Foreclosures in Michigan

Good News Florida is number 1 in foreclosures. We are not the only state hurting with slow sales. One nationwide builder in Florida was 85% down from last year. That is a big number.

So you say, what about buying foreclosures. Is it a good time to buy a foreclosure? Let me explain the process of foreclosures in Michigan. First the homeowners miss 3 or more payments on their house. The bank may send them a letter right away stating they need to pay up or they are going to start foreclosure proceedings. Then it takes anywhere from 2 months to a year before the bank turns it over to attorneys and schedule a sheriff sale.

A sheriff sale is where the house is auctioned off to pay off the bank. It is usually held near the county building where the home is located. They send notices out and post it in the paper. When the house is auctioned off anybody can bid. The bottom line is that the bank will usually be the high bidder especially in this market. They have to buy the home back for at least at the price of the mortgage. So if the house was worth $200,000 and they had a mortgage of $190,000. The bank is not going to let it be sold for $100,000 or any low price. They will just buy it back.

In this market they may let you have it at $170,000 or $180,000. Maybe. But most of the time they will buy it back and then list it with real estate agents. The only time it is a good deal is if they have a low mortgage balance versus what the house is worth. But that does not happen very often because there are a few lenders that will loan 60 - 70% even if you are in foreclosure. They scoop up the house if you default again with only a 60% mortgage. They have done good.

So many of the houses have mortgages of over 70% on them. Lately many of them aren't worth the amount of mortgage on them. So it isn't a great deal to buy them at Sheriff sale. You must know what the house is worth for the condition it is in before you put in a bid. You are bidding blind because you can't get into the house to look around. The people who have defaulted on the mortgage are most likely living there. They have been living there rent free because the bank won't (most of the time) take any thing but the full past due amount. But there are times that there are deals at sheriff sale. You just have to be an educated buyer and know what is a good deal.

That comes to the next point. Even if you win the sheriff sale the people who have defaulted have six months to come up with the money to pay off the bank. That very seldom happens. If they haven't paid it up to this point they don't have the money. After six months you get to move in. They will be evicted at the end of the six month redemption period.

Now the bank has it back. I will tell you what they do next in my next post. If you want to search Michigan homes go to my website www.russravary.com and search homes free.

May tomorrows plans come off without a hitch for you. Russ Ravary