Last October I purchased three houses from the Detroit tax auction. One I never intended on keeping but I did have a buyer already lined up… or so I thought.
When it became clear that buyer wasn’t going to come through, I got to talking with my buddy Jamiel about what we could do. He hooked me up with his partner Jamila and we listed it on the MLS.
To our surprise, it wasn’t long before we had an interested buyer. Apparently the guy owned a good sized apartment complex nearby. And, unlike me, he liked the area.
Awesome!
We wrote up a purchase agreement for $13,000 and got to work.
For such a cheap house you’d think this transaction would be quick and easy. Given the purchase price, it’s a cash deal, and those generally move fast.
Nope.
This one took forever for several reasons. First, we owned the house on a quit claim deed (QCD) and the buyer wanted to go through title, meaning he wanted title insurance. Apparently that process is a bit more complex with a QCD and involves a Freedom of Information Act (FOIA) request.
When that was finally done we hit another snag. There was an $8,000 balance on the previous owner’s water account. Obviously, this wasn’t ours and it’s common knowledge in Detroit that utility bills follow previous owners and tenants, but title was insisting we had to get it cleared before proceeding.
That took some back and forth with DWSD via phone and email and having them state in writing that it wasn’t on us was eventually enough to satisfy the title agency. We ended up closing yesterday after having the initial purchase agreement signed on February 13th. Almost two months!
We paid $10,032 for the Fire House at auction and another $1,162 in property taxes for a total of $11,194.
Although we sold it for $13,000, after commissions, fees, title insurance, etc. we only walked away with a check for $10,520.27 resulting in a loss of $673.73.
As far as lessons go, that’s a cheap one. I’ve lost far more money doing far smarter things. I’m just glad to be done with it and focusing on more important projects. At the end of the day, I’m super thankful that Jamila stuck it out and got this sold for us. It’s obviously not a huge win or big money maker for her.
Now we can dump the money into putting a new roof on the McCarty House.