To buy a foreclosed home in Michigan, you have three practical paths: bid at a county sheriff sale, purchase a bank-owned (REO) property after the foreclosure is complete, or bid at a county treasurer’s tax-foreclosure auction. Each path uses different rules for payment, timing, and when you actually get to move in. Sheriff sales are the cheapest entry point but come with a mandatory redemption period during which the former owner can reclaim the home. REO sales look and feel like a normal purchase. Tax auctions transfer the property immediately but can carry title risks that require careful research.
The Three Ways to Buy
Most Michigan mortgage foreclosures happen through foreclosure by advertisement, a non-court process that ends in a public sheriff sale.1Michigan Legislature. Michigan Compiled Laws Chapter 32 – Foreclosure of Mortgages by Advertisement If nobody outbids the lender at that sale and the former owner doesn’t redeem, the property becomes REO and is usually listed with a real estate agent. Tax foreclosures run on a completely separate track under the General Property Tax Act, with county treasurers holding auctions between July and November.2State of Michigan. Real Property Tax Forfeiture and Foreclosure Process
Pick your path based on how much risk you can absorb and how quickly you need possession. A sheriff sale can hand you a deed for the amount of the debt, but you may wait six months or a year before you can set foot inside. An REO transaction lets you inspect, finance, and close normally. A tax auction transfers ownership right away, but the property may have hidden liens and you almost never get to see the interior first.
Buying at a Sheriff Sale
Finding the Sale
Michigan law requires the foreclosing lender to publish a notice of sale in a newspaper circulated in the county where the property sits, once a week for four consecutive weeks before the sale.3Michigan Legislature. Michigan Compiled Laws 600.3208 – Publication of Notice Each notice lists the borrower, the original lender and any current holder, the mortgage recording date, a legal description, and the amount claimed due.4Michigan Legislature. Michigan Compiled Laws 600.3212 – Foreclosure Notice Contents Many county Registers of Deeds also publish foreclosure records online, which makes tracking upcoming sales far easier than driving to the courthouse.
Research Before You Bid
Sheriff sale properties sell as-is with no warranties, no seller disclosures, and no negotiation. Your pre-auction homework is your only protection.
Order a professional title search. It will surface unpaid utility assessments, mechanic’s liens, second mortgages that survived the foreclosure, and defects in prior deeds — any of which can cloud your ownership. Expect to pay between $75 and $500 depending on the property’s history. Pay particular attention to federal tax liens. In a non-judicial sheriff sale, an IRS lien is not automatically wiped out; it survives unless the IRS was properly notified at least 25 days before the sale, and even after a valid discharge the IRS keeps a right to redeem the property for 120 days after the sale or the state redemption period, whichever is longer.5eCFR. 26 CFR 400.4-1 – Notice Required With Respect to a Nonjudicial Sale6Office of the Law Revision Counsel. 28 U.S. Code 2410 – Actions Affecting Property on Which United States Has Lien If your title search turns up a federal tax lien, talk to a real estate attorney before you bid.7Internal Revenue Service. Understanding a Federal Tax Lien
You almost never get to see the inside. The property may still be occupied, and the lender has no duty to arrange showings. Drive by. Look at the roof, the foundation, the windows, the yard. Foreclosed homes often suffer from water damage, mold, or stripped appliances and copper. Budget conservatively for repairs, and plan on a $300 to $500 professional inspection once you get inside.
Money and Payment
Bring certified funds or a cashier’s check to the auction. The check for the bid amount is typically made payable to the foreclosing lender, with any overbid paid separately to the county treasurer.8Calhoun County Michigan. Civil Process – Section: Mortgage Foreclosure Sales Personal checks and cash generally are not accepted. Since you won’t know the winning bid in advance, get multiple checks in different denominations, or confirm the conducting office’s payment procedures beforehand. Your bank will issue a cashier’s check for $5 to $15.
The Auction Itself
Sales take place at the county circuit courthouse between 9:00 a.m. and 4:00 p.m. The sheriff, undersheriff, or a deputy conducts the sale, and the property goes to the highest bidder.9Michigan Legislature. Michigan Compiled Laws 600.3216 – Sale at Public Auction Bidding usually opens at the amount the lender says is owed, including principal, interest, fees, and costs. In many cases no outside bidders show up, and the lender takes the property with a credit bid against its own debt.
If you win, you hand over your certified funds and receive a sheriff’s deed naming you as the purchaser. That deed goes to the Register of Deeds, but it does not give you the keys. It’s subject to the former owner’s right of redemption.
The Redemption Period and What It Means for You
This is where Michigan sheriff sales differ most from a normal purchase. After the sale, the former owner has a set period to reclaim the property by paying the full bid price, interest at the mortgage rate from the sale date, the sheriff’s fee you paid, and a $5 custody fee if payment goes through the Register of Deeds.10Michigan Legislature. Michigan Compiled Laws 600.3240 – Redemption of Premises
How long you wait depends on the property type and the debt:
- Residential property of four units or fewer, where the amount claimed is more than two-thirds of the original loan: six months from the sale date.10Michigan Legislature. Michigan Compiled Laws 600.3240 – Redemption of Premises
- Commercial, industrial, or multifamily property over four units: six months.
- Agricultural property: one year.
If the amount claimed due is two-thirds or less of the original loan balance, the residential redemption period may be longer. If the lender can prove the home has been abandoned under MCL 600.3238, a court may shorten the period significantly.
During the redemption period you hold an interest in the property but cannot evict the occupants, collect rent (absent a separate agreement), or make major alterations. If the occupants damage the property or strip fixtures, your remedy is to seek a court injunction from the circuit court, which takes time and money. Assume the condition of the home may deteriorate while you wait.
If the redemption period passes without payment, your sheriff’s deed becomes fully effective and full ownership transfers to you.
Taking Possession After Redemption Expires
If the property is vacant when your deed becomes operative, you can change the locks and move in. If someone is still living there, Michigan law bars self-help removal; you have to go through a formal eviction in district court, which means filing fees and a wait of several weeks for a hearing and a possession order.
A common workaround is “cash for keys.” You offer the occupant a few hundred to a few thousand dollars to leave voluntarily by an agreed date, with the property clean and undamaged. It’s usually faster and cheaper than eviction and reduces the odds of a spiteful exit that wrecks the place.
Buying an REO Property
When no one outbids the lender’s credit bid and the former owner never redeems, the property becomes Real Estate Owned. REO purchases behave much more like a standard home sale. The bank lists the property with an agent or on a bank-owned property site, you submit an offer, and if it’s accepted the transaction closes through a title company. Because the redemption period has already passed, you’re not waiting on anyone to potentially reclaim the home.
REO properties still sell as-is, and the bank will typically make you sign an addendum acknowledging that. The advantage over a sheriff sale is that you can generally arrange a professional inspection before closing. Use it. Homes that have sat vacant for months often have plumbing failures, mold, or deferred maintenance you can’t see from the curb.
Financing an REO
You can usually finance an REO with a conventional mortgage, FHA loan, or VA loan, provided the property meets the lender’s minimum condition standards. Get a pre-approval letter or verified proof of funds ready before you make an offer. If the property is owned by Fannie Mae as a HomePath property, special rules apply: seller-paid closing cost allowances are higher (up to 6% of the purchase price for principal residences with loan-to-value ratios above 90%), and a $500 credit toward appraisal costs is passed through to the buyer.11Fannie Mae. Loans Secured by HomePath Properties Ask whether any REO you’re considering carries the HomePath designation.
Buying at a Tax Foreclosure Auction
Tax foreclosures follow the General Property Tax Act on a roughly three-year timeline. After taxes go unpaid for about two years the property is forfeited; the county then petitions the circuit court, notifies the owner, and (absent payment) obtains a judgment of foreclosure that extinguishes redemption rights, typically by March 31 of the third year. Public auctions follow, with the first sale generally on the third Tuesday of July and all auctions completed by the first Tuesday of November.2State of Michigan. Real Property Tax Forfeiture and Foreclosure Process
Key differences from a sheriff sale:
- No redemption period after the auction. Because the former owner’s redemption already expired before the sale, you don’t wait to take possession.
- Opening bids can start at the amount of unpaid taxes rather than market value.
- Title problems are a real risk. A thorough title search and title insurance are strongly recommended.
- Parcels that don’t sell are offered to the local municipality or transferred to a land bank authority by the end of the year.
Auction dates, property lists, bidder registration, and payment rules are set by each county treasurer, so contact the treasurer’s office in the county where you want to buy.
Recording the Deed and Closing Costs
No matter which path you use, record your deed with the county Register of Deeds to protect your ownership in the public record. Michigan’s standard recording fee is $30 per document regardless of page count.12Monroe County, MI. Schedule of Fees for Recording and Filing An unrecorded deed can cause serious problems the next time you try to sell or refinance.
Michigan also imposes a Real Estate Transfer Tax on most sales: $3.75 per $500 of sale price at the state level plus $0.55 per $500 at the county level, or $8.60 per $1,000 combined. On a $150,000 purchase that comes to $1,290. Some transactions are exempt, including certain family transfers and transfers involving government entities.13Michigan Legislature. Michigan Compiled Laws 207.505 – Real Estate Transfer Tax Exemptions
Then budget for title insurance, any unpaid utility balances tied to the property, and a professional inspection once you have interior access. On an REO closing, most of these show up on your closing disclosure. On a sheriff sale or tax auction purchase, tracking and paying them is on you.