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Right Answer to Abandoned Homes?

Posted to MichiganNow.org on Thursday, August 9, 2012

INTRO: Michigan is known for land and houses that can’t even be given away. No one wants them.  Tension develops between present and future owners and the  local governments responsible for the properties. Michigan Now’s Chris McCarus reports from Ingham County where they’re trying to dump inventory in their second and final real estate auction of the year, on August 24.

Auctioneer John Bippus is trained in high speed, cadenced bid calling. But he used slower, regular language for the auction July 24 at the Lansing Center. He didn’t want to confuse anybody.

“Sold it. 788. 788 at the minimum bid on number 105. 788 at the minimum bid.”

The minimum bid on this house was $12,730.  Bippus was trying to sell more than 80 properties like this scattered across a whole county. He brought in $450,000…though the county’s still in the hole by several million.

“Today was a good sale. A lot properties sold. About half. It’s what we expected. People got good deals. Eric told them not to overpay. I tried to make them overpay but…”

Eric Schertzing is the Ingham County treasurer. He’s supposed to collect the taxes on 800 abandoned properties.

“The goal is not to extract as much money out of somebody. The goal is to have a high quality property at the end of the process. This is the beginning of their process, the end of mine as treasurer. It’s the beginning of the renovation, fix up, rental or resale process. We want a high quality home for somebody at the end of the process. If they overpay me they might not have the money to fix it up.”

10 years ago, Genesee County became a national model by starting a land bank. They were the first to deal with the worst. Mainly because they contain Flint that got crushed as GM eliminated 80,000 jobs there. Land banks can slow suburban sprawl on the edge and urban decay at the core. Fill the city back in. Ingham is now one of 33 Michigan land banks.  But auctioneer John Bippus says:

“No I don’t see a trend of moving back to the city unless they have a job in the city or close to the city.”

Treasurers like Schertzing hope that’s not true. They use the land bank to fill the treasury. The land bank can decide to fix up or demolish a whole row of houses. It can steer the neighborhood economy. Cities can shut down speculators whose only goal is to maximize profit off their little parcel. Even worse, they do nothing while it sits and rots. Tom Haas has been buying and selling houses for 30 years.

“I don’t agree with putting them in a land bank. I don’t like the land bank concept at all. I think… I think…. although I’m a very trusting person in what Eric does, I truly believe that the philosophy should be as soon as you possibly can get to it. Don’t take it to a land bank. Actually just take it to an auction like the county treasurer is supposed to do.”

But the Ingham County land bank can’t take control of every house anyway. That’s why these 80 are being auctioned off . The Genesee County Land Bank in Flint is bogged down by 7,000 properties. Tom Haas says don’t blame the speculators in Detroit, Saginaw or any other beat up Michigan city.

“If you’re gonna sit on them you’re dumb. It’s a waste of money.”

So Haas thinks they’re not the problem. County treasurers say they ARE the problem. The free market they always operated in has failed. Tom Haas says no. Let’s return to the free market.

“Take a look at Flint. You want to see a place with a large land bank and they can’t maintain the properties.”

“But without the land bank wouldn’t you say they would have been in much worse shape?”

“No. They would have gone. They would have sold and private money would have moved on it.”

So what has private money done in this auction? Tom Haas says:

“I would tell you that the ones that stood out were the one on 501 N. Francis which is a good neighborhood. The SEV’s, the property is probably worth 50 or $51,000 and they bought it for $11,500.”

“How do you know it’s worth $50,000?”

“It’s just a neighborhood. If you know the neighborhood and know what’s going up in that neighborhood it’s probably a good value. $9,500 for the property on 1701 W. Saginaw seems to me a good value.”

“What did it look like?”

“It’s rough. But once again, $9,500 for a property that according to the city is valued at $96,000 that’s 10%.”

I went to visit 501 N. Francis. Built a century ago. A story and a half. Less than 1,000 square feet. Maybe 2 bedrooms. Damaged walls inside. Drab brown color outside. Neighbor Philip Lamoureux says it’s been empty for a year.

“I felt a little sorry for them when they got into that house because the previous time before when it had been empty the pipe in the basement had burst and filled the thing up like a swimming pool. But apparently that didn’t cause them many problems. It got sided while they were there. It really looked rattier even before. I heard from the guys who were throwing stuff in the dumpster in that back that there was a lot of junk left. But I mean when you kicked out of your place do you tidy up and clean the carpet for the next folks? I don’t think so.”

So someone other than Tom Haas bought the house for $11,500. Are they willing to spend another $20,000 to make it livable? Do they have $20,000? This is the cycle of abandonment  that keeps going on.

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Philip Lamoureux lives 2 houses north of the abandoned house. He credits Harold Leeman, who ran for a seat in the state house in the August 7 primary, with maintaining the property.

Philip Lamoureux lives 2 houses north of the abandoned house. He credits Harold Leeman, who ran for a seat in the state house in the August 7 primary, with maintaining the property.

Plaster removed exposing the lath strips. Original woodwork but not fancy enough to call it arts and crafts style.

Plaster removed exposing the lath strips. Original woodwork but not fancy enough to call it arts and crafts style.

Tom Haas is a 30 year veteran of the Lansing area real estate industry. He's an investor to some and a speculator to others.

Tom Haas is a 30 year veteran of the Lansing area real estate industry. He's an investor to some and a speculator to others.

501 N. Francis sits across from former city councilman Harold Leeman who mowed the lawn when it was empty.

501 N. Francis sits across from former city councilman Harold Leeman who mowed the lawn when it was empty.

John Bippus' sister collects the cash.

John Bippus' sister collects the cash.

Ingham County Treasurer Eric Schertzing tallying $450,000 worth of bids on tax reverted property.

Ingham County Treasurer Eric Schertzing tallying $450,000 worth of bids on tax reverted property.

Auctioneer John Bippus at the Lansing Center July 24, 2012

Auctioneer John Bippus at the Lansing Center July 24, 2012

501 N. Francis St. on Lansing's east side, August 6, 2012

501 N. Francis St. on Lansing's east side, August 6, 2012

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