Our local market in Grand Rapids, Michigan has witnessed an unprecedented increase in homes going into foreclosure.  This is not unlike many areas of the country. 

If you're considering a purchase of a  home that is in pre-foreclosure or in the redemption period during of a foreclosure it is important that you are aware of some important situations which will impact the process and /or your ability to successfully execute a transaction.  This list is not all inclusive.  Please be advised that consulting with a real estate professional with experience in this area is highly recommended.

 Do not expect things to be Normal.  According to the wonderful writer Erma Bombeck, "normal is a setting on a dryer".  That being said, there are a number of  aspects of the process which you are fairly likely to encounter, so being prepared or aware of them is important. Here are some "must know tools" for success! 

1.  Remember that "time is of the essence".  In a redemption period of 6 months, the option expires at 6 months...period!  It is rarely extended.  Investigate how much time you have for the redemption the period of the home you are planning on purchasing.  Your agent can check this information with the Registrar of Deeds office to see when the deed was sold at auction.  Make sure that if your offer is accepted, there will be enough time to actually close on the transaction before you spend money on things like inspections and appraisals.

2.  Now, be prepared to be patient.  Do not be surprised if the bank seems to take forever to come to a conclusive decision regarding your offer.  They may be utilizing the services of a "committee" which meets somewhat infrequently to decide the merits of offers that come in on houses they now own by default.  When they do make a decision however, they will usually expect YOU TO HURRY.  Be prepared to be given a very short time to complete the transaction soo....

3.  Have Your Ducks in a Row!  Make sure you have a Valid Pre-approval letter.  You may be asked to submit to a another pre-approval through the bank's approved lender.  Normally this will simply be used to verify that you are indeed qualified to proceed with the purchase.  Have your inspector, lawyer, accountant, surveyor and whoever else you think you need ready to go as well.  There's nothing more frustrating than having 10 days to complete a transaction and being unable to get an inspector you like and/or trust to complete a home inspection.

4.  Inspect the House!  Thoroughly!  Do not expect to get a seller's disclosure that has any information if the home has already been foreclosed on.  If the home is in the pre-foreclosure stage or redemption period, you are more likely to have access to a Seller's Disclosure.  However, do your own due diligence.  I can't say it enough....Inspect the House thoroughly.  You cannot be assured that there will be significant assistance with repairs, so it is important to know what you are dealing with BEFORE you make a final decision on an offer.

5.  You may have to Sign Some Strange Forms.  If you've bought a home before, you are probably familiar with the West Michigan Regional Purchase Agreement.  In addition to the purchase agreement, many banks will also require you to sign an ADDENDUM.  This may be 1 page or 13!  These addendums are written to heavily favor the interests of the bank.  If you are buying a bank foreclosure, keep this in mind.  Be advised that sometimes they will refuse to accept any offer that attempts a modification of the requirements on the bank ADDENDUM which usually included wording that supersedes the purchase agreement.

6.  Be prepared to Become a Nag.  Information may not flow to you freely.  Keep in contact with all parties which will allow you to talk to them.  Do NOT Be Rude!  This will only impede your progress.  Instead be persistent.  While you are waiting to hear answers about the acceptance of your offer, check in through your Realtor often.  After your offer is accepted, make sure everyone is aware of how you are expediting the process.

7.  Know About Stipulations that May Cause the Loss of Your Earnest Deposit!  This can be a laundry list of items or something as simple as closing after the agreed upon date.  Read the contract carefully & make sure your lender reads the contract so they are aware of potential costs to you with regards to closing delays.  You may be required to submit your Good Faith Deposit in Certified Funds.

8.  Do NOT Surprise your Home Insurance Company or Home Warranty Company!  Make sure they are aware BEFOREthey issue a policy that you are purchasing a home which has been in foreclosure.  This is usually not an issue under normal circumstances if the home is in the pre-foreclosure stage or redemption stage and has not been abandoned.

9.  You may have some Unexpected Guests show up before the Closing!  Sometimes, you find that you have more than 1 owner.  Make sure that all lien holders agree to the sale of the home you desire to purchase. Inspecting the Title-work well before the closing is very important to make sure that you are able to obtain clear title.  You may also want to consider buying a "souped up" policy which will give you additional protection.  Consult a reputable title company for recommendations.  In addition be advised that sometimes the loan has been sold to a 3rd party Investor, who will also need to be consulted to ensure the sale proceeds.

10.  This is Probably NOT going to be a Happy, Smiley Closing.  These types of situations are tough and can sometimes get very emotional.  Prepare yourself.  Be calm.  This is not  usually a good scenario to have Buyers & Sellers at the same Closing Table. Do not be surprised if there are some last minute high jinx from the bank making all sorts of changes at the last minute.  Take your time to carefully inspect all changes on deocuments before proceeding. 

11. Keep Things in Perspective!  When you take possession of your home, remember that some really difficult times have probably been witnessed within this home.  If you're a spiritual person...PRAY.  Pray for wholeness and blessing for yourself and your family.  Pray for Recovery for the family or individual who experienced the pain of this type of loss.  Pray that this home is cleansed of it's sadness and once again becomes a place of joy and good memories.

© 2007 Audu Real Estate All rights reserved

Affording a home is one of the biggest challenges facing new home buyers.  The median income in 2006 for US families was $59,600. A CNN Money.com article by Les Christie quotes  National Association of Home Builders President David Pressly as saying, "40.4 percent of all new and existing homes sold during the third quarter were affordable to families earning the median." 

In a related January 2007 news release by the National Association of Realtors for housing projections for the year 2007, NAR Economist David Lerah indicates that the market will steadily improve during the year after what he terms a "soft landing" for the industry in 2006.  The national median price for all housing is expected to rise 1.5% to $225,300 while the increase in new homes is expected to rise 3% to $248, 900. During her term as First Vice President of the National Association of Realtors (NAR), Pat Vregdevoogd Combs who hails from Grand Rapids, Michigan and is now the 2007 President of the National Association of Realtors commented on the third annual National Housing Opportunity Pulse survey:

 "The survey sheds new light on the conditions that encourage people to support affordable housing," said Pat Vredevoogd, the first vice president of the National Association of Realtors, which sponsors the study. The NAR's hope is that the research will serve as a guide to local officials and give them "the political will to do what people want"

She's absolutely right!  People want and need affordable housing.  Results of the study  found that more than 70 percent of the respondents would support building more affordable housing if it made for more efficient use of their tax dollars for public services, did not hurt local property values, did not contribute to overcrowding in schools, or did not further exacerbate clogged streets and highways. In view of these results, it is noteworthy that Grand Rapids, Michigan is considered one of the most affordable major metropolitan areas in which to live in the United States. 

 The CNN Money.com article indicated that last year the median price of a home in Grand Rapids, Michigan was about $128,000 which is affordable by over 80% of the population. I did a March 2007 search which revealed that the median price for homes within the Grand Rapids school district are now $115,000 according to the Grand Rapids Association of Realtors database. If you're an investor,Grand Rapids, Michigan is definitely the Best Bang for Your Buck.  With good schools, a diversified economic base, low crime and high ratings on the quality of life index, this is definitely a community you should check out!  As a homebuyer, low interest rates and excellent inventory levels in most communities make this a great time to get an excellent value on a home.

Are You Looking For New Listings that are Affordable Great Deals to Rent or Buy in Grand Rapids & Surrounding Communities?  We have included several surrounding communities as well such as: Grandville, Mi, Sparta, Mi, Cedar Spring, Mi Jenison, Mi, Kenowa Hills, Mi, and  Kentwood, Mi .  Click below for a fully list of homes listed or updated within the past 7 Days!

Homes Priced between: 0 - $50,000

Homes Priced Between: $50,000 - $100,000

Homes Priced Between: $100,000 - $150,000

Find the Latest New Listings Here...  Yes, this is Access to All New Home Listings as they come on-line!

Call the team at Audu Real Estate to arrange a pre-view tour of any of these homes.

Interested in Investment Opportunities in ForeClosure Homes in Kent County

Just another great Value Added Service from the team at Audu Real Estate

In Grand Rapids, the rates of foreclosures have increased dramatically over the past year.  Kent County is averaging about 100 foreclosures a week right now.  The crisis is a result of a number of factors including lay-offs in the furniture and auto industry over the past several years as well as more buyers opting for adjustable rate mortgages which are adjusting upwards and increasing payment levels significantly. 

As a real estate agent, I have negotiated foreclosure and pre-foreclosure sales for my clients.  Each part of this process is gut-wrenching and often laden with anxiety and guilt.  The fact is that unwanted, disruptive events can come suddenly into anyone's life; illness, a bad financial decision or investment, job loss, business failure, death or divorce can plunge anyone of us into a situational crisis that is unexpected.   But, there are some disturbing  patterns that are evident amidst all this chaos.

The Mask: 

  Traditionally, a mask is worn to cover and conceal one's true identity or activity.  Perpetuators of crime hide behind it's anonymity to shield themselves from prosecution.  The crisis in foreclosures in West Michigan is mask which veils a broader dimension of involvement beyond those whose homes are being forfeited.  Perhaps, the nature of the injury could be succinctly stated as creating inventive methods and means to over-extend financing to individuals in a manner that puts them at severe risk for default. 

Lending models are extremely accurate in their predictive ability to determine default rates.  Adjustable rate mortgages have historically been viewed by the lending industry as a high risk alternative.  But in the last couple of years adjustable rate mortgages and interest only loans have skyrocketed with double digit increases.  The temptation to be over-extended/leveraged on debt has knocked on our door in different forms.  Sometimes it has arrived as a letter, a call or fax describing an incredible "teaser" rate for a few months or years. In other instances, the delivery was via loan officers willing to finance anyone or anything for a fee.    We have been regaled by TV commercials starring incredible testimonials of individuals who got out of a debt crisis by creating more debt! 

Many segments of the industry and society have been co-conspirators; appraisers created inflated values to buttress shaky real estate transactions.  Sometimes the misdeed was the action of a homeowner in concert with a buyer who created fake documents to substantiate a false transaction or an investor allegedly "flipping a property".  But, the point is that somebody designed the letter, somebody made the call or TV commercial;  the appraiser, loan officer, Realtor, homeowner & buyer where not nameless or faceless.  Who is the somebody? The somebody is us.  Everyone who chose to turn a blind eye or to participate, everyone who knew the truth and ignored it, everyone who was consumed with greed or who was just plain ignorant.  

 All of us have worn the mask.  The crisis in the real estate industry is not unrelated to our collective choice as a society to be irresponsible in our spending habits and personal decisions.  In fact, we no longer refer to ourselves as humans, we are now called CONSUMERS, a term which may reflect some unconscious desire to divorce ourselves from the implications of our decisions.  The consequences have now returned home to roost...literally as all of us are being confronted by the prospect of potentially thousands of homes placed on the market because of a foreclosure proceeding.

The good thing about a mask is you don't have to wear it, it can be removed.  An African proverb says: At anytime that you choose to wake up, it becomes morning for you.  We can each choose to wake up and take individual responsibility and control for our financial lives.  We can remove the mask and take a critical look at our personal spending habits.  We can choose to walk away from transactions which are not financially wise or prudent.  We can choose to say NO to acquiring additional credit and increasing our debt load.

The crisis has spurned some positive results.  Housing affordability has never been better.  Last year, ABC News featured Grand Rapids as one of the most affordable places to live in America!  In the past 12 months, I have witnessed an urgent call to education amongst real estate professionals and mortgage lenders. There is more widespread understanding of what constitutes illegal activity and this light makes it more difficult for darkness to hide misdeeds.  There are obviously many more lessons to be learned, and all of us will be learning them.

 *Special note:  The FBI recently offered classes to real estate agents, brokers and mortgage lenders in Grand Rapids, Michigan to educate the industry about the disastrous consequences of lending & real estate practice which constituted the practice of fraud .  Most agents had never had this type of information presented so starkly and clearly.  As a result of these classes and other situations, the Grand Rapids Association of Realtors has established a FRAUD HOTLINE available to the public to report suspicious activity and has beefed up its Professional Standards recommendations to ensure better education and enforcement of the transactions done by its members.