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Selling Homes in Detroit: It's About More Than Just the Benjamins

If all you knew was what you saw in the national media, you'd think being a real estate agent in the city of Detroit would qualify you for a guest spot on the Discovery Channel's "Dirty Jobs" show. Talk of $100 houses makes Detroit seem like the blue-light special of real estate. Everyone from CNN on down is telling the story of out-of-state speculators snatching up Detroit property like the sample vultures at Costco mindlessly gorging on the freebies. It sounds sad and ugly.

There's some truth in those cheap property stories, but that's only one part of the real estate picture here.

Enter Sabra Sanzotta's beautifully decorated live/work space in Eastern Market's FD Lofts, where swaths of luxurious fabric drape brick walls, silver cut out butterflies glimmer from the impossibly high ceilings and the kitchen gleams with fancy appliances. As Sanzotta sits, chatting and monitoring her buzzing cell phone, she doesn't seem on the precipice of defeat, gnashing her teeth and shaking her fist at the heavens. She offers no "why me?" diatribe and doesn't rail against the state of real estate. She just seems busy. Really busy.

"This has been our best year,"  says the proprietor of The Loft Warehouse. You may have a hard time believing this, but she means that this year -- yes 2009 -- has been her best yet. Huh?

Sanzotta isn't the only one telling that story. Realtors who specialize in the greater Downtown area and some of the city's more affluent neighborhoods say they aren't immune to the realities of a national mortgage crisis, sky-high home foreclosures and other unsavory economic realities. They aren't quitting the city either, not when there's good money to be made.

Many of the city's agents are selling more than just cheap houses to scavengers. They are selling things like luxury lofts to happy new residents. They sell fixer uppers to families, condos to empty nesters. Good homes to people who will live in them. And Detroit agents are making money doing this, even if to do so they have to work their tails off and harder than ever.

What are they buying?

Oh, that mythic $100 house. It's out there, but most of us couldn't or wouldn't live there.

While innovative projects like the internationally famous Mitch Cope/Gina Reichert Power House are extremely cool, not everyone has the guts or the vision to be gutsy and visionary. Some people want to buy a home, move in and live in it without first giving it an extreme makeover. You can do that in Detroit, real estate agents say, but you'll have to pay a little more than a Benjamin.

Joy Santiago, a real estate agent and resident of The Villages says people who have been waiting are now moving forward to get into properties and neighborhoods that in another time would have been out of reach. "We've got the biggest opportunity ever to be able to purchase Riverfront, Downtown, or Midtown property," she says.

Condos on the riverfront that were once six figures are going for less than $100,000. Houses in sought-after neighborhoods like The Villages -- historic homes that anywhere else in the nation would be worth millions -- are more affordable than ever.

In Midtown on highly desirable historic Ferry Street, Sanzotta is selling new construction luxury condos at Centurion Place starting at $150,000 about half of what they were selling for a couple years ago.

One of Sanzotta's young professional customers, Damoni Hurt, a marketing manager for Ford who is in his 30s, was one of those waiting for the right time. He just bought a condo with a downtown view on E. Jefferson across from Belle Isle.

"Now is the opportunity to transition from renting and sitting out to really jumping in," he says.

Hurt bought a bank-owned condo for $80,000 in The Lofts at Rivertown, a building that a couple years ago had units going for at two to five times as much. He knew the location was perfect: He was living there already. "It was a no-brainer from a quality of life standpoint," Hurt says. "I was living in the same building renting, paying twice as much for rent."

And he was not just buying junk. His is a tri-level loft with high-end fixtures. "This is the whole kit and caboodle," he says. "It's a foreclosure, but it wasn't a falling apart, dilapidated kind of East Side house deal."

The same space in downtown D.C. or Atlanta -- where he's lived before -- would have been out of his reach: "It'd be $1 million plus in D.C. In Atlanta, half a million easily," he says.

In addition to foreclosures, real estate agents say another big part of their business right now is short sales. In these cases, they negotiate with the banks to let homeowners sell the homes for less than they owe, and then the banks forgive the difference.

A short sale, however, is a lot more difficult and takes longer than a traditional sale, but agents say that when these short sales work out, it's a win-win for all the parties involved. In a short sale, the home won't sit empty, the seller gets out of the mortgage, the buyer gets a good deal and the agent gets a better commission than he or she would have gotten if the home was sold in a foreclosure.

More than foreclosures

Foreclosures and short sales aren't the only deals being made in the city. It's squishy, but there is still a market out there.

Last month, Sanzotta sold a $165,000 condo in Harbortown to a firefighter who plans to retire on the riverfront. She's also closing on a $141,000 townhome in Corktown in a few days. Both are not foreclosures.

Ryan Cooley of O'Connor Real Estate and Development in Corktown, says he's had a lot of demand for architecturally significant properties like the Mies van der Rohe townhomes in Lafayette Park. This month, in fact, he showed them to a couple from Baltimore, relocating here to work at Wayne State University. And it looks like they're buying.
 
Santiago just wrapped filming an episode of the ultra-addictive real estate drama "House Hunters" for HGTV. She showed the buyers three $400,000 properties -- all within Detroit's city limits. If you watch the show, which we already established that you do, you know they always buy something at the end.

And real estate agent Austin Black II, who works a lot in his Midtown neighborhood, says a customer walked in recently and paid a cool half million cash for a penthouse loft in the new Willys Overland Lofts development in Midtown.

Those stories -- market rate sales and big properties with high price tags -- might be more rare thanks to foreclosures and short sales, but they are out there.

Who is buying?

Black says 2009 is turning out to be a good year for him, as well, but he's had to hustle. "Part of it is, I am working with a lot more people, and you have to work a lot harder with those buyers," he says. Buyers have a lot more from which to choose, and they want to see the options, he says. "But it's paying off."

There might be out-of-state speculators looking to buy up Detroit by the block, but Black, Sanzotta and others who regularly sell in the city say those customers aren't as frequent as one might think. And the media reports mislead people to believe that for pennies, they're going to get a great house.

"I've gotten calls from people who are not from this area and who are from other parts of the country, and their impression is that they are getting a livable home for $100 in a livable neighborhood," Black says. "I think you'll find the market is typically more stable in Midtown."

OK, so who are the regular buyers? Sanzotta says many of her customers are professionals coming to work at the Medical Center. Black sells a lot to empty nesters, too. Cooley has a lot of customers relocating from out of state. Black does, too, and says that "95 percent of them grew up in the 'burbs, and a good percentage of that group has lived in cities across the country." They want an urban lifestyle, and they want it here.

In Detroit, he says, new development has slowed but there's still a trickle, like the newly rehabbed condos on Mack in Brush Park that Black sells. Black says selling new condo developments is tricky right now because lenders want 15 percent down on condos not already half sold, and most buyers don't have that to pony up. Sanzotta is facing the same challenge at Centurion, but she's seeing new interest in the property.

But even with the slowdown, Black says don't let those big media guys fool you: In Detroit, there's still plenty of life.

"One of the unique things about the downtown and Midtown areas, we've lost some businesses and some of the developments that were proposed never got off the ground, but you still see businesses opening, places under construction, new restaurants," Black says. "I still see more people walking outside, more people walking and running. Things are still happening and people want to be down here."



Clare Pfeiffer Ramsey is managing editor of Model D. Send feedback here.


Photos:

Centurion Place interior

Sabra Sanzotta, realtor

Centurion Place interior

Damoni Hurt

Damoni Hurt in his tri-level loft

Austin Black, realtor

Photographs by Detroit Photographer Marvin Shaouni Marvin Shaouni is the Managing Photographer for Metromode & Model D Contact Marvin here

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