Eight months have elapsed since the Detroit Land Bank (DLB) began auctioning off distressed properties on BuildingDetroit.com with the requirement that buyers bring the houses up to code. How's it going so far? "Detroit home auction program falters," declares a headline in the Detroit News. The article is a long one, but the use of "falters" comes from the following fact: sales have closed on "just over a third" of the 394 houses put up for auction in 2014.
The biggest problem, DLB spokesperson Craig Fahle said, involves financing. Thanks to a flawed appraisal system in Detroit (explained by Bloomberg here), winning bidders are unable to secure mortgages and the deal falls through.
But there's another factoid in the article that's a bit more telling: Fahle reports that that successful buyers have been great about meeting the land bank's requirements for repairing the homes. He reports an 89% compliance rate thus far, indicating the program is attracting buyers willing to reinvest and repelling the slumlords who typically feast on distressed properties. That's the goal, right?
· Detroit home auction program falters [Det News]
· Detroit Homes Rot as Appraisals Stopping Sales [Bloomberg]