Are $1 homes worth buying?
This week a story from The Detroit News reported that homes are being listed in Detroit for $1. One particular $1 home sold for cash after being on the market for 19 days. The buyer seems to have gotten the deal of a lifetime, but did she?
As detailed in the article , the buyer will need to sink in a considerable amount of money to rehab the home to a livable state because everything of value including the kitchen sink have been stripped and stolen from the house. Even if she rehabs the home, as long as it stays vacant looters will steal whatever she puts in. Additionally, she will owe $3900 on the property taxes unless she challenges the assessment. Basically, that $1 purchase could very well turn into a very large money pit.
One dollar homes are not exactly unique to Detroit. The Department of Housing and Urban Development or HUD for short regularly sells homes for $1 each to local governments through their Dollar Homes program . The local government is responsible for rehabbing the homes and reselling them to moderate and low income families. So once again, a $1 home costs much more than $1 for the buyer.
Another interesting place to buy $1 homes is Norfolk, MA. The town regularly sells historic homes slated for demolition for $1. The catch is that if you buy the home you do not buy the land underneath it and you are required to move the home. It generally costs $10000 or more to move an entire home, but if you already have a plot of land it might not be such a bad deal. For those who do not have land, some homes might have antique finishings and raw materials that can be salvaged.
Looking at all the options, it seems that even though these homes are 99.99% discounted they may not be such a good deal for most people. However, they might be a steal for those who have the time and resources to either salvage the raw materials or rehab them for future profit. One thing is clear, $1 homes never really cost just $1 and buyers should always be wary of anything that is extraordinarily cheap.
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