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4 ideas for fixing Wayne County's auction of tax-foreclosed properties

Jerry Paffendorf

The first round of Wayne County's annual auction of tax-foreclosed properties, the largest of its kind in the world, wrapped up last week. According to data from Loveland Technologies, of the 24,950 foreclosed properties for sale in the city of Detroit, only 1,648 sold.
 
As we await the second round of the auction, which will occur Oct. 6-22 and offer the 23,302 properties unsold in the first round at opening bids of $500 each, consider these musings from Jerry Paffendorf, Loveland Technologies' co-founder and CEO, on how Wayne County and the city of Detroit can better deal with their foreclosure problem in 2016, when another 60,000 properties could be eligible for auction.
 
Editor's note: This post was composed on an iPhone and originally appeared on the author's Facebook page. It is re-published with his permission.
 
Off the top of my head, here are four things the city and county could do in 2016 as another 60,000 Detroit properties are being noticed for foreclosure. Plenty of time if we get started now:
 
1) Reassess property taxes in a highly public manner, making the formula, process, and city services being funded clear (model it on Kickstarter). What's happening right now with the reassessment is not effectively public, not understood, not necessarily correct (my understanding is that it doesn't incorporate tax auction sales, which are among the majority of sales in Detroit), and I fear it will have to be done again.
 
2) Visit and survey everything that gets foreclosed, both the property type and condition, and also the human situation -- if it's occupied, why is someone in this situation and what help do they need? Do they want to stay, [or] do they want to move? Don't assume anything! A main reason the foreclosure system is such a mess is that everyone just assumes assumes assumes, when they know *nothing*.
 
3) Organize local community groups to participate in the surveying and outreach so that trust, empathy, sensitivity, and local knowledge is maximized. As local groups do this work they will also be planning for how to work on the properties that are left behind. This at once works on population stabilization, blight removal, and future land use planning.
 
4) Improve the tax auction itself, transparently bundling properties that shouldn't be sold because they are far too blighted or far too occupied or in the footprint of a public work (like a bridge) [bundling is the only legal way not to sell something at auction -- attaching it to many other things so it becomes un-buyable], securing the salvageable properties so they don't catch fire or become further scrapped, and then actually photographing and featuring the properties you want to sell to the highest bidder, making sure buyers know they'll get all the help in the world to put the property back together, but they do have responsibilities.
 
In thinking about turning an overwhelming disaster into an opportunity to unite the city, heal neighborhoods, and plan the future, taking on tax foreclosure like this in 2016 sounds to me like the absolute highest leverage thing that anyone could possibly do for Detroit and Detroiters.
 
Jerry Paffendorf is CEO and co-founder of Loveland Technologies. Follow him on Twitter @WELLO.
 
To explore everything currently for sale in Wayne County's 2015 tax foreclosure auction, visit detroit.makeloveland.com.

Explore the 60,000 Detroit properties that are two or more years behind on taxes and are currently receiving yellow bag tax foreclosure warnings that they will be auctioned in 2016 if they don't pay here: https://detroit.makeloveland.com/taxes15/mi/wayne/detroit#t=overview

Finally, check out Loveland's new report and survey of 6,000 occupied properties that went through the tax auction last year: makeloveland.com/foreclosure
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