Now on auction in Detroit: Homes starting at $1,000

The three-bed, one-and-a-half-bath colonial on Bishop Street in Detroit's East English Village — a sturdy home otherwise in need of a new furnace and water heater — went on the online auction block this past Monday at 9 a.m. for $1,000.

Two hours into the day, the price was up to $12,100. By lunchtime, it was at $17,000. Then $22,000. Finally, at 6 p.m., the Detroit Land Bank Authority closed the bidding for its first property in a new program designed to turn over long-abandoned but durable homes to local residents who must vow to rehabilitate them. The house at 4148 Bishop Street drew 88 bids (including a few from people who tried to skirt the auction's strict eligibility rules). The winning bid: $34,100.

Tuesday, the Land Bank moved on to another home in the same neighborhood, and it has auctioned online a new house there each day since, with dozens more to come across the city as the program expands into other neighborhoods.

As housing auctions go, this one is as much about offloading vacant properties as trying to control what happens to them once they're off the Land Bank's rolls. No absentee landlords or faraway investors allowed. Only Michigan residents and businesses can bid on these homes. The next two provisions set the program apart from typical housing auctions: Within 30 days of closing on a property, winners must show an executed contract to rehab the home (or evidence that they've purchased supplies to do the work themselves). Within six months, they must produce a certificate of occupancy.

"We are not interested in encouraging or doing a buy-and-hold type thing. If you buy a property, you have to bring it up to code, and you have a finite amount of time to do that, and if you don't do that, the property will revert to us," says Richard Wiener, the land bank's executive director. "What we're interested in is causing properties to be rehabbed."

The idea is to lure neighbors, not investors or opportunists (#NeighborsWanted is the city's hashtag for the program). And that does not include out-of-state urban homesteaders dreaming of cheap property in Detroit. Right now, the land bank is focusing on otherwise intact neighborhoods, as opposed to those parts of town where vacant parcels outnumber the residents who've stuck around.

These also aren't just any empty homes: They have peeling paint but chandeliers, water damage but marble fireplaces, broken appliances but crown molding of the kind no one constructs any more. The Land Bank warns that winners will probably spend more money rehabbing these properties than acquiring them in the first place. But the rehab jobs are realistic, and the payoff for anyone who follows through will be potentially large.

The Land Bank will soon have some 30,000 properties on its books, foreclosed or abandoned lots transferred from the city, county and state — some with homes, some without, many worth rehabbing, others with structures beyond repair that will need to be demolished. The start of the action this week was a proof-of-concept. Soon, the Land Bank plans to expand into other parts of the city, offering more than one property a day.

"We're going to try to in large measure go neighborhood by neighborhood," Wiener says. "One of the things we want to do is start with relatively strong areas, then go to less-strong areas, on the theory that we will strengthen less-strong areas if we first strengthen the stronger areas around them."

The evidence this week so far suggests that the concept may be even more welcome than the Land Bank expected. When it hosted a circuit of open houses for the first batch on auction, 1,049 people turned up to look around.

Emily Badger is a reporter for Wonkblog covering urban policy. She was previously a staff writer at The Atlantic Cities.
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