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We seem to be in the midst of an era for state-sponsored real estate fire sales: Last month, Newark staged its headline-grabbing Valentine's Day sale of $1,000 plots of land. Now, New York state is preparing to auction off 150 Sandy-damaged Long Island lots and homes at a steep discount, according to the New York Times. In both cases, the deeds come with serious strings attached.
As with the Newark sale—which required buyers to build a home on their new lots within a certain time frame—buyers of the Long Island properties, most of which are either empty or occupied by badly damaged houses, will be required to build new homes within three years, with construction designed to weather future storms and rising sea levels. At an event on May 19th and 20th (details can be found here), the state will be auctioning the first round of properties it picked up to relieve struggling neighborhoods after the storm, selling them for around 20 or 30 percent less—sometimes more—than they were worth before the damage. For instance, a two-bedroom in Mastic Beach will be on the block for a $27,950 starting bid, and one East Rockaway home with a "pre-storm value" listed as $430,000 will be available for a starting bid of $94,900.
One big sticking point to consider before diving in: If you're building from scratch (as the State expects the majority of buyers will do), you'll likely need a construction loan. As Newark buyers have discovered in the wake of the sale, these aren't so easy to come by—lenders view them as risky, and often require down payments of 20 or 30 percent, the Times reports. In addition to what will likely be astronomical flood insurance bills, that reduced price might not end up looking like such a discount.
If you do decide that this is your best shot at an affordable seaside home, prospective buyers are required both to register and purchase due diligence information about the sale in order to take part in the auction—all steps further detailed in the auction catalog.