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Wednesday, October 8, 2008

House sells for $1.75 in Michigan

A recent story in a Chicago newspaper told of a Chicago woman who bid on eBay on a house in Saginaw, Michigan and won. She won with a bid of $1.75. That tops even the $1,000 houses for sale in Detroit stories. She will end up owing about $850 in back taxes according to the story.

And in a page right out of a TV commercial, when asked what she planned to do, she replies “I’m going to try to sell it now.” Sell what, one is tempted to ask; just top hear the answer – “That thing I just bought.”

Te woman has never been to Saginaw and never seem the house, other than in the picture on eBay. It is apparently a foreclosure house that the mortgage company Southern Investments LLC just wanted to dump. Saginaw, like much of Michigan has fallen on hard times lately.

Whenever I see a story like this or hear of homes selling in Detroit or Pontiac or Ypsilanti for some ridiculously low price I wonder how the area became so depressed that even land is effectively worth nothing. One has to wonder if the land value of this $1.75 house is at least worth the $850 in back taxes.

Whoever ends up owning this place will have an interesting time fighting the assessors over what it should be valued at and taxed upon. Local governments are already tearing their hair out over the decline in revenues from dropping home values. If the lady who bought it wanted to fix it up for sale, rather than just throwing it back on the market "as is", she certainly has a lot of fix-up cost headroom to throw some money at her $1.75 investment.

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