So far 33 homes have been auctioned off with a combined total of nearly $1 million dollars in bids or around $22,000 per house. Detroit's median home price is $11,000. This could mean that the value of Detroit's housing will be appraised for higher values in the near future.

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The market has been based on rock-bottom foreclosure sales for the past seven years, so it's hard for appraisers to know how to value a property.

"In Detroit, 90 percent of a property's assessed value is based on comparable sales," Boudreau said.
So even if a home is exquisitely renovated, a gem of a property, it still will only be valued against what has sold recently nearby.

"I sold a house in the University District last year," said Austin Black II of City Living Detroit, a Detroit-based real estate firm. "It had brand-new windows, roof, completely done on the inside, new bathroom. It goes on the market for $189,000.
"The first lender we went with got it appraised for $120,000."
Eventually, the sellers worked with another lender and got a better valuation, but there isn't always a happy ending.
There is hope that the Land Bank auctions will help create a bottom for the market — showing what people are willing to pay for unrenovated homes — and push up appraisals.
"The auctions give a little bit of validity to the market," said Boudreau, whose company has appraisers in 35 states and values 6,000 properties a month. "That will help everyone else out. Plus it gets one more publicly owned property off the market. It's definitely going to help."
http://www.crainsdetroit.com/article...ue-for-housing


The article also mentions that during open houses, the Land Bank now shows preinspection reports so bidders can figure the approximate cost of rehabilitation before bidding for the property. Initially, the Land Bank didn't show that information until after bidders won the properties.

However, there's still the issue that most banks won't finance mortgages unless the house meets a certain level of habitability. With some houses estimating a need of at least $100K for rehabs, that'll definitely turn some people off. Currently, the only exception is in Marygrove where Talmer Bancorp Inc is offering $25,000 in forgivable loans. Also JP Morgan Chase with their big Detroit investment announcement a few weeks back is trying to create a program to offer loans to future buyers of the auction.

Currently, most of the houses coming up in the auction are in Old Redford, Osborn, and Cornerstone with a few sprinkled in other areas.