Market for Fixer-Uppers Traps Low-Income Buyers: High-Risk Deals on Shabby Homes Ensnare Buyers
Some of the homes in Akron, Ohio, that have been sold through contracts for deeds that have been condemned or have housing code issues. Many derelict houses across the Midwest and the South have been sold to private investors, who then sell them through contracts for deeds.
A version of this article appears in print on February 21, 2016, on page A1 of the New York edition with the headline: High-Risk Deals on Shabby Homes Ensnare Buyers.
AKRON, Ohio — Hundreds of broken-down houses still dot the streets of this onetime tire capital of the world, a scar from the financial crisis and housing bust.
The wood has rotted in some; others have black mold, broken windows or failing foundations. Many lack working electrical systems or are missing water pipes and furnaces. The unpaid property taxes mount.
Dozens of these houses were scooped up after the financial crisis by investors, who then make deals with low-income home buyers unable to get traditional mortgages. The arrangement is something like buying a home on an installment plan, with a high-interest, long-term loan called a contract for deed, or land contract.
But for buyers lured by the dream of homeownership, these seller-financed transactions can become a money trap that ends with a quick eviction by the seller, who can flip the home again. Before the housing crisis, low-income buyers got too much of a house that they couldn’t afford. Now, they are getting too little of a house that they can’t afford to repair. CLICK ON THIS LINK FOR THE FULL ARTICLE, or click on the heading.
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