Buy Foreclosure Homes in Detroit Where Prices Plunged 80%

Time icon November 23rd, 2009 by Autor Joseph Smith

Investors can buy foreclosure homes at substantially discounted prices in Detroit, fix them, rent them out and wait for the city to recover before selling them or partner with nonprofits so they can help stabilize neighborhoods to facilitate recovery.

Buy Foreclosure Homes in Detroit Where Prices Plunged 80%

Home prices in Detroit have plunged by as much as 80 percent, according to real estate professionals in the area. Three years ago, the average price for non-distressed single-family houses was $96,000 and the average price for distressed homes was $50,000.

But over the past several months, the number of foreclosure homes in Detroit soared as auto manufacturers and other industrial companies closed their operations in the city and in neighboring areas. Foreclosure and short sales surpassed conventional home sales by more than three to one and the average home price fell by a staggering 80 percent to just $10,000.

Investors with plans to buy foreclosure homes in Detroit can take encouragement from the rising number of nonprofits and private-public organizations that are standing up to prevent Detroit from falling into decay.

Among these organizations is ROOF, which stands for Retaining Occupancy on Foreclosure. It will be spearheaded by several major mortgage lenders in Detroit with help from community organizations.

Under the ROOF guidelines, which are still being fine-tuned by Detroit real estate attorneys, homeowners whose mortgages have been foreclosed will be allowed to remain in the foreclosed homes for 3 months, with an option to renew the arrangement. The occupants will be required to continue paying their utility bills such as water, heat and electricity. They will also pay a monthly fee to the lender depending on their capacity to pay.

When the foreclosed homes are eventually purchased, the occupants will get back about half of the monthly-fee payments they have made on the condition that they will leave the premises on time and have maintained the homes.

City mayor Dave Bing lauded the ROOF program and its positive impact on the city. Stephen Bancroft, head of the city’s foreclosure prevention office, also reiterated what the program can do to prevent the deterioration of property values.

Bancroft, who also spoke together with the mayor at a meeting held to explain the ROOF initiative to about 40 mortgage lenders and servicers, said that home values must be protected from falling further.

Indeed, investors can buy foreclosure homes in Detroit not only to earn money but also to help the city of Detroit rise again.

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