March 8, 2009 -- A dollar doesn't buy much these days. But in Detroit, it can buy you a house.
Real estate agent Ian Mason, who specializes in selling foreclosed properties, showed us a two-bedroom, 800-square-foot home that his agency recently sold for a single dollar.
"It wasn't much of a negotiation," said Mason, who works for Bearing Group. "The seller was ambitiously looking to get rid of it."
That's because the seller, a bank, was losing thousands each month in maintenance costs and taxes just to hold onto the foreclosed home, which is badly in need of new paint, carpeting, and bathroom fixtures -- but otherwise appears structurally sound and free of mold.
For the price of a can of soda, Mason says it's a bargain.
"I think you can make this house clean, safe and functional for $500 to $1,000," said Mason.
There are more than 40,000 vacant properties in Detroit, which has been hit hard by the foreclosure crisis, and the median home price is a stunningly low $7,000. In many neighborhoods, homes that were fetching $75,000 just three years ago are now selling for ten cents on the dollar or less.
"Some of the homes are very nice. Some of them are falling over," said Mason.
It's not just Detroit. This weekend, hundreds of foreclosed houses were being unloaded at fire sale prices at giant auctions in New England and New York. For the banks that are in possession of these properties, time is money.
In Detroit, home prices have plunged more than 20 percent, but sales volume is up 37 percent in the past 12 months.
Many of the buyers are real estate investors like Bret Russell. The Michigan native has purchased and renovated more than 120 Detroit-area properties, converting them into rental homes. He works closely with Mason to find the best houses at the lowest prices.
"I see very little risk in the market currently," said Russell. "You're buying a home for $10,000. If it goes down to $8,000, your rents are very strong, so from a cash-flow standpoint, you're on steady footing."
Mason says some residents may not be thrilled about a home next door selling for close to nothing, but he says in the long run it's the best thing for Detroit's struggling housing market and economy.
"A neighborhood gets a person or a family inside a vacant house," said Mason. "You have kids playing on the block again. You have people using the stores ... and they bring life back to the neighborhoods."