Short Sale Houses in Michigan: Properties on the Real Estate Market
From time to time, you have probably encountered short sale houses available online. While these were much more common after the crash in 2008, occasionally, short sales are still offered today. To summarize, a short sale happens when an owner owes much more on their home that it is currently worth (hence why these were so common after the housing market crashed!). To prevent foreclosure, the homeowner can petition the bank to accept an offer on the home from a new buyer at a price that reflects the current market value. These are properties that lenders and bank companies want to sell immediately, to prevent them losing the investment and proceeding with foreclosure, but that doesn’t mean that the process happens quickly! A short sale can take months to process, and 6+ months is not uncommon from offer to closing table. Read more about how short sales work in Michigan below!
What are Short Sale Houses?
For starters, a short sale property is a house, which owners fail to pay the mortgage on time. Because of financial difficulties, homeowners can sometimes fail in paying their mortgage on time or with the right amount. This could lead to foreclosure of their property. The only option to avoid foreclosure is to sell the home. However, due to fluctuations in the market, sometimes homeowners owe their bank more than the home is worth. Of course, banks would rather the property sell to a new owner that can make the payments on the house, so they occasionally opt to allow a “short sale” on the property, where the homeowner can sell the home “short” of what they owe to the bank, and the bank will write off the remaining balance from the original home owner’s debt.
Should You Buy Short Sale Houses?
You can consider buying a short sale house, especially since you may be able to get more value for your purchase price than the other properties in our Michigan market. However, there are certain factors that you should think about before making your decision.
One such factor is the long process a short sale house could take before being approved to be sold. Before being placed on the market, the property needs to first get an approval from all of its creditors. This first step could reach months to complete, and can even end up in disapproval. Sometimes, homes enter the foreclosure process before a short sale can even be reviewed for approval.
Another factor to keep in mind is that expensive repairs or overdue utilities could be present in the properties. One of the reasons why homeowner fails to pay for the mortgage is financial problems, which could also mean they could miss big repairs. If you decide to purchase a short sale house with such issues, the bank lenders will not cover the expenses for such repairs, thus you need to pay them up by yourself. Additionally, if the water was shut off because of an overdue bill, many water departments require the balance to be paid before they will restart service at an address. From a few hundred dollars to a few thousand, a bill like that could break a sale.
Short Sale House Advantages
On the bright side, homeowners of a short sale property will tend to take care of it, since they are still living in it. This could be an advantage of short sale house over foreclosed properties, where upset homeowners may have chosen to damage the property out of anger. You just have to find one with the best condition by availing house inspection services and be prepared for repairs and overdue maintenance that the property might need.
These are just a few factors to keep in mind if you are thinking about buying a short sale house in Michigan. You just have to be careful with your choice, make sure it is a great real estate deal for you. It’s important to work with a Realtor who has strong communication skills and has the knowledge to answer your questions. Ed Constable is a Realtor based out of Fenton, MI servicing neighboring counties. He and his team have experience with short sales, foreclosures, and flip/investment properties and would love to chat with you about what you’re looking for!
Call me today and have me work for you. You will be thankful that you did!
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