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Buyer Beware: Despite Low Prices for Detroit’s Foreclosed Homes, the Houses Might Already Be Occupied

Street of residential houses
Foreclosed homes may seem cheap in Detroit — sometimes as low as $500. But experts warn that they come with hidden costs, including the payment of back taxes, and maybe even a few surprises for buyers.

According to mapping company Loveland Technologies, which has surveyed every property in Detroit, there are approximately 100,000 Detroit residents living in foreclosed homes.

Some of these individuals are the former owners of the property, many of whom were unable to pay Detroit’s property taxes for the few services the city does offer. Detroit has the highest property taxes of any city in the United States, set by now-outdated assessed home values.

Others may have been longtime tenants, and some, the company said, may even be squatters.

Mary Wilbur, a 46-year-old homemaker, is one of those squatters.

Wilbur and her 17-year-old daughter, Claire, live in a 1920s-era house in an area now called Fireweed Universe City, a so-called self-sustaining community filled with artists and activists. The house is part of the Grixdale Farms neighborhood, which was once known for drug crime and now is home to more than 500 vacant buildings.

Wilbur and her daughter moved into the home two years ago after going through a divorce and losing her home to foreclosure; Claire had chosen to stay with her mother rather than live with her father instead. In the U.S., where around 40 to 50% of marriages end in divorce, the child custody arrangement isn’t unusual, but the living situation is.

The City of Detroit used to give legal protections to squatters, insisting that the home’s owners were responsible for evicting residents. But in September 2014, the law changed, and now police are able to force squatters from the homes and arrest them on the spot.

A few Detroit residents have gotten creative with repossessing or revitalizing homes.

Darin McLeskey, who buys, sells and develops real estate in the city, took a “cheaper, easier and more amicable” route with a squatter rather than evicting the man. He and the squatter of an uninhabited home made a “cash for keys” deal, and McLeskey got the house from the man for $300.

Back in October, an Austrian man named Nik Gindelhuber made a deal to buy a house in Detroit as an investment property in exchange for an iPhone 6.

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