I can’t believe I missed out on this. If I saw this I might have thought this was a joke or something was not right. But it seems that this story is true. Someone actually bought a home on eBay for $1.75.

Joanne Smith lives in Chicago and she’s never been to Saginaw, Mich. But Ms. Smith has just bought a house there. The price? $1.75 (U.S.).

Ms. Smith, 30, was trolling on eBay last week looking for a PlayStation game when she stumbled across the small house, which has been condemned by the city. Bidding was at $1.25.

“I thought it was a joke. It just didn’t make sense,” Ms. Smith said yesterday. She put in an offer and found out a couple of days later that she was the new owner at $1.75.

“When I found out I just called my mom. I said, ‘You know what? I just bought something.’ She was like ‘What, another purse?’, and I said ‘No, a house, for $1.75,’ ” said Ms. Smith, who works as a hairdresser and lives in a rented apartment.

She’ll have to come up with at least $850 to cover some of the back taxes and cleanup costs, but the price marks a new low in the U.S. housing market.

With foreclosures reaching record levels in many parts of the United States,

the Internet has become a handy tool to sell distressed properties. eBay had more than 4,000 U.S. properties for sale yesterday, although only 64 were foreclosures. Prices ranged from $10 to $850,000.

Some companies specialize in buying up dozens of vacant properties from lenders or through sheriff sales, and then unloading them, usually for a small profit, through eBay and other websites.

The owner of Ms. Smith’s home was listed as Southern Investments LLC of Arizona City, Ariz., which bought the house for $26 on Jan. 20, 2008. Officials from the company could not be reached for comment.

Ohio-based Best Buy Properties Inc. has sold hundreds of foreclosed houses on eBay since 2000.

“Our staff is constantly searching the United States for bank foreclosures, tax foreclosures and other sources of distressed properties,” the company said in a statement.

Real estate experts advise caution when buying a property online. Ownership laws vary by jurisdiction and sometimes there could be thousands of dollars in back taxes owing.

“The bidder has got to be aware of the property and has got to have done enough research, that’s just common sense,” said Craig McIntyre of Realauction.com, which is helping several Florida counties sell hundreds of foreclosed houses online.

Some city governments are finding the online sales a problem. Whenever a foreclosed house changes hands, city officials have to track down the new owner and issue notices for back taxes, orders to condemn, or bills to cover various cleanup costs. That can be a challenge if the house keeps changing owners.

Constant sales also do little to improve blighted neighbourhoods, added Matt Lasko, housing director for the Detroit-Shoreway Community Organization, a non-profit group.

“You have these blighted and vacant structures that keep changing home ownership and the title keeps changing hands. At the same time, the house is staying vacant,” he said. “No is doing even minimal site control.” He has seen some houses change owners as many as five times in a month.

Ms. Smith isn’t going to sell her new home for now. She plans to visit the house in the next few days.

Would she consider moving? “I don’t know. If it’s okay over there, I can move there.”

View pictures of the house
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Story by:PAUL WALDIE
Reportonbusiness.com
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