Interested in Purchasing a Foreclosed Home in Oakland County MI?
Real estate bargain hunters can find great deals on foreclosures and foreclosed homes in Oakland County MI. The biggest selling point of foreclosed homes is, of course, their marked-down price, which is often significantly lower from other similar properties in the same area, also known as “comparables ” or “comps” in real estate speak.
Foreclosed homes are available in just about every real estate market across the country, providing opportunities for homeowners and investors alike. Most foreclosures are sold at a sizable discount below market value. Buyers may also take advantage of additional savings such as reduced down payments, lower interest rates, or the elimination of appraisal fees and certain closing costs.
A REALTOR® for foreclosed homes in Oakland County MI will often know about properties that are nearing foreclosure because they are familiar with the local market, actively network with other agents, and frequently works directly with banks and other lenders.
With access to comprehensive foreclosure listings that include homes already in foreclosure as well as those approaching it, your agent can help you uncover a great deal on a home that you might not find otherwise.
Locating foreclosures and foreclosed homes in Oakland County MI
One can find foreclosed properties in multiple-listing service (MLS) periodicals and websites, via online real estate searches, bank offices and websites, and through local newspapers. Lenders are increasingly selling their seized assets through real estate agents, so don’t hesitate to ask an Oakland County MI REALTOR® for opportunities.
Some real estate pros even specialize in foreclosure properties, which are often sold well under market value because the owners are eager to unload them.
Locating foreclosures and foreclosed homes in Oakland County MI greatly depends on what stage the property is in during the foreclosure process. Properties can still be owned by the original homeowner or by an entity such as a bank or the government.
Stages of Foreclosure
Here are the various stages of foreclosure:
1). Pre-foreclosures – A home is in pre-foreclosure after the lender has notified the borrowers that they are in default but before the property is offered for sale at auction. If the homeowner can sell their home during this time, they may be able to avoid foreclosure proceedings. As a result, some homeowners are willing to negotiate. Your agent can help locate those properties that are still in the pre-foreclosure phase.
2). Short sales – Short sales occur when the lender will accept less for the property than what is owed on the mortgage. Although borrowers don’t necessarily need to be in default of their mortgage for a lender to agree to a short sale, they typically need to prove that they are in fact experiencing financial hardship, such as the loss of a job, which is likely to result in default. Often, the property is worth less than the outstanding balance on the mortgage.
In order to qualify as a short sale, the lender must agree to accept less than is owed, and the property must be listed as a short sale. A successful short sale helps the lender avoid yet one more foreclosed home on their books as well as the cost and time associated with maintaining that home until its potential sale. Also with a short sale, the likelihood that the borrower/ homeowner will trash the property on his way out the door is reduced.
3). Sheriff’s sale auctions – happens after the lender has notified the borrower of default and allowed a grace period for the borrower to catch up on mortgage payments. An auction is designed for the lender to get repaid quickly for the loan that is in default. Auctions often occur on the steps of a city’s courthouse and managed by the local law enforcement authorities.
The property is auctioned to the highest bidder at a publicly announced place, date, and time. The large cash outlay required to buy foreclosed property at the Sheriff’s Sale is the biggest deterrent for many buyers. Certified checks and sometimes cash will be required to bid on properties. In addition, you may not be able to inspect a foreclosed property before bidding on it.
4). REO properties – Properties that don’t sell at auction revert back to the bank or become real estate owned (REO) properties. Cathy has access to extensive listings of such bank-owned properties. REOs are generally purchased “as is,” but buyers can negotiate with the lender to pay for any repairs.
The option for a home inspection makes REO properties especially attractive to investors because they review the current condition of the property, including any repairs that will need to be made. With short sales or bank-owned (REO) properties, you can finance the purchase with a mortgage. In fact, it’s common to do so.
5). Government-owned properties – Government foreclosures are residential properties that have been repossessed and put up for sale by a government agency. Several government agencies such as the Housing and Urban Development Department (HUD), the Federal Housing Authority (FHA), the Veteran’s Affairs Department (VA) offer mortgages at special rates for qualified borrowers.
When a homeowner defaults on their mortgage, these agencies will repossess their property and sell it to recoup money lost on the unpaid loan. Other reasons government properties are sold include homes seized and sold by the IRS due to tax debts and property seized and sold by Homeland Security due to criminal activity. Typically, a government-registered broker must be contacted to purchase a government-owned property.
Potential pitfalls when buying a foreclosed home in Oakland County MI
There are some standard difficulties you may encounter when purchasing an Oakland County MI foreclosed home. While foreclosures can be great investments as fixer-uppers, either to live in or resell, these properties will typically come with issues, and the financial rewards of buying one only come after a significant amount of hard work.
Bank-owned properties are sometimes very dirty because of the amount of time sitting empty, neglect by the previous owner, or vagrant occupancy. A Home that has been sitting locked up with no air circulating for months can have built-up dirt that causes the entire home to smell.
Many properties in foreclosure have been poorly maintained and may have water or mold damage, structural issues, or be in violation of codes or other standards. A small leak under the kitchen sink can lead to a mold problem, and a roof leak or burst pipe can lead to major water damage when there is no one in the home to fix it.
Banks are unlikely to have any knowledge of existing problems with the property since one there has lived in the home. That means you will have to uncover everything yourself, either during the home inspection or through experience after you become the homeowner.
Vandalism such as graffiti, broken windows, and other damage can also be an issue. After the occupants leave, foreclosures sit abandoned, often inviting criminal activity. Even the prior owners may take fixtures, appliances, windows, crown molding, or anything else of value from the home.
Despite all of the above potential problems, a foreclosed home in Oakland County MI can still be a good deal. If you are up for fixing problems that most people don’t want to deal with, you can purchase a home at a significant discount.
Financing options for Oakland County MI foreclosed homes and lenders
Buyers should do some research on financing options before shopping for Oakland County MI foreclosed homes. Although you can go the traditional route of using a private lender as you would for a conventional home, some lenders are reluctant to finance a foreclosed home, making the purchase with all cash your only option.
Lenders will typically not give a home buyer money for a home they consider uninhabitable or that appraises below the purchase price. Of course, if you are paying cash, this will not be an issue. If you are not in the position to pay all cash, It’s worth looking into loans from the Federal Housing Administration (FHA) or Freddie Mac.
The HUD Section 203(k) loan program can help in some circumstances. The total amount of your mortgage is based on the projected value of the home after the renovation is completed while also taking into account the cost of the work.
Keep in mind that when purchasing a foreclosure, negotiating with a bank is very different than negotiating with an individual. A real estate agent who has worked with banks before understands the bank’s processes and can anticipate the bank’s needs to make the transaction go smoother.
Even if you’ve purchased a foreclosure before, it’s still to your advantage to enlist the services of a qualified agent as each bank has its own procedures and timelines. Working with someone who can help navigate the nuances can alleviate a lot of stress.
Partner with highly-rated Oakland County MI REALTOR® – Tom Gilliam
Buyers have the opportunity to pay below market value for homes that wouldn’t be available to them under normal circumstances. If done responsibly, and with the guidance of a reputable real estate agent, purchasing a foreclosed home can allow a homebuyer to reap a myriad of benefits.
Inexperienced foreclosure buyers might want to hire a real estate agent for guidance and assistance. Agents have direct access to tools like the Multiple Listing Service (MLS), which they use to share information about properties.
Oakland County MI REALTOR® – Tom Gilliam has over 20 years of local experience and provides the kind of knowledge, skills, commitment, and professionalism you need when buying or selling a home. As your agent, Tom will protect your interests, advocate for you, negotiate on your behalf, and be your trusted guide and advisor every step of the way.
If you or someone you know is interested in purchasing foreclosed homes in Oakland County MI, please give Tom Gilliam a call today at (248) 790-5594 or you can get in touch here.
Tom Gilliam, REALTOR®
29630 Orchard Lake Rd.
Farmington Hills 48334
Email: Tom @ Homes2MoveYou.com