Foreclosed Home For Sale For Just $1

Real estate is bad where I live, but apparently it's just peaches when compared to Detroit. So, how bad is real estate in the Motor City? So bad that banks were selling foreclosed homes for $1 ... and it took 17 days to find a buyer!

The home, at 8111 Traverse Street, a few blocks from Detroit City Airport, was the nicest house on the block when it sold for $65,000 in November 2006, said neighbor Carl Upshaw. But the home was foreclosed last summer, and it wasn't long until "the vultures closed in," Upshaw said. "The siding was the first to go. Then they took the fence. Then they broke in and took everything else."

The company hired to manage the home and sell it, the Bearing Group, boarded up the home only to find the boards stolen and used to board up another abandoned home nearby.

Scrappers tore out the copper plumbing, the furnace and the light fixtures, taking everything of value, including the kitchen sink. [...]

So desperate was the bank owner of 8111 Traverse Street to unload the property that it agreed to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer's closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000. [...]

And I love the last part here:

Colpaert declined to provide the name of the prospective purchaser, because the deal had not been through closing. The agent did say that the buyer agreed to pay the full list price of $1, and planned to pay cash.

Link - via J-Walk Blog


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Sustainable solutions...

In these run down, high-crime areas there should be something you could do for the neighborhood. For a dollar you could maybe make a park or use shipping containers to build low-income apartments. This type of construction may be just what is needed for secure, vandalism resistant homes.
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It would prolly cost you 10k to tear the house down, and at that price you are going to get the cheapest demolition guy, who is prolly going to contaminate the soil(lead paint, asbestos, etc). Then when you decide to sell the land, it's going to be worth even less, cause the buyer will have to scrape the top 1-3 feet of soil(if he's lucky) to get to good soil. Any idea how much it costs to get rid of contaminated soil?!? Plus, property taxes would still hit you for the land itself.

If you left the house there, you would get cited by the city for it not passing code, or being a blight on the neighborhood(they dont care if the rest of the neighborhood is in crap shape, you just bought the house, so they know where you live and can cite you!) If you were cited for not passing code, you have a limited time to get the home up to code, or you pay ever increasing fees until you do get it up to code.. I have heard of fees in the hundreds if not thousands per day.

Lets say the house has mold?! Then you have to remediate the mold, and pray that the house hasn't been placed on the insurance blacklist.... Heck, even if it doesnt have mold, you still have to pray the house isn't on the insurance blacklist.. One over zealous owner can get a home blacklisted for 5-10 years.

I went and looked at a home that was listed at 10k.. In great shape the home was worth 40-50k, but it had been in a fire and needed 40k in repairs. The bank was hoping someone would take the problem off their hands. I assume because they didnt want to pay the fees to tear the house down, or fix it, or pay the citations coming due!

People think how can a house go for $1?!? Well, cause no one wants it at that price.. Too many headaches, not enough cash.
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The difference between a place like Brixton and Detroit is simple: as shitty as Brixton was for a while, it was still a short commute to one of the most desirable pieces of real estate in the world, central London. Detroit is a dying city with lots of redundant housing stock built during the good times when there were plenty of jobs. Now the jobs have gone forever, and the population has crashed. The bulk of Detroit's population is made up of people who can't afford to move somewhere else. Not a recipe for a revival.

A lot of these places aren't coming back, ever. Within a couple decades they will revert to forest land after the stripped, abandoned houses fall down or are torched. The reason you can't give these properties away (literally) is because they are a liability rather than an asset, and there is no sign that is likely to change.

As for renegotiating the mortgage: this is an asset that is literally worth nothing. A mortgage on it is therefore essentially an unsecured loan, most likely made to someone with terrible credit. And with a low interest rate and other terms that are much more favorable to the debtor than you would normally get with an unsecured loan. It's dead weight on the balance sheet. Better to take the pain now and cut it loose.
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Nobody is living in these houses. They are abandoned.
The property taxes on that house are probably $2,000 per year - even in its destroyed condition.

Even if the new owner fixed it up, she would need a security guard to protect it during the remodel and before it became rented.

This may be news to the rest of the world, but here in Detroit, we just shrug.
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