Detroit has tens of thousands of abandoned homes. The city is experimenting with new ways to repopulate them — including auctioning them online for as little as $1,000. There are deals to be had, but the cost of repairs often exceeds the value of the homes.

The city's worst homes end up with the Detroit Land Bank Authority, a quasi-governmental agency. Craig Fahle, the agency's director of public affairs, shows me around a 1,300-square-foot Tudor-style home on Detroit's far east side.

"Properties come to us, only after nobody else wants them anymore. They've gone through foreclosures and they come to us when they're in this kind of condition," Fahle says.

Outside, the place is charming. Inside, it's a mess.

The radiator is gone. Windows are missing, now boarded up. Many of the kitchen cupboards are gone, as is the boiler. But the floors and the moldings look salvageable.

It's one of Fahle's better properties. He's hoping to get $25,000 for the place, but he'll take whatever he can to get it off the rolls.

"We have to cut the grass on the properties," he says. "We can't do it every week or anything. We'll do it a couple of times a summer because we own 88,000 parcels of land in the city, as a land bank. We own one-quarter of all the property in the city of Detroit."

Fahle says Detroit's land bank has perhaps more properties than any other in the world.

Three-quarters of the land bank's parcels are vacant. Those sell for $100. Neighbors are snatching them up to double their land.

The land bank is auctioning off three houses a day online, eBay style. It has closed on just over 300 in a year since the auction site got going. That leaves more than 21,000 to go.

Mayor Mike Duggan says that's just not fast enough.

"Three months ago, we kicked off a program where city employees and their families, if they bid on a house on the land bank could get a 50 percent discount," Duggan said at a City Hall news conference last week.

That discount puts bidders who don't work for the city at a deep disadvantage. But city officials say there's so much inventory, they have to do something to build up demand. Besides, only 44 city employees have won those auctions with the half-off discount.

Duggan says the main problem is, whether you work for the city or not, it's hard to get a loan on a dilapidated property.

"A typical house on the auction that you'll buy it for $10,000, you have to put $20,000 in to fix it up. It's almost impossible to get a mortgage in that circumstance," he says.

But now, the city has a partner: Flagstar Bank is offering mortgages to city employees, loans for up to 300 percent of the value of the homes — that will cover the purchase price and many necessary improvements.

Flagstar is also offering $15,000 grants, paid out over five years.

City contractor Carolyn Abney was lured back to Detroit from the suburbs. In the home she's leaving, she says, "I have one bathroom, and I have to fight over [it]."

Her new home in Detroit has 2,200 square feet. "There are three bathrooms. There's a circular staircase. It's just cute," Abney says.

She bid $56,000. She could end up getting it for less than a quarter of that, after discounts and loans. And, she can get a loan to fix the place up.

Still, Fahle, the land bank official, wants people to know what they're getting into when they bid for a home online. In another home about to go up for auction, the gutters were missing, the garage door was detached from the hinges, and the neighbor parked his car on the back lawn.

Despite its flaws, it was an attractive colonial brick house. But if nobody fixes it up, neighbors' property values will likely keep declining.

"It's just a matter of time before somebody says 'enough' and they just do what a lot of other people have done and they leave," Fahle says.

And the spiral will continue.

Fahle says he's thrilled when he gets $1,000 for the worst houses. If he can't get that, it costs $15,000 to tear them down.

Copyright 2015 NPR. To see more, visit http://www.npr.org/.

Transcript

ROBERT SIEGEL, HOST:

Detroit has a lot of abandoned homes - more than 20,000. The city government is trying to do something about that by offering new financing incentives. And as we're about to hear, there are deals to be had. But repairing the houses can add tens of thousands of dollars to the cost. NPR's Jason Margolis has our story.

JASON MARGOLIS, BYLINE: Craig Fahle works for the Detroit Land Bank Authority, a quasi-governmental agency. Ask him exactly what a land bank is, and he'll tell you, they're the property owner of last resort. He shows me around a 1,300 square-foot Tudor-style home on Detroit's far east side.

CRAIG FAHLE: Properties come to us only after nobody else wants them anymore. They've gone through foreclosures and they come to us when they're in this kind of condition.

MARGOLIS: It's a mess.

FAHLE: Let's take a look behind here. Yeah. See, the radiator's gone.

MARGOLIS: Windows are missing, so are kitchen cupboards and the boiler. But the floors and the moldings look salvageable. It's one of his better properties. Fahle is hoping to get $25,000 for this place, but he'll take whatever he can to get it off the rolls.

FAHLE: We have to cut the grass on the properties. We can't do it every week or anything. We'll do it a couple of times a summer because, you know, we own 88,000 parcels of land in the city as a land bank. We own one-quarter of all the property in the city of Detroit.

MARGOLIS: Eighty-eight thousand properties?

FAHLE: Eighty-eight thousand.

MARGOLIS: Is that the largest of any city in the United States?

FAHLE: It might be the largest in the world.

MARGOLIS: Three-quarters of those lots are vacant. Those sell for 100 bucks. Neighbors are snatching them up to double their land. The Detroit Land Bank is now auctioning off three houses a day online, eBay-style. They've closed on just over 300 in a year since the auction site got going, 21,000 more to go. Mayor Mike Duggan says that's just not fast enough. He spoke last week at City Hall.

(SOUNDBITE OF ARCHIVED RECORDING)

MIKE DUGGAN: So three months ago, we kicked-off a program where city employees or their families, if they bid on a house on the land bank, could get a 50 percent discount.

MARGOLIS: That puts bidders who don't work for the city at a deep disadvantage. But the city says there's so much inventory, they have to do something to build demand. Besides, only 44 employees have a won those auctions. Duggan says the main problem is that whether you work for the city or not, it's hard to get a loan on a dilapidated property.

(SOUNDBITE OF ARCHIVED RECORDING)

DUGGAN: It's a typical house on the auction that you'll buy it for $10,000, you have to put 20,000 in to fix up. It's almost impossible to get a mortgage in that circumstance.

MARGOLIS: But now the city has a partner. Flagstar Bank is offering mortgages to city employees, loans that will cover the purchase price and necessary improvements. Flagstar is also offering $15,000 grants paid out over five years. Carolyn Abney was lured back to Detroit from the suburbs. I asked her about the home she's leaving...

CAROLYN ABNEY: I have one bathroom, and I have to fight over the bathroom.

MARGOLIS: ...And her new one in Detroit.

ABNEY: Twenty-two hundred square feet, there are three bathrooms, there's a circular staircase. It's just cute.

MARGOLIS: She bid 56,000. She could end up getting it for less than a quarter of that, and she can get a loan to fix the place up. Still, Craig Fahle with Detroit's land bank wants people to know what they're getting into. We stopped by another home about to go up for auction.

FAHLE: Gutters are missing. The neighbor's so generously parking his car on the lawn.

MARGOLIS: And the garage door is detached from the hinges. Still, it's an attractive colonial brick house. If nobody fixes it up though, the neighbors' property values will likely keep declining and the spiral will continue.

FAHLE: It's just a matter of time before somebody says enough, and they just do what a lot of other people have done and they leave.

MARGOLIS: Fahle says he's thrilled to get a thousand dollars for his worst houses. If not, it costs him $15,000 to tear them down. Jason Margolis, NPR News, Detroit. Transcript provided by NPR, Copyright NPR.

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