http://www.detnews.com/apps/pbcs.dll/article?AID=/20080813/METRO/808130360/&imw=Y
Foreclosure fallout: Houses go for a $1
Ron French / The Detroit News
DETROIT -- One dollar can get you a large soda at McDonald's, a used VHS movie at 7-Eleven or a house in Detroit.
The
fact that a home on the city's east side was listed for $1 recently
shows how depressed the real estate market has become in one of
America's poorest big cities.
And it still took 19 days to find a buyer.
The sale price of the home may be an
anomaly, but illustrates both the depths of the foreclosure crisis in
Detroit and the rapid scuttling of vacant homes in some of the city's
impoverished neighborhoods.
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.
"It about
doesn't make sense to put the family out," Upshaw said. "Once people
are gone, you're gonna lose the house in this neighborhood."
Tuesday,
the home was wide open. Doors leading into the kitchen and the basement
were missing, and the front windows had been smashed. Weeds grew
chest-high, and charred remains marked a spot where the garage recently
burned.
Put on the market in January for $1,100, the house had
no lookers other than the squatters who sometimes stayed there at
night. Facing $4,000 in back taxes and a large unpaid water bill, the
bank that owned the property lowered the price to $1.
$1 sale to cost bank $10,000
While
it's not unusual for $1 to be exchanged when property is transferred
for legal reasons, listing a home in the Multiple Listing Service for
$1 was surprising and unsettling to Kent Colpaert, the listing real
estate agent for the property.
"I've never seen a home listed for $1," Colpaert said.
"But it's been hit hard: It's just a shell."
On Tuesday, Realtor.com listed one other single-family home, one duplex and one empty lot at $1 in Detroit.
Dollar
property sales are the financial hangover from the foreclosure crisis,
said Anthony Viola of Realty Corp. of America in Cleveland.
Lenders
that made loans to unqualified buyers during the height of the subprime
market now find themselves the owners of whole neighborhoods of vacant,
deteriorating homes.
"No one has much sympathy for these banks
that made subprime loans," Viola said. "And in some cities like
Cleveland, judges aren't letting them sit on the properties -- they're
ordering them to tear them down or sell them."
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.
"It doesn't make sense in
some neighborhoods to keep paying costs and costs," Colpaert said. "It
can make more financial sense to give it away."
Buyer calls it an investment
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.
The
buyer, a local woman, considers the home to be an investment property
and will not live there, Colpaert said, though exactly how soon the
buyer can expect to recoup her four-quarter investment is questionable.
Replacing the guts of the house will costs tens of thousands of
dollars, and the owner will have trouble keeping scrappers from
stealing the improvements as quickly as they're installed. Home
demolition costs about $5,000, Colpaert said.
Meanwhile, the
new owner will owe $3,900 in property taxes in 2009 on her dollar
purchase unless she challenges the tax assessment.
While
selling a home for the amount of change most people could find between
their couch cushions is unusual, some abandoned homes in Detroit sell
for $100; vacant lots can be purchased for $300.
"My
14-year-old son could buy a block of Detroit property," said Ann
Laciura, senior servicing specialist for the Bearing Group.
