City will auction up to 175 houses

April 10, 1994|By Adriane B. Miller | Adriane B. Miller,Contributing Writer

Would-be homeowners, sharpen your pencils, steel your wills and get ready to bid on a house.

The city of Baltimore has started to qualify residents for the first Baltimore Home Festival Auction, scheduled for April 23-25.

As many as 175 vacant houses, most in need of repair, will be auctioned during the festival weekend to individuals who agree to make them their primary homes.

Houses for sale include properties that have been abandoned or foreclosed on by lenders. Most are owned by the city, others by the Maryland Department of Housing or the federal government. They are in neighborhoods throughout Baltimore.

The city has auctioned off distressed properties before, most recently 1,500 vacant homes last year in a tax sale. That auction generated mostly investor interest, and less than half have been sold.

This auction will be different, said Mayor Kurt L. Schmoke. It will target individual homebuyers, not developers or investors.

"The Baltimore Home Festival and the auction are a blend of the City Fair, a citywide neighborhood festival and the dollar housing program from the '70s, with elements of a tax sale, all rolled into one," the mayor said.

The auction is part of the city's push to inject new life into old neighborhoods that are full of vacant and dilapidated houses. City officials are eager to be done with the responsi bility of holding them and want tax-paying citizens to move in.

Some houses are in move-in condition, but many others need extensive repairs. Work orders for each house have been prepared by the city and may be reviewed by prospective bidders before the auction. The city is responsible for completing the noted renovations and repairs.

The auction price of each home will include the cost of renovation. All repairs will be completed before closing and before owners move in.

NationsBank will offer 30-year financing to qualified successful bidders. Financing will include the entire cost of renovation.

The city will provide "gap" financing for the amount of the purchase price that exceeds the appraised value. A buyer might pay more than the appraised value because of renovations that the city promises to make.

No repayment of gap financing is required if the owner agrees to live in the house for at least 10 years.

Assistance with down payments and closing costs is available through the city's Settlement Expense Loan Program and through local nonprofit housing groups.

As another incentive to bid, 100 percent of the cost of renovating each house may be deductible from the owner's property taxes during the first year.

To participate, bidders must be prequalified by one of six housing and financing consultants who are staffing the temporary Auction Information and Financing Headquarters, at 511 E. Baltimore St.

The headquarters office is open from noon to 7 p.m. Monday through Friday and from noon to 4 p.m. Saturday. Prequalifying began March 28 and will continue through April 22.

Zack Germroth, Baltimore housing department spokesman, said as many as 2,000 bidders may be prequalified to buy houses at the auction.

Prospective buyers may talk with a consultant without an appointment at no charge to find out whether they would qualify for a loan if they have a winning bid.

"They can tell you how much cash you will need to buy the property, as well as how much money you are able to borrow and your corresponding monthly payment," said O. Jesse Wiles II, president of Asset Property Disposition Inc. Mr. Wiles' company and Hudson & Marshall Auction Marketing, both of Atlanta, will direct the auctions.

The prequalification process consists of three steps:

1. Anyone who wants to bid in the auction must sign an affidavit stating that the buyer will occupy the property as a principal residence for at least five years.

2. If financing would be used to buy a house at the auction, bidders must meet the lender's qualifications and show they can repay the loan. Prospective bidders must bring several financial documents and other information to prequalify, specifically:

* Most recent pay stub.

* 1992 and 1993 W-2 tax forms. Self-employed individuals must bring copies of their 1992 and 1993 tax returns.

* Name, address, and phone number of landlords for the last two years.

* Residence history for seven years, with addresses.

* Complete mailing address of employers for the last two years.

* Most recent bank statements, including credit union accounts.

* A list of credit accounts, with address, account number, balance owed and required monthly payment for each account.

* For retirement or Social Security income, 1992 and 1993 1099 tax forms.

* Community homebuyers certificate (optional) if the bidder has attended a Community Home Buyers training program.

3. Eligible bidders will receive prequalification certificates from the Auction Financing Center to register for the auction. They must have the certificates with them on auction day, as well as $500 earnest money to be used as a deposit if their bids are accepted.

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