Buying That Fixer-Upper

Once you have found a fixer-upper that you like, there are generally four paths forward, depending on circumstances.

Number one is a private sale, which is a sale between two private parties (current owner and you).  These can range in complexity.  On the simple end, a with-it property owner (rare bird) agrees with you on a price and then transfers the deed of the property to you, perhaps through a quitclaim deed filing, which is the most basic way to transfer real estate.  On the other end of the spectrum, you have the Rhode Island St house A. and I were interested in, where there was not only a property owner, but a loan servicer (bank), foreclosure law firm, City Hall demolitions office and lawyers for both us and the property owner.  That kind of complexity might mean things drag on for six months before falling apart after the title search, as it did in our case.  It takes all kinds.

Another type of sale is a purchase of a City-owned property, as in the case of the Green Monster.  The relevant page of the City’s web site is: Purchase of a City Property.  An in-depth look at this process will be in a later post, so for now I’ll just mention that the bylaws of the City require that the City seek fair market value for any properties they sell.  This rule is a big part of the reason why we have been plodding through the purchase process of the Green Monster for over half a year.  Not because of the price, per se, but because of the process in place for establishing fair market value and making the sale.  There are many steps and each takes weeks.

There are two ways to get around the fair market value rule, and one of them is the Homestead program.  The gist is this: you buy a fixer-upper from the city for $1 plus closing costs, but you must agree to live in the house for at least three years and have the house up to code in 18 months.  This program was designed to promote home ownership in hard-hit neighborhoods and get people living in vacant houses.  And that’s the catch; to be eligible for Homestead a house must be in a Homestead district.  Here’s the map.  Outside of those districts, you cannot Homestead a house, you have to go through the regular purchase process.  The Green Monster is approximately 100 yards outside of a Homestead district.  Ouch.  Side note: the Homestead program also applies to City-owned vacant lots right next to (as in touching) a house that you own and live in.

The fourth way to buy a fixer-upper in the city (and the second way to do it cheaply) is to go to the Inrem Auction.  I am not exactly sure what Inrem means here (in remediation?), but that’s what they call it.  Every October the City stirs the pot by offering up for auction any properties that are behind on taxes.  In Buffalo, that happens to be a number of them.  Property owners have up to a certain date to pay, and if they do not they their property is put on the block.  There are deals to be had (a number of folks we know have gotten houses this way), but it can be a bit of a crapshoot.  For one, the City does not allow buyers to walk through the houses before the auction.  Legally, you can view the houses from the sidewalk, but beyond that you are trespassing.  Also, properties that get paid off before the auction get taken off the list, so you can never be exactly sure what will be auctioned off and what will not.  If you go this route, do your research beforehand and make notes about which properties you like and how much they might be worth to you.  Always better to be prepared than to start bidding on properties based on address alone.  You can find information about current City foreclosures here.  The Convention Center downtown is the venue for the auction.


4 thoughts on “Buying That Fixer-Upper

  1. Sorry for the dumb question, but on the map, are the brown “CCE” areas the homestead areas?

    Awesome blog, by the way! I have dreams of taking a project like this on eventually.

    • Not a dumb question at all. CCE stands for Concentrated Code Enforcement area, and houses within those boundaries are Homestead eligible. The colored sections represent the Urban Renewal Areas, which are also Homestead eligible. Why exactly there are two different designations, often overlapping, I couldn’t say.

  2. This is all great info! Thanks so much for posting it all. Btw, in rem is latin for “about a thing.” In the Anglo-American legal system, there are two basic types of civil actions you can take: “in personam” and “in rem.” In personam is the most common — it means you are suing to determine something about a person, whether his actions (as in negligence) or his status (as in divorce). In rem is less common — it means you are suing to determine the status of property. Sort of arcane, but it has to do with the court’s jurisdiction, whether it has power over the particular person or the thing (usually because of where the person or thing is located).

    • Thanks for clearing that up. For some reason, Latin never occurred to me. But the interesting legal framework of the tax auction certainly merits an obscure term.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s