Hoarder Houses: What Investors Need to Know Before Buying

The hoarder house is one of those phenomena in real estate with tons of misconceptions surrounding it. Some people think they’re automatic gold mines. Some people think they’re inevitable money pits. Some think that investors who buy them are taking advantage of vulnerable people. Some people see potential upside in buying hoarder houses, but are too worried about unknowns and risks to take the plunge.

The truth is, there is nothing wrong with buying hoarder houses as an investor from an ethical or financial standpoint. In fact, they can be incredible opportunities. You just need to know how to anticipate hidden risks, be transparent, price correctly, and have a plan before you close.

This guide breaks down what experienced investors look for, what can go wrong, and how to protect yourself from buying a clean-out project that turns into a full-scale disaster.

What is a Hoarder House?

Hoarder houses are houses that are packed to the gills with stuff. Think years or decades worth of random items that would normally get thrown away just accumulating in piles around the home instead. 

‘Hoarder house’ tends to serve as a kind of catch-all term for any house where an exceptionally labor-intensive and involved cleanup is going to be required. However, there is a pretty broad range of situations that get put under this umbrella and hoarder houses can be anything from organized chaos to out-and-out biohazards. 

Two categories show up most often:

1) Hoarder house- Hoarder houses have lots of items, but are not necessarily dirty. Typical things you’ll see in a hoarder house include items stacked floor-to-ceiling and narrow pathways through rooms. 

While it’s a mystery as to how they could possibly be kept clean, many of them are surprisingly not smelly. However, the sheer amount of stuff in them hides a lot of potential risks and makes it impossible to check floors, walls, and ceilings for damage.

2) Trash house- Trash houses are houses where things are truly filthy. You usually know right away you’ve encountered a trash house as you’re greeted by a strong odor that hits before you walk inside. They are often full of pet waste, pests, and all manner of unsanitary conditions.

Trash houses present investors with a totally different level of risk than simple hoarder houses. Carpet and drywall are often saturated with smells and contaminants, and there is a much higher chance of needing a full gut and remediation.

Why Hoarder Houses Mean Deep Discounts

Hoarder houses are often among the most deeply discounted properties that investors can buy. In fact, it’s not unheard of for houses of this description to go for 20% of ARV or even less. 

Why are these houses so cheap? It generally boils down to a few key factors: 

Risk

To put it simply, you just don’t know what’s under all that stuff. That means that buying a hoarder house is inherently a huge risk.

When you can’t see a home’s surfaces, you have to assume worst-case scenarios like:

• Rotting subfloors (especially if moisture has sat for years)
  
• Hidden fire damage under carpet or furniture
  
• Mold behind walls
  
• Broken plumbing fixtures you can’t access
  
• Structural issues you won’t notice until it’s empty
  
• Odors soaked into drywall and wood framing

The cost to remedy these issues needs to be factored into any sale price that you negotiate.

Labor Intensiveness

When it comes to hoarder houses, simple cleaning won’t be enough. At minimum, you’ll be renting multiple dumpsters and hiring help in order to get the house into livable or at least sellable shape. 

If it’s at the level of being a trash house, this factor gets amplified. In these types of homes, smell doesn’t just air out. It absorbs into carpet padding, subfloor, drywall, and wood studs. At that point, you’re ripping out materials, sealing, running ozone treatments, and rebuilding entire features or rooms.

Motivated Sellers

Most owners in hoarder house situations fall into the category of motivated sellers. That means that rather than wanting top dollar for the home, they just want to get it off their hands in as quick and straight forward a manner as possible.

Nine times out of ten, the owner knows that the house could be worth quite a bit more if it were in better condition, but they simply do not have the time, money, physical capability, and/or motivation to make it happen. 

Many hoarder situations involve things like:

• An aging homeowner who needs to move into assisted living
  
• A family member trying to help sell a property
  
• A home inherited after someone passed away
  
• Someone overwhelmed, embarrassed, or emotionally drained by the situation
  

Basically, both buyers and sellers know that hoarder houses are a lot of work and come with big risks. That’s why investors will only pay a small amount for them, and it’s why owners are willing to accept small amounts for them. 

How to Reduce Risk Before You Buy

Here are the smartest ways to lower your risk on these deals:

1) Treat cleanup like a real line item (because it is)

Cleanouts aren’t free, and they aren’t always cheap. Costs usually come from:

• Dumpster fees (plus multiple loads)
  
• Labor
  
• Disposal time
  
• Hazard protection
  

A cleanup can easily be the first big check you write, before renovations even start.

2) Decide your strategy BEFORE closing

A hoarder house can be profitable in different ways. The key is knowing which exit fits the property and the neighborhood. 

If you just want to create value quickly you can wholesale. If you’ve got a buyer who values the space/land, you can owner finance. If it’s got good bones and you can get it into livable condition without overimproving, you can rent it out. Or if the area supports it, you can flip. 

But whatever strategy you choose, make sure you choose it before you buy. You aren’t going to know if the economics are viable without knowing your exit.

3) Pay attention to construction type

Some homes are much safer than others when you’re dealing with unknowns.

Example:

• Poured concrete walls/floors reduce risk of odor absorption and rot issues
  
• Wood-framed homes with subfloors are more vulnerable to moisture, smell, and structural damage you can’t see
  

Construction details can materially change your risk profile.

4) Don’t “talk yourself into it”

It’s a classic scenario. Seller pushes back on price, investor starts mentally minimizing risk, numbers get “adjusted” to make the deal feel workable, and then everything falls apart. 

If the seller insists on a price that blows your budget to the point that you can’t comfortably absorb surprises, you have to be willing to walk.

5) Remember that cleanups can backfire

Cleaning a hoarder house can increase value fast because it gives buyers clarity. Afterall, a cleared-out house is easier to evaluate, estimate, visualize, and purchase confidently.

But sometimes cleaning it out reveals a problem that immediately lowers value (burnt flooring, structural issues, mold, etc.). That’s why your buy price needs to leave room for surprises.

6) Be mindful of government benefits and asset rules

One real-world issue that shows up in these situations is Medicaid/Medicare asset review.

When a homeowner enters assisted living and government benefits are involved, the sale can get complicated if someone later argues the home was sold for “too little.”

That doesn’t mean you can’t buy the home, but does mean you should:

• document condition thoroughly (photos, notes)
  
• be transparent about the repairs/cleanup costs
  
• work with a solid closing attorney
  

How to Find Deals Like This

Consistent marketing is the key to finding these deals. Hoarder houses, for obvious reasons, usually aren’t found through listings or agents. Investors usually find them because the owner or a family member sees a postcard from an investor who’s willing to pay cash. 

When you get calls from potential sellers, be transparent and neutral. Let them know that they will get more money if they fix the house up and tell them they should do whatever is best for them. They may take some time to think about their options or they may want to sell right away. 

The call might not come immediately, but when the right situation hits, the seller often chooses the person they already recognize and trust.

Bottom Line

A hoarder house can be a great investment, but you have to do it right. If you’re not willing to walk away from a buyer whose price means you can’t account for unknowns, you can easily fall into a money pit. But if you price for cleanup + unknowns, plan your exit strategy early, and treat the home like a risk-managed project instead of a quick win, you can add serious value and reap some truly impressive profits. 

Want to learn more about real estate investment and find discounted properties in your area? Reach out to an Evernest Investor-Friendly agent to get started.