations'

The above might not apply to every home in foreclosure, but a familiar real-estate mantra can be the guide to choosing which homes to demolish: location, location, location.

Add one more thing to the chant: condition.

"Two main considerations go into the decision to bulldoze a property: market condition and property condition," said Rick Sharga, who was the senior vice president at RealtyTrac, an online marketplace of foreclosure properties, before he recently left to become the executive vice president at Carrington Mortgage, a financial-management company.

"If you are located in a down market where there has been a loss of jobs, population or both, then there is no one to buy the properties," Sharga said.

RealtyTrac began posting foreclosure records in 2005, and Sharga estimated that of the 800,000 properties still on lenders' books, less than 10% of them would eventually be bulldozed.

"If the property is in extreme disrepair, where it is a blight on the neighborhood or a safety hazard, demolishing it can be seen as an improvement to the neighborhood, like pulling a bad tooth to save the rest of them," Sharga said.

Demolition can be done for between $5,000 and $30,000, depending on the size and type of the structure. Fixing up a blighted home for resale can reach into five or six figures, and when taxes, maintenance and liability costs add up to a continuing loss on a property, the most cost-effective means of disposal is the bulldozer.

"Homes that we demolished are at times listed at values of $5,000, but to bring them up to code and make them habitable could cost $50,000 to repair," said Jumana Bauwens, a spokeswoman for Bank of America Home Loans.

Cities proceeding with demolitions

Demolition of foreclosed homes and other abandoned structures is happening in several U.S. cities. Detroit has a goal of demolishing 10,000 structures by the end of 2013. So far, almost 4,000 properties have been identified, at least 95% of them residential. The properties come into the city's possession through donation, because of delinquent taxes or failure to respond to nuisance-abatement procedures.

Bank of America has said it would identify 100 properties for demolition in Detroit. Rick Simon, a spokesman for Bank of America Home Loans, said homes designated for demolition are donated to public agencies and "generally would require prohibitive costs to make them habitable."

He said the properties are usually under $15,000 in value, costly to maintain or to prepare for sale and are often in areas with many vacant properties, creating blight and hurting surrounding property values.