You Can Buy a House for as Little as $1 in This NJ City

Want to buy a home for as little as $1? If you live in New Jersey's largest city, you've got a shot.

Newark recently announced the Homeownership Revitalization Program, where small residential properties seized for non-payment of taxes, water bills or other public debts are sold at certain minimum prices to qualifying residents. Up to 12 potential buyers could pitch per property under the program, which launched two days after the Newark Municipal Council gave final approval.

The program is a measure that enables low-cost sales to residents who have lived in Newark for five years or more or have been displaced by gentrification. These properties will be used for the construction of one, two, three, and four-family homes. The initiative also establishes a program for homebuyer counseling, creating well-informed owners with knowledge of how to successfully redevelop their properties.

Participants will gain an understanding of homeownership, including the borrowing process, their housing needs, home maintenance, and household budget and more, according to the city of Newark.

“Across America, LLCs are buying up owner-occupied homes and turning them into corporately owned expensive rental units,” Mayor Ras Baraka saidin a statement. “In Newark, where we work hard to expand homeownership, we have created a wide-ranging strategy to do everything possible to counter this dangerous trend. The Homeownership Revitalization Program is a new way to enable longtime Newark residents to become homeowners at costs that they can afford.”

With just one in four residents in Newark owning their own homes currently, Baraka says the Homeownership Revitalization Program is a key strategy he'll use execute to expand homeownership and promote housing stability and wealth building among Newark residents. The ordinance grew out of Newark's work with its Equitable Growth Advisory Commission, the mayor added.

The first partner and Program Administrator in the Homeownership Revitalization Program is the Neighborhood Assistance Corporation of America, or NACA, a national non-profit, community advocacy and homeownership organization that provides low-interest mortgages to help people become homeowners and stay in their homes. The national nonprofit mortgage company already runs another homeownership program with Newark.

Here we answer some questions about the program:

How do I qualify?

In order to apply, prospective buyers must have lived in Newark for at least five continuous years prior to the enactment of the ordinance, or be a resident of the city for a minimum of five continuous years before having to move due to gentrification and /or displacement.

In addition, they must show proof of ability to finance the purchase and address any code violations or other substandard conditions.

The applicant shall work with the Program Administrator to submit their application to the City of Newark. The application shall, among other things, include cost estimates for the redevelopment of the in-rem City-owned property, which shall include the work required to bring the property into conformance with all applicable state and local codes.

What kind of documents should I submit?

The applicant, with the assistance of the Program Administrator, shall submit proof of acquisition financing and shall demonstrate the financial means to redevelop the property. Proof of financial capability shall include, but not be limited to, the purchaser's own personal finances, a bank loan, and a commitment from lender to finance construction sufficient to bring the property up to City code standards.

• Source of Redevelopment Funds: Applicant must submit proof of acquisition funding including personal funds, bank and/or mortgage company loan, state or other financial sources that cover the cost for redevelopment. Basic eligibility is determined by gross annual household income to participate in the Homeownership Revitalization Program. Such income includes salary, wages, alimony, social security benefits, pension, business income and actual or imputed earning assets which include bank accounts, stocks, bonds or other securities.
• Source of Financing Acquisition of Property: Must demonstrate ability to acquire property through savings accounts or other liquid assets.

When does the program start?

The program will go into effect once the city draws up a list of available properties for sale and posts it online.

How much would the property cost?

The minimum purchase prices of properties under this ordinance are flexible on terms that the City deems reasonable and could permit the sale of properties for one dollar with a mortgage covering the cost of construction or rehabilitation.

“We are very excited to partner with Mayor Baraka. This will be a national model where community residents can purchase a vacant residential home or lot for $1 and then renovate or build a beautiful affordable home. Everyone gets NACA’s Best in America Mortgage: no down payment, no closing cost, no fee, and no mortgage insurance at a below-market fixed rate without consideration of one’s credit score,” said Bruce Marks, NACA founder and CEO.

What are the agreements to acquire the property?

All prospective buyers of in rem City-owned properties under this program must be Newark residents and must commit to reside in the properties for a minimum of 10 years. The properties will contain a deed restriction that states that the purchaser or any subsequent purchaser can have their property taken back by the City for any failure to comply.

The transfer of in rem City-owned property to the prospective purchasers shall be by private sale, through a Quitclaim deed, for the purpose of redevelopment requiring construction of a one, two-, three- or four-unit owner-occupied residential structure.

All redevelopment of in rem City-owned properties must commence within 3 months after acquiring title and all work must be completed within twelve 12 months thereafter. One 6 month extension may be granted at the conclusion of the 12-month period

Here is more information.

What is the election process like?

NACA will implement the program in partnership with the City and decisions will be based upon the ability of an applicant to carry out the financial and other necessities needed to become a successful homeowner.

The Program Administrator will not take more than 12 applications per property. No one individual will be permitted to purchase more than one property. The application to purchase must include cost estimates for the work required to bring the property into conformance with all applicable state and local codes. The applicant must submit proof of acquisition financing and must demonstrate the financial means to redevelop the property as determined by gross annual household income, savings accounts or other liquid assets.

How can I find more information?

NACA Newark can be reached at (973) 679-2601. You can read more about the program here.

This ordinance is one of a package of measures in Mayor Baraka’s strategy to counter the effects of the purchase of owner-occupied homes by large-scale investors.