Credit: Fabrizio Costantini/Bloomberg
In Detroit, flawed appraisals and a dearth of normal, non-foreclosure sales to serve as comparisons have put mortgage loans out of reach for most potential buyers.
Non-profit groups rehabbing homes in economically troubled Detroit, Michigan, aren't having trouble attracting buyers these days. But when a buyer does show up, deals often break down over the problem of property appraisals, according to a Bloomberg report ("Detroit Homes Rot as Appraisals Stopping Sales, Mortgages," by Jeff Green). In Detroit, most comparable sales available for appraisal comparisons involve foreclosed homes — meaning buyers, even if they have good credit, can't get financing at the price they're willing to pay.
"Flawed appraisals and a dearth of normal, non-foreclosure sales to serve as comparisons have put mortgages out of reach for most potential buyers, even in the best neighborhoods like Grandmont Rosedale that are the focus of officials' efforts to revive Detroit," Bloomberg reports. "In a city of about 700,000, there were just 578 mortgages for purchases last year, according to RealtyTrac, an Irvine, California-based data provider."