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Nickelless
Administrator
USA
5580 Posts |
 Posted - 01/09/2009 : 07:40:42
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Les Christie, CNNMoney.com staff writer
The real estate market is so awful that buyers are now scooping up homes for as little as $1,000.
There are 18 listings in Flint, Mich., for under $3,000, according to Realtor.com. There are 22 in Indianapolis, 46 in Cleveland and a whopping 709 in Detroit. All of these communities have been hit hard by foreclosures, and most of these homes are being sold by the lenders that repossessed them.
"Foreclosures have turned banks into property management companies," said Heather Fernandez, a spokeswoman for Trulia.com, the real estate Web site. "And it's often cheaper for them to give these homes away rather than try to get market value for them."
In Detroit for instance, Century 21 Villa owner Randy Eissa has a three-bedroom, one-bath bungalow of about 1,000 square feet listed at just $500. It's a nice place with lots of light, but it needs a total rehabilitation inside, which Eissa estimates will cost between $15,000 and $20,000. But that's not bad, considering that the home last sold for $72,000 in late 2007, according to Zillow.com.
With prices this low, lenders aren't looking to make any money on these deals. They just want to get these houses off their books, so they don't have to bear the cost of maintaining them and paying property taxes.
In fact, the $500, $1,000 or $3,000 that a buyer forks over often goes straight to the real estate brokers as a commission. And often the lenders have to kick in extra cash to make it worthwhile for a realtor even take the listings, according to Eissa.
"Usually these homes are bank repossessions that the lenders have already tried to sell on the market, perhaps then put up for auction without success and then re-listed," he said.
Fixer uppers
These houses are almost always small fixer-uppers. Wiring, plumbing and heating systems have to be replaced, walls and ceilings sheet-rocked, plumbing and light fixtures installed and new kitchen cabinets and counters put in. Few come with working appliances.
Often buyers are legally required to rehab these homes to bring them up to code. In Detroit, buyers are required to sign Affidavits of Compliance Responsibility, which obligates them to make repairs outlined in an inspection report. Only after that can a certificate of occupancy will be issued, which makes the house legal to live in.
But even factoring in these costs, they're still bargains.
And as the housing crisis drags on, there are more and more four-figure listings popping up, as lenders try to unload their repossessed properties.
Cleveland is another city with many incredibly inexpensive homes. On Ardenall Avenue, in East Cleveland, McMullen Realty has a listing for a four-bedroom, one-and-a-half bath house for $1,900. It's been vandalized inside, but the outside is in good shape.
It features a deep front porch with Doric columns, double dormer windows and a separate garage. It's an excellent opportunity, according to agent Tonya Stoudamire. The last time it sold was in March of 2008 when it went for $16,677, according to Zillow.
"East Cleveland has a beautiful housing stock," she said. "These houses just need someone to come in and love them a little."
Another property for sale in Birmingham Ala. is priced at $1,900. The one-bedroom, one bathroom home was built in 1923 and has major fire damage, according to its listing broker, Tom Murphy Realty. The listing states that "Rooms are hard to distinguish."
But it's on a nice-sized lot, about 0.38 acre, close to downtown and transportation and has all utilities. Nearby, comparable homes in good condition sell for about $100,000, according to Zillow.
Rehab money
Most of these $1,000 homes can be renovated relatively inexpensively, and buyers can actually get government help to finance these repairs. The U.S. Department of Housing and Urban Development (HUD) has a special loan program for just such purchases.
Its rehabilitation mortgage insurance, available through FHA-approved lenders, was designed to encourage banks to issue a single, long-term loan to buyers that covers both the acquisition and rehabilitation of a property, according to HUD spokesman Brian Sullivan.
He adds that there may also be grant money available from the $4 billion Neighborhood Stabilization Program, which was a part of the massive housing rescue bill passed by Congress in July, to assist buyers with grants for down payments.
Buying homes like these is certainly a leap of faith; they're generally not in the best of neighborhoods and they're often surrounded by many other vacant and deteriorating homes. Still, some of these neighborhoods may turn around and provide residents with good, dirt-cheap housing.
"It's a sad time," said Stoudamire. "But it's also a time of opportunity, especially for low and moderate income people."
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Bluegill
1000+ Penny Miser Member
USA
1964 Posts |
Posted - 01/09/2009 : 14:02:37
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There is a reason why Detroit has so many cheap homes... Half of that city makes the Gaza Strip look like Beverly Hills.
They were never worth their last selling price. That was pure fraud. Detroit has been the hot spot for mortgage fraud. The FBI expanded their Detroit office to cope with the overload of investigations over 2 years ago.
Detroit's Hip-Hop mayor was just recently jailed...
zillow.com is the most unreliable and inaccurate source for real estate info there is...
Most of the houses in Detroit really need to be pushed over with a bulldozer. It will cost more to make them habitable than they will ever be worth on the open market. Not to mention the oppressive Detroit property taxes. That's why they can't give them away..
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/09/2009 : 17:36:24
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I have the suspicion that the $1,000 houses are not even worth the copper pipes in them (provided the copper pipes are still in said houses.)
Sounds like the old advertisement "genuine army Jeep only $49"
and if you have a fully supplied garage and are skilled in reassembling the parts back into a Jeep, then you have a good deal.
Old saying-
"You don't buy the house, you buy the neighborhood"
or
"If you don't have good neighbors you don't have spit"
(Cleaned up the language for younger readers. ) |
Edited by - pencilvanian on 01/09/2009 17:39:11 |
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Bluegill
1000+ Penny Miser Member
USA
1964 Posts |
Posted - 01/09/2009 : 18:49:00
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Out of curiosity I decided to see what is currently on the market in Detroit. There are 322 properties for $1000 or less.
And these for $100 or less.
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wagsthadog
Penny Hoarding Member
USA
565 Posts |
Posted - 01/12/2009 : 17:39:44
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Hi all,
$100?!?! I'd buy a house in Old Detroit just to metal detect the yard. Detroit was JUMPING when gold and silver coins were flowing (and falling) freely....
wags |
Only when they CAN'T have it, ......THEN they'll want it.
I love Cents. If you get an UNC box, you win. If you get a regular circ. box, you win. If you get a zinc box, you don't lose....so you still win. |
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Bluegill
1000+ Penny Miser Member
USA
1964 Posts |
Posted - 01/12/2009 : 17:52:11
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Sadly, in those areas with $1-$100 houses, you would involuntarily be finding a different kind of metal.
The carbon steel of a knife blade, or the lead of a bullet. 
The police won't go in there without backup and bullet proof vests.
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Edited by - Bluegill on 01/12/2009 17:53:18 |
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Radical cheap: $1,000 homes
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