I wonder if there are any "African Americans"
would really qualify for a $1 dollar mortgage loan?
Foreclosure fallout: Houses go for a
Ron French / The
DETROIT -- One dollar can get you a large soda
at McDonald's, a used VHS movie at 7-Eleven or a house in Detroit.
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
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
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.