A U.S. city is offering homes for just $1 in an attempt to improve the neighborhood by putting abandoned properties back into use.
Louisville, Kentucky, is selling these abandoned and vacant homes to people who can see the vision in transforming the area.
Interested buyers must also provide the intended use of the property after the construction ends in order to be considered (stock).[/caption]
To sell them for a dollar, the property must be abandoned and vacant.
This means there is an open maintenance violation on the property and a code enforcement official deemed it unoccupied for a minimum of a year, according to Realtor.com.
Other vacancy qualifications include the property being referred to the city for abatement action like cleaning, boarding or demolition.
The Landbank Authority, the agency behind the program, is in charge of acquiring, managing and selling the “distressed” properties to developers who would be able to stimulate the tax base and increase property values.
Applicants must submit proof of funds, construction plans, an itemized budget and reveal the intended use after completion in order to be considered, according to the development program.
The minimum amount of funds required for the properties range from $29,000 to $62,750.
The developers may face total rehabilitation costs estimated anywhere from $104,250 to over $216,000, depending on the property.
Interested applicants must also agree to complete the necessary work within a year.
“We want to revitalize the block,” Tia Bowman, the executive administrator for the Metro Office of Community Housing and Development said in an interview with WDRB.
“We don’t want to gentrify it. We don’t want to move people out or displace people.”
“It’s not about the dollar cost,” she continued. “It’s about what you’re putting into this property. It’s about the amenities, the features in this property. It’s going to be about what you list this property for.”
DOLLAR DEALS
Ten properties were up for grabs to interested buyers in the neighborhoods of Portland, Shawnee, Park Hill, Parkland, Chickasaw and Russell.
The mission, led by the Landbank Authority, hopes to put these properties “back into productive use to improve our neighborhoods by increasing property values, stimulate the tax base, and reducing crime rates.”
A 2017 study from the Urban Institute found that vacant and abandoned properties are one of the main indicators of neighborhood-level distress.
One theory suggests that vacant properties create a climate of “social and psychological disorder that attracts criminal activity and violence and becomes a breeding ground for vermin,” according to the Urban Institute.
These factors can lead to effects on residents in the surrounding area including mental distress and higher rates of chronic illnesses, the study said.
The Pew Research Center, explained these kinds of transformations enhance public safety, increase green space and provide economic opportunities that contribute to improved mental and physical health outcomes for community members.
Tips on spotting property scams
These five tips on avoiding real estate scams have been shared by The Bellamy Law Firm.
Fake Owners:
- This is where properties are listed for sale by scammers who do not own them.
- They may ask for a deposit to “hold” the property until you can view it to lure in prospective buyers.
- Be wary of people who ask for money upfront and before signing any documents ensure you ask to see the tax records and deeds.
Fake Real Estate Professionals:
- Scammers pretending to be real estate agents.
- Prospective buyers can check the Board of Realtors website for the individual and their real estate license to confirm their story.
Cash Offers:
- Warning phrases for this are: “We pay cash for homes” and “We buy ugly houses.”
- This often sees people sell their homes for much less than the going market value and those who are hard-up are often victims.
Predatory Lending:
- Some mortgage lenders may urge borrowers to repeatedly refinance their mortgages when it is not needed so they can get more cash on hand.
- It is also important to be suspicious of lenders who come to you before you have requested help.
Bait-and-Switch Moving Companies:
- This is where the moving company gives you an estimate for your belongings and then increases the cost when they arrive which pressurizes customers to accept the new offer.
- Another version of this is when movers pick up your belongings but hold them hostage and refuse to deliver them until more money has been paid.
- People moving homes should ask for a license number from the moving company and check for complaints with official companies like the Better Business Bureau and the Federal Motor Carrier Safety Administration.
- It is also worth shopping around by getting multiple quotes and holding off on paying until the move has been completed.
Source: The Bellamy Law Firm
The transformation can also help curb crime.
According to the Manhattan Institute, overgrown abandoned properties can be breeding grounds for criminal activity.
The overgrown trees, weeds and shrubs can “reduce the visibility of criminal activities on the streets and discourage residents from walking down them.”
Some in Louisville, like Louisville Councilwoman Tammy Hawkins, have expressed concerns about gentrification and the costly home assessments with these transformations.
“Most of those homes, they already have them pre-assessed for up to $100,000 or even more,” Hawkins told the Courier Journal. “If they can barely fix up their own home, the average person wouldn’t have that amount of money.”
Hawkins also worried that the movement focuses only on homes in the West End of Louisville, saying she believes “this is just the start of gentrification.”
A spokesperson for the Louisville Cabinet for Economic Development told the Courier Journal that the west side of the city was being focused on because the Landbank Authority has several properties in the area.
The decision to focus on a few neighborhoods was also made to make it convenient for buyers to scope out multiple properties in a day.
In terms of gentrification concerns, officials are narrowing down the applicant pool to ensure buyers follow through on the program’s goals.
The Courier Journal reported that applicants who plan to own and occupy the home are ranked above those who plan to sell or lease the property once construction is completed.
Those planning to rent or sell the homes are also being considered above those looking to sell the property at market value.
Locals are already thinking positively about the transformations.
“This is a really good area,” Monica Hill, who visited one of the open houses in August, told the Courier Journal.
“When you come in and you start fixing up other properties that are distressed, it’s going to add value to the community and other properties.”
“A lot of these old properties here, they just need love,” Charles Scott, a general contractor who grew up in the area and now rehabilitates homes in the local community, said in an interview with WDRB.
“I remember these houses when I was a kid. I had an uncle who lived around the corner, and these houses were beautiful at one time.”
