The current state of the US property market is so dire that buyers are now scooping up homes for next to thing according to a CNN website.
In places like Detroit and Cleveland, the report said, the banks are unloading rundown homes at prices sometimes as low as US$500 (A$750) - and in some cases even lower. In Detroit for instance, Realtor.com listed a three-bedroom, one-bathroom home of about 986 sq ft for only US$100 (A$150).
"With prices this low, lenders aren't looking to make any money on the deals," the report said. "They just want to get the houses off their books, so they don't have to bear the cost of maintaining them and paying property taxes. In fact, the $500, $1,000 or $3,000 that a buyer forks out often goes to the real estate brokers as commission. And often, too, the lenders have to kick in extra cash to make it worth a realtor's while to even take the listings," the report said.
The report went on to state that most of these homes are small fixer-uppers with wiring, plumbing and heating systems that have to be replaced. "Often buyers are legally required to 'rehab' these homes to bring them up to code. In Detroit, buyers are required to sign Affidavits of Compliance Responsibility, which obligates them to make repairs outlined in an inspection report. Only after that can a certificate of occupancy be issued, which makes the house legal to live in."
But even after factoring these costs in, the report said, they're still bargains.
"Buying homes like these is certainly a leap of faith; they're generally not in the best of neighborhoods and they're often surrounded by many other vacant and deteriorating homes. Still, some of these neighborhoods may turn around and provide residents with good, dirt-cheap housing," it stated.
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