Buying Foreclosed Property

With the recent and ongoing housing market challenges, most people have become very familiar with home foreclosures. Most of us, by now, know someone or have ourselves experienced home foreclosure and, if not, we've seen it on the news and in a host of other media outlets. Home foreclosures reached all time highs for a variety of reasons, much if which centered on risky lending practices combined with borrowers taking loans that they simply could not afford. Inevitably, home foreclosures would result and though it has been a trying and frustrating time for many people, it can also be positive.

Being displaced from your home is traumatic, but so is the stress of mounting mortgage payments and foreclosure offers homeowners a way to leave unaffordable housing situations and start anew. Foreclosures also give lenders a chance to recoup some of their money. For buyers looking for real estate, foreclosures are properties at a discount, which can be a benefit to investors and new home buyers both. In Michigan, we've experienced a lot of foreclosures, but in recent months, foreclosures have tapered off and home sales in general have been on the rise.

If you are considering purchasing a foreclosed home, make sure to get educated about the foreclosure laws in your state and just about the foreclosure process in general. Many states offer homeowners a Right of Redemption period during which they can buy back their home after it has been sold in a foreclosure. This often does not happen because few owners have access to the amount of their missed payments and fees accrued; otherwise they would not have reached the full term of their mortgage foreclosure proceedings.

Michigan Foreclosure Basics:

·   Judicial and Non-Judicial Foreclosures exist in Michigan. In Judicial Foreclosures, the court declares the total debt that the borrower must pay within a specific period of time. If the debt is not paid, the court issues a notice of sale. In Non-Judicial Foreclosure a power of sale clause exists in the borrower’s mortgage, which pre-authorizes the properties sale to pay off the accrued debt in the instance of default. Michigan does have a Right of Redemption Law.

Home Foreclosures: A Few Things to Remember

·   Not all foreclosures offer deep discounts. In some cases, a borrower owes much more than a property is worth and there may be multiple lien holders expecting to collect money for the sale of a foreclosed home. This and other factors can affect the asking price for a home foreclosure, so don't leap on it just because it's foreclosed.

·   Buying at auction takes cash and patience. Home auctions seem like a great way to pick-up low priced real estate; however, you may have to bring cash to buy auction properties. These homes can also take a while for you to gain possession of. Since you may not see the property before hand, there can also be extensive repairs or the home may have been stripped of appliances and damaged by the previous owners.

·   Find an agent who works with foreclosures. The high risk aspects of home foreclosures make the need for a knowledgeable real estate agent even more urgent.

·   Get a title search. Since the title may be clouded by other liens against the property, you may need to pay several hundred dollars before purchase having the title searched so that you don't obtain a property with multiple liens against it.

How to Buy Home Foreclosures

You have three options when purchasing a foreclosed property. You can buy a home during the foreclosure process from the homeowner. This means that you negotiate directly with the homeowner, but these can be risky because lenders may reject offers despite agreements between the seller and buyer. The other two options include purchasing a foreclosed home at auction or buying a bank owned home. One perk to buying an REO (real estate owned) property is that you can often qualify for a traditional mortgage to purchase it and banks that want to unload these properties are more likely to negotiate a deal that works for everyone.

If you're thinking about buying a Michigan foreclosure in East Lansing, Okemos or the Greater Lansing areas, get in touch with me at MyRealtorRob. In addition to helping you find foreclosure listings, I can answer all of your foreclosure related questions and offer local resources.