Basic Guidelines For Perusing Detroit Real Estate Listings
Hi! I used to read Detroit real estate listings for about five hours a day from 2011–2014 when I was running a website called Curbed Detroit. Maybe you’ve heard of it? It was super fun and very exhausting and I learned a lot.
In 2015 I got a real estate license and I work for O’Connor Realty, a firm based in the city of Detroit which is super-important if you actually plan to buy something in Detroit. Suburban-based firms are not going to give you the same advantage so if you are serious, if nothing else, work with an agent whose office is here. I did when I made a personal purchase in 2013.
I still peruse Detroit real estate listings daily, but I’ve gotten a lot more efficient about which ones I really want to go see to analyze as a possible investment for myself or my clients.
As a real estate obsessive, I’m all too aware that one can get totally lost perusing the listings and dreaming of what might be. In fact, there’s a television empire (HGTV!) built on our addictive desire to do so, and I watch that every time I have a hotel TV to myself but have barred it from my personal home because I’d never ever get anything done.
And while I am ok wasting my own time, I wanted to sit down and pass along some tips for would-be buyers to be more effective with their own, and with the future agents they might hire to help them find a home. I find myself all too-often shooting down clients (hopefully, politely) when they suggest we go see something that they hope might be a dream, but that I can typically already tell is going to be a nightmare. It’s totally fine to be an amateur with lots of questions! You should ask your agent as much as you need, but in the interest of being a little bit more efficient for everyone, here are my basic tips for looking at online listings if you are really trying to decide, “is this house for me?”
- Is it less than $20K? If so you probably don’t want it
No reasonable person is going to sell something for less than it is worth. A working HVAC system, plumbing, and electrical should equal at least $20K, roughly. If the listing is less than that, you are going to have to put in one of those systems, and likely all three of them. Just to get it habitable is going to be something like another $20K, assuming you have to hire someone, and if you are not experienced hiring contractors and managing costs it is going to balloon to $30K. So, in very basic terms, if you are not a developer and can’t do your own plumbing, HVAC, and electrical, every time you see a $20K listing just think “they mean $50K.” That is what it is going to take just to make it habitable, and certainly not comfortable or stylish (which HGTV teaches us is VERY IMPORTANT!)
2. Does it say Quit Claim Deed? Run!
Due to the high amount of foreclosure in Detroit, and speculators who buy in auctions and are trying to “flip” those purchases without adding value, you may notice a listing that says “Quit Claim Deed.” If you are an experienced developer you know what’s up and this might be a good one for you. If you just want a place to live this is going to be a mess and you will have to pay for title work and hope that you can really close on this property, but you might not be able to. The problem is that, most likely, the person selling this thing bought it in an auction but part of the previous foreclosure process was not completed. Which is to say, someone could come around and say “Hey listen I know you just paid that guy for that house and he gave you a quit claim deed, but he does not own it, I do.” Educate yourself on what title work is and what different types of deeds are, very carefully, before getting serious about a listing like this.
3. Don’t Trust a Zestimate
I’m not trying to call out Zillow specifically, but they have something called a “Zestimate,” which in theory tells you what the home is worth. Zavoid it. Maybe that really works great in some markets, but speaking for Detroit I would say skip it and ask your agent about “comps.” That means comparable sales. If you are serious about a property, you want to know what properties of a similar size and condition sold for and try to use that price for square foot to figure out what to pay for the thing you want to buy. Caveat: Detroit comps can be really screwed up and you might need to discard this information, but at least you will have it and know how it was obtained. What formula goes into a Zestimate and do they care if you pay the right price for property? You agent is going to be more invested in helping you figure that out.
4. Ask around when it comes to hiring an agent
I recently spent some time playing around with the online Zillow and Trulia profiles agents have, and it occurred to me that some people might actually be figuring out who to work with based off what little pixilated headshot appears on the listing you are looking at. I am digital person in a digital age and I would love to trust the internet to send me the right pixilated head to help me buy the thing I want, but the internet just does not know you that well, and some of that is “paid placement” which does not even mean that agents knows the property well. Word of mouth is the best way to find a real estate agent. Talk to your friends who have bought in Detroit, or friends of friends, or just some guy in the bar. If someone had a bad experience with an agent they are not going to blindly pass that name along, and hopefully it was a good experience instead.
I hope that helps get you started. And if we are lucky enough to work together what I really hope is that it helps me help you. Investing and renovating in Detroit can be an awesome experience, but it is also a very time-consuming job. For some people, a move-in ready home is going to be the better choice. Trust me, there will still be plenty to obsess over (I’ll even sign up to help with that, I could lose months of my life devoted to paint colors and house plants (That actually took up most of my last year, don’t ask!))
Want to tell me I am wrong, that I forgot something important on this list, or buy a house plant from me (I have 22 and need about six)? Email me at
Cox@oconnordetroit.com
OR find me on twitter and ask a 280 character question. (SN: Are they Reddit now? Should this blog post be on Reddit?)
xoxo, Cox
