Foreclosures and Distressed Properties in Washtenaw County

We’re happy to provide a white-glove real estate purchasing experience for investors and homebuyers seeking distressed properties. Feel free to reach out to Alexander at any time with your questions!

But first… What are distressed properties and foreclosures?

A distressed sale property is real estate where, due to personal circumstances or some other hardship, the property owner has fallen behind on legal, tax, maintenance, or some other obligation which is forcing it to be sold.

Distressed properties were popularized during the previous and earlier recession(s) when real estate agents who sold property during that time can probably remember how distressed assets were between 30% and 70% of any given market’s inventory; they were everywhere! Since getting my start in 2012 I can remember the majority of my client’s contracts were a combination of short sale and foreclosed homes.

Although distressed assets have become far more rare in the sellers’ markets of the early 2020’s, we still see them from time to time and are happy to help facilitate these sales!

Types of distressed properties

  • Bank foreclosures, also known as ‘real estate owned’ or ‘REO’ properties
  • Government-owned foreclosures, including HUD and Fannie Mae Homepath properties
  • Probate and Trust properties
  • Tax foreclosures
  • Pre-foreclosures
  • Short sales
  • “As-is” properties, also known as physically depreciated properties, ‘value-add properties’, ‘fixer-uppers’, or ‘handyman specials’

Bank Foreclosures

A bank-owned foreclosure (or real estate owned, ‘REO’ asset) is a home which is owned by the bank, having completed the foreclosure process and reposessed the property from the previous homeowner.

In Our Market: As of writing this (Aug 2022), the Ann Arbor and Ypsilanti area do not see too many bank-owned foreclosures. The totality of them only consist of around 2 or 3% of our total inventory share, and the reason for this is because most Washtenaw county owners have seen their property appreciate generously for upwards of a decade. Because so many homeowners have additional equity, selling their property and paying off the underlying mortgage is an option and often a very generous option. Compared to 2012 when the majority of homeowners were underwater (owing more on their mortgage than the market value for their property), the market has blessed a lot of homeowners during recent times.

With a bank-owned real estate transaction, buyers will typically be able to walk through the property prior to offering, and depending on the financial institution of ownership they often have lots of disclaimers and very little disclosure about the property’s specifics. Expect to use a bank or financial institution’s purchase agreement, and be prepared for some delay in processing times since some bank asset managers have hundreds of properties they are responsible for, and some financial institutions will have an attorney or some other representatives review purchase agreements prior to signing.

Due to the nature of foreclosure properties involving much more paperwork, disclosure, and typically fewer guarantees or agreements from the seller side than in most other transactions, it’s important to involve a real estate attorney to review purchase and title documents when buying these.

Government Foreclosures

A government-owned foreclosure is a property which was foreclosed by a governing institution. Similar to a bank foreclosure, the government foreclosure unfortunately involves someone’s home having being repossessed, however the government (or a government chartered institution) ends up taking ownership of the property because of how they guaranteed or purchased some underlying debt on the property.

The following are some of the largest government home sale entities along with their websites.

Since all of the above ^ gov’t sellers list their properties in the MLS, we are happy to provide you with market updates! Contact us if you’d like us to send all bank and gov’t-owned foreclosures sent straight to your email as soon as they hit the market.

Probate and Trust properties

Tax foreclosures

Pre-foreclosures

Short Sales

“As-is” sales

Also known as physically deprecated, ‘value-add’, ‘fixxer uppers’, and ‘handyman specials’, as-is sales are homes which typically have some sort of defects or deferred maintenance which are driving them to be sold the way they are, without repair or improvement. This could be a private owner or an investor who owns the property but is unable or unwilling to invest capital into repairs to make the property habitable or desirable for sale. Due to a purchaser having to assume the necessary repairs as a barrier to entry, as-is sales tend to sell below market value (or ARV, ‘after repair value’). When an investor picks a property with a significant repair as a barrier to entry, by repairing or reconfiguring the property they can realize an opportunity to maximize the property’s value (creating ‘upside’).

As-is sales are still somewhat common in today’s marketplace.