The Detroit Land Authority continues to auction $1,000 houses, as the city has an estimated 40,000 houses that need to be torn down. The results of the program have been depressing. The Land Authority’s Build Detroit Initiative, the face of the auction project, is a tiny boat against a massive tide.
The Building Detroit website has a large number of homes up for auction within the next few weeks, with a base price of $1,000. Most are small, at 1,000 square feet or under. Many are in terrible shape. Buying one of these houses comes with a number of restrictions, which makes the process relatively difficult:
Winning bidders are required to fix up the homes promptly. The following requirements will have to be met:
- Within 72 hours of auction, you must pay 10% of the bid price.
- If you are not seeking lender financing for the sale or rehabilitation of the property, you will need to close on the sale within 30 days of the winning bid.
- If you are seeking lender financing for the sale or rehabilitation of the property, you must close on the sale within 60 days of winning the bid.
- Within 30 days of closing, you must provide Land Bank with an executed construction contract for rehabbing the property (if you are rehabbing the property yourself,  you must provide receipts for purchased rehab materials and applications for necessary permits).
- Within 6 months of closing (9 months for properties in designated historic districts), you must submit a copy of a certificate of occupancy or certificate of acceptance and have an occupant living in the home.
It is likely that some winning bidders do not fulfill these requirements, which means these homes could be recycled back into the auction pool.
Measured by the numbers, Building Detroit has posted awful results. According to its most recent auction sales report, the program has sold 645 homes from its inception on June 12, 2014, through April 10 of this year as determined by “closings.”
Less than 1,000 homes sold, as much of the rest of the city goes under the plow.
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