house auction flops for urban wasteland

[Rich Parsons]

As seen reported here:
http://news.yahoo.com/s/nm/20091025/us_nm/us_usa_housing_detroit

Detroit house auction flops for urban wasteland

DETROIT (Reuters) – In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded.
After five hours of calling out a drumbeat of "no bid" for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag.
"OK," he said. "We only have 300 more pages to go."

...

On the auction block in Detroit: almost 9,000 homes and lots in various states of abandonment and decay from the tidy owner-occupied to the burned-out shell claimed by squatters

...

Total vacant land in Detroit now occupies an area almost the size of Boston, according to a Detroit Free Press estimate.

...

Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days.

...

They mostly found themselves outbid by deeper-pocketed investors from California and New York who were in a race to claim the auction book's relatively few livable properties.


Dozens of potential bidders, mostly local residents, were turned away on the first day of the auction by deputies after they failed to meet the morning deadline for registration.


Ross Wallace, a lieutenant in the U.S. Army, turned in his check for $500 and waited on the auction floor in full dress uniform for a chance to buy a Detroit house on the cheap.

Wallace, 27, said he did not want to leave his fiancee and two children with a mortgage before shipping out to Iraq later this year.

"I still have student loans and I'm trying to be responsible. I don't want to leave debt," he said.

Wallace waited for the auction to roll around to Detroit's Boston-Edison district, a once stately area that was home to boxing legend Joe Louis and Motown founder Berry Gordy.
But he was quickly outbid. An unidentified investor at the front of the room who had scooped up several dozen properties took the home Wallace wanted for about $15,000.

...


Schumack, who runs a community garden near her home that employs 14 neighborhood children, said she had been battling through a maze of bureaucracy for years to try to buy an abandoned lot nearby to expand and plant fruit trees.

She learned the lot had been taken back from its previous owner -- an absentee investor with more than 100 abandoned lots in Brightmoor -- only because of her constant calls to city and county officials, she said. When officials told her she would have to wait for a fourth day to bid on the property, Schumack broke down into tears.

....

WOW, just an out there article.

First homes for $500 not being picked up.
Just how bad are these homes or property lots?

Second the process allowing for the big business to step in quick and easy but the individual investor or person looking for a place to live is told to wait for multiple days, as if they have more vacation or sick days to take off.

A person in the Military looking to find a house he could pay off for his wife and kids while he is out of the country serving over seas. But unable to get the house he wants.

Locals who have been after a piece of property that has had absent land owners for years not able to pick it up, to plant trees and extend a personal park to help the over all value of the neighborhood.


I know in my subdivision an hour+ away, we have about 5% of the homes empty with the foreclosure paperwork up. Others are for sale and empty as the people have left the state.

Because of those house that do sell for foreclosure or at fire sale prices just to dump it, means my house is valued so low it is depressing, and no one can sell for break it even. Those who were unable to buy before or just did not, are not able to and find some nice values even with the repairs they might have to make for foreclsures. But it sucks for anyone who owns a house and would like to leave, and just wants to walk away clean. So, people strip the house of all value and destroy what is left and then just leave out of frustration and anger.

This is the only reason I can think a $500 house could not sell.

 

[Bill Mattocks]

It's not all as the article states. In order to register, you must bring cash or certified funds for $2,500 dollars, which you do not get back if you bid and win. Whatever the final bid is, has $2,500 (that's the minimum amount, over that is based on some percentage I forgot) tacked on to that final price. So if you bid $500 and win, the actual amount you owe is $3,000, and you do not get the $2,500 you brought with you back.

In addition, Detroit has a city income tax which is steep. And the city of Detroit does not forgive water, sewer, or past-due utility bills, so those have to be paid. The 'winner' does not get quiet deed, but a quit-claim title. So you have to buy title insurance on a house that may not be livable.

When scrap metal prices were high, many of these houses were invaded and gutted for copper, so the walls are torn out inside. Many of them have been turned into crack houses.

Inside Detroit city limits, if you're not in the center of town, you're in danger. Crime rates are staggering, the former Mayor was in prison, the city council is under FBI investigation for kickback bribes, and the police department has been demoralized and investigated for some time, all kinds of allegations - but one of the most damning is that the crime rate is actually much higher than it appears (already high) because Detroiters do not bother to report crimes anymore - even murders. There is no point to it, no one will show up half the time, no matter what the crime. I posted a link here recently to a story about a man who froze in the ice in an abandoned building with just his feet sticking out - people played ice hockey around his body, and when a reporter was told about it, he called the police and fire department repeatedly before someone finally showed up and chopped the body out of the ice - like they were doing the reporter a favor.

If you live south of 8 Mile, your life is in danger.

North of 8 Mile, everything is fine. Most of the northern and western suburbs are like any major metropolitan area, except for Pontiac and Flint. Flint is actually worse than Detroit, and Pontiac is about to take bankruptcy and lay off the entire police force.

There are a number of HUD and FHA homes in foreclosure near my apartment. Been trying to come up with the dosh to buy one. The 3 bedroom house across the street from my apartment in a very nice area went for $18K. It formerly sold for $124K.

If you want to have some fun, go to www.zillow.com. Set your search parameters and you'll see the lowest house prices you ever saw if you look at Detroit.

I love Michigan, and I think the Detroit metro area is great. I would not live south of 8 Mile if you held a gun to my head. And if I did, a gun soon would be held to my head, and the trigger pulled. Living there is asking to be murdered.

 

[arnisador]

How depressing.

 

[Big Don]

Years of Republican mayors sure screwed up detroit...
Oh, wait...

 

[Rich Parsons]

North of 8 Mile, everything is fine. Most of the northern and western suburbs are like any major metropolitan area, except for Pontiac and Flint. Flint is actually worse than Detroit, and Pontiac is about to take bankruptcy and lay off the entire police force.

Bill,

First do you have any link for the Pontiac comment and the Police? I would be interested in reading those. You can send privately if you want.

Second, I agree that Flint is worse, shootings are not reported unless it is something news worthy, such as a single gunman carrying to automatic rifles and firing both at the smae time at the police. A single weapon being fired at the police is not new worthy. If there is a child involved it is new worthy unfortunately.

There are neighborhoods I have seen go down over the last twenty years, with more and more houses parted out for siding and copper and old wood and anything else they could cut out. Then they use it for drug purposes, and many times the locals burn it down. Or partial burns and then over time it falls or gets burned for "fun" or safety reasons.


(* Begin Sarcasm *)
Ah the good old days when I used to do security and work doors and places in Flint.
(* End Sarcasm *)

 

[Bill Mattocks]

Bill,

First do you have any link for the Pontiac comment and the Police? I would be interested in reading those. You can send privately if you want.

No problem. I boned it up a bit - it's the firefighters who are facing the ax (no pun intended) and the police have had to lay off over half the force; they're down to 70 full time officers now.

http://www.tv20detroit.com/explorepolitics/63610002.html

 

[Bill Mattocks]

There are neighborhoods I have seen go down over the last twenty years, with more and more houses parted out for siding and copper and old wood and anything else they could cut out. Then they use it for drug purposes, and many times the locals burn it down. Or partial burns and then over time it falls or gets burned for "fun" or safety reasons.

It's a sad thing. I got here about three years ago, and with the exception of the area of Detroit between the downtown area's edge and 8 Mile, I love the Detroit area, and all of Michigan that I've seen so far. Beautiful country, great people. I would love to say that if more decent people would just buy up these houses in blighted areas of Detroit (and Pontiac and Flint), that the neighborhoods would slowly get better. But I talk to the people who have lived here all their lives, and they just laugh and shake their heads. They've heard it all before.

I'm still on the hunt for an inexpensive house in North Oakland county (not including Pontiac) and with any luck, I may find one. It would be nice to be able to buy a house for cash and own it. Especially since the house I own in NC is currently not selling.

 

[David43515]

I`m not sure all the properties are residential either. Some industrial properties get sold this way and it costs a fortune to clean them up to EPA standards before they can be used for anything.

Years ago a friend of mine bought a two story home in NW Ohio for $9,000. Basically he was only paying for the 1/2 acre lot. The previous owner had no construction experiance and tried to remodel it himself. What a sad joke. Plumbing had been replaced with garden hoses. A stairway had been moved but the new stairs were made of the sides of wooden fruit crates. My friend spent more money tearing the house down and hauling the mess away than he did on the land.

 

[Bill Mattocks]

I`m not sure all the properties are residential either. Some industrial properties get sold this way and it costs a fortune to clean them up to EPA standards before they can be used for anything.

QFT. My wife works for a bank and she tells me that in the case of certain businesses, when they process mortgages for repo, they quite often decide to abandon their interest in the property and take the loss. If they bid and buy the property back at the auction (standard procedure in most residential cases), they become liable for the EPA cleanup. So they walk away. They don't want the property and would rather take the loss on the mortgage. Think gas stations, dry cleaners, even restaurants. That's why often sit vacant for years - no one actually 'owns them' anymore, not even the bank, and the city, which ends up having possession due to tax foreclosure, is immune from having to pay to clean them up, but can't sell them either, because the buyer would again be stuck with the clean up costs. So the properties sit vacant forever on the tax rolls.

 

[Big Don]

I looked at a couple of dozen houses in Detroit in the $10 to $20K range, on the MLS, some of them looked pretty damn nice. One word stopped me from buying one, though:
SNOW. I'm a CA boy, I can't live some place where they measure snow by the foot...

 

[Bill Mattocks]

I looked at a couple of dozen houses in Detroit in the $10 to $20K range, on the MLS, some of them looked pretty damn nice. One word stopped me from buying one, though:
SNOW. I'm a CA boy, I can't live some place where they measure snow by the foot...

Aside from the snow...

Let's take an example...

120 W Brentwood St Detroit, MI 48203. Currently listed for sale on Yahoo Real Estate (realestate.yahoo.com) for $1,750. That's not the rent, that's the purchases price. Look it up - looks pretty good, huh? Nothing really wrong here.

http://listings.listhub.net/pages/REALCOMPMI/29138279/?channel=yahoo

Now go to www.bing.com and click on maps, then put in the address. Then click on 'birds eye view'. Notice the vacant lots up and down the street. They weren't always vacant - notice the driveways for the houses that are not there anymore?

This house is near 7 Mile and John R. Just a couple blocks away. Want to see what 7 Mile and John R looks like? Here you go:






So yes, you can buy houses cheap in Detroit. And on the surface, they look like a really good deal. It would be great if lots of decent people bought these up and lived in them, bringing the old neighborhoods back to a livable condition. Detroit deserves to have good things happen to it. But for me - I don't want to live in this neighborhood. I'd always be worried for the safety of my wife and family. I'm just sayin'...

 

[Rich Parsons]

Another Detroit House story:


http://news.yahoo.com/s/ap/20091027/ap_on_bi_ge/us_ice_house_detroit