Part of the reason why real estate went for so little, though, is that the lenders weren’t bidding and the foreclosure sale. The problem with Detroit property is that nearly every property (even in good areas) gets stripped and filled with vagrants as soon as it becomes vagrant. It costs more for the lenders to maintain the property and they always suffer severe theft/vandalism losses. As such, the lenders don’t usually competitvely bid at the sale…they’d rather the property sell to a third party and take the financial loss than take back a property that will soon be destroyed by vagrants and become a liability.
This is something that would not likley happen in San Diego. Don’t get your hopes up about properties selling for little-to-nothing. Lenders have too much invested to let them go for a few thousand.
Don’t forget that the lender still has to approve the bid at Detroit’s sale AND there’s a six month period of redemption in Michigan. So, the person who purchased the property for next-to-nothing might not actually keep the property if the lender doesn’t agree that the bid was high enough or if the borrower is able to redeem the loan in the next six months. Even if the lender approves the loan, the high bidder cannot legally take possession of the property until the 6 month redemption expires. ALSO, a lot of the properties would have sold occupied since an eviction cannot begin until after the foreclosure sale and the redemption expires. This means that in Michigan, you can essentially get a mortgage and live free for at least a year.
