NIAGARA FALLS – A house goes into foreclosure. It’s sold at a city “in rem” auction. Before long, it’s back in foreclosure and falls into disrepair.
It’s a seemingly endless cycle that plagues cities around the country, including the Falls which has seen its housing stock deteriorate and be stripped by thieves:
“It’s a flawed process,” said City Community Development Director Seth Piccirillo of the in rem process. “Sometimes it brings out people who want to invest in these properties, but other times it brings out people who want to game the in rem. They don’t renovate the houses and are just trying to make money off of them and then don’t pay their taxes. It goes over and over again.”
To stop the cycle, the city has been trying a “smart” home ownership auction. Properties with the most potential for long-term homeownership are identified for the auction. Potential buyers have the chance to learn about the house before they bid on them. Buying through the program also forces buyers to enter into an agreement that promises that they will renovate and live in the house.
“This is just as much about home ownership as about changing the standard in rem auctions,” said Piccirillo.
He said this is the third year the city has offered the Home Ownership Auction. Building on its success, the program is going from three houses in the first year to 19 in the current auction.
The next Home Ownership Auction will be at 6:30 p.m. April 14 in Council Chambers in City Hall, 745 Main St. A community informational meeting will be held from 5 to 7 p.m. March 30 in City Hall.
Piccirillo said in a regular in rem auction people buy houses on spec and might get inside and find out that it needs more renovations than they realized, then they walk away and abandon the house, don’t pay taxes and the cycle begins again, which hurts the neighborhood and leads to demolition, which costs the city.
“It benefits us to find a smarter alternative,” he said.
In the Home Ownership Auction there is the ability to tour the homes and see the code enforcement violations prior to bidding on a house.
“We want to give as much information about theses houses as possible because that is what we would want if we were looking to buy these houses ourselves,” said Piccirillo. He said the information session also will teach prospective buyers how to bid on the houses, which can be daunting at an in rem auction.
Also unlike an in rem auction, there are rules bidders must agree to adhere to before they plan to bid.
Successful bidders must sit down after the auction and sign a commitment agreement that says they will live in the home as a prime occupant for no less than five years.
At the time of the sale they must present a renovation plan and agree to renovate the property to municipal code within one year of purchasing the property, unless an extension is negotiated.
They must also pay city, county and school taxes for the property at the time of purchase. A $500 deposit must be paid at the auction, which will be refunded once they complete the renovations.
“Each one of these houses will require hard work,” said Piccirillo. “We want to grow this so it a real alternative to the standard in rem auction.”
He said this auction is not limited to first-time home buyers. He also said in some cases, you could buy a house and pay less per month than you are paying for rent in the city.
But he stressed, “Don’t just go in and bid on anything. Know what houses you are bidding on. You don’t want to get into a situation where you’re owning something you don’t know how to renovate.”
He said when a potential bidder comes in on April 14 they should be able to pay the sales price and the full taxes and know how they want to renovate it.
Information about the properties are at: www.nf-cd.org, or www.AuctionsInternational.com/liveauction. Information about the properties is also available in the Niagara Falls Library or the City Clerk’s office.
Piccirillo said interested people can also contact him at 286-8801.