WILL SELLER LANDLORDS BE THE NEXT WAVE OF FORECLOSURES?

In Macomb County many of the homes listed for rent are home owners or what we refer to as "Sell Lords". They are not Landlords, have never been a landlord and have no idea what it takes to be one. But because they can not sell their home, this market is creating tons of them. So who are they?

• Sellers that need to move out of Michigan for work but have not sold their home yet
• Sellers that have bought another home BEFORE selling their old one home
• Sellers / Investors that have been unable to sell their Flipper
• Sellers who have fallen behind or stopped making payments and are now in their redemption period

The question is will they be the next wave of Foreclosures? Yes, it seems many of them are already headed there. In the past 30 days we have received several calls from tenants looking for a new place to live because someone came to their door saying the landlord was in foreclosure.

• One was a lady whose landlord bought the home, fixed it up, could not sell it and decided to rent it. He had used the past 3 months of rent to pay his bills and was headed to foreclosure.
• Another was a guy who had rented from someone who had just bought a new home and could not sell this one. Problem is the tenant thought he was doing a lease option and finished the basement. He just found out his landlord was also 3 months behind.
• Another was a gal who was renting a home from someone that needed to move out of state. In this case the tenants husband has been out of work and they were now 2 months behind in rent. The landlord is having a hard time making double payments now.
• The worst was a young couple who rented a home from someone going through a divorce. The tenants just found out the landlord was in his redemption period when he rented to them.

So what can you do to prevent this from happening to you?

As a Seller/Landlord - check out the tenants credit and have them complete a financial statement. Call their references and their employer. Set three (3) months payments aside to cover shortages. You also need to verify what your non homestead tax rate will be. Check here for Macomb County mill rates because an increase in property taxes can really mess up your escrow account and put you behind, if you are not collecting enough rent to cover it.

As a Tenant - don't be afraid to ask the landlord lots of questions. Go to the city to make sure the property taxes are paid and check the county records to see if their has been a sheriff sale. With property values still slipping do not get caught up in a lease option. If you suspect your landlord has already been foreclosed on find out how it can affect you.

As a Real Estate Agent - if you are working for the seller make sure you know what they owe, if they can afford both payments and Please Please tell them what their new taxes will Be. If you are working for the buyer make sure the listing agents did their job.