Detroit has recently launched a website to auction off the vacant homes forced into foreclosure. It's part of the city’s continuing efforts to boost home values and fight blighted areas.
The website, BuildingDetroit.org was launched this Monday and has 15 listings for properties and auctioning will begin on May 5, with one property being auctioned each day. Opening bids for properties start from as little as $1,000, but potential buyers have to be prepared to step in and renovate the home so it can be occupied within six months. If they fail to do so, then they will lose their money and the house.
Detroit's mayor acknowledges that these are aggressive measures to help rehabilitate abandoned homes and to get them occupied by families. The hope is that buyers will find it much easier to make a commitment to renovating the property if they know other people are going to be buying and renovating other vacant homes in the area at the same time.
The article in CNN Money points out that neighborhoods in Detroit were hard hit during the foreclosure crisis and many areas are struggling to recover. At the moment the city owns 16,000 homes that were taken when homeowners failed to pay municipal fees and property taxes. People chose to walk away from their homes because they thought their neighborhood had no future. Only Michigan residents and companies can bid, provided they don't have any tax foreclosures, or any prior building code or blight violations.
Winning bidders must put down a 10% down payment within 72 hours, and must make full payment within 60 days for property is costing less than $20,000. If the price is in excess of $20,000 then they have 90 days. This work on the property must begin within 30 days of taking possession, and buyers have to submit reconstruction plans to the Detroit Land Bank Authority. The new owners must have someone living in the property within six months otherwise they risk forfeiture of the building.
Apparently an open house is to be held on April 27 so all interested bidders can look inside the 15 homes currently featured on the website. Some 12 of these homes are in the East English Village neighborhood, and the first to be auctioned is a 1,400 ft.² brick built colonial property with three bedrooms and one half baths that was built in 1941. The new owner will have to fit a new water heater and furnace. The idea is to rehabilitate whole neighborhoods at the same time, and potential new owners need to be serious about rehabilitating the property and installing tenants.