Short Sales in Michigan: Why 2025 Is Becoming a Turning Point for Distressed Homeowners

Michigan is quietly re-entering the national conversation around foreclosure and distressed housing—and for homeowners, real estate agents, and investors, that shift matters.

While Michigan isn’t making daily headlines like it did during the Great Recession, the data from 2025 tells a clear story: financial pressure is building, foreclosure activity is rising, and more homeowners may soon need alternatives to foreclosure. One of the most effective—and often misunderstood—options is the short sale.

Let’s break down what’s happening across Michigan and why understanding short sales right now is critical.

### Foreclosure Activity Is Rising Across Michigan

According to ATTOM’s Q2 2025 U.S. Foreclosure Market Report, Michigan foreclosure filings increased **8% year-over-year** in the second quarter of 2025. That alone is notable—but the broader context is even more important.

In the first half of 2025, Michigan recorded **over 6,100 foreclosure filings**, placing the state among the **top 15 states nationally** for foreclosure activity. This isn’t isolated distress—it’s systemic pressure building across the housing market.

And the trend is especially pronounced in southeast Michigan.

### Detroit Metro Area Leading the Increase

ATTOM’s Midyear 2025 Foreclosure Report shows the **Detroit metro area ranking among the top U.S. metro areas for foreclosure starts** this year. Filings are rising across:

- **Wayne County**

- **Oakland County**

- **Macomb County**

These are not fringe markets. These are core counties with large populations of homeowners who bought, refinanced, or modified loans during very different economic conditions than we see today.

When foreclosure starts rise in multiple neighboring counties at the same time, it typically signals that homeowners are falling behind faster than lenders can absorb the backlog.

### Lenders Are Moving Faster Than Before

Another key signal in Michigan’s data: **completed foreclosures (REOs) increased 17% year-over-year** in mid-2025.

This matters because it shows lenders are no longer sitting on distressed loans indefinitely. Instead, they’re pushing files through the system—either to foreclosure sale or REO—once borrowers fall far enough behind.

For homeowners, this reduces the margin for error. Waiting too long can eliminate options that were available just months earlier.

This is exactly where **short sales** become a critical strategy.

### Distressed Sales Are Back on the Map

Nationally, distressed sales—including foreclosures and short sales—now represent roughly **2% of all existing home sales**, **double their share from one year ago**, according to the National Association of Realtors.

Midwest states like Michigan are contributing disproportionately to this increase.

That tells us two things:

1. Distressed homeowners are returning to the market.

2. Buyers and agents are encountering short sales more frequently than they have in years.

Understanding how to navigate them properly is no longer optional.

### Why Short Sales Matter More in Michigan Right Now

A short sale allows a homeowner to sell their property for less than the total amount owed on the mortgage, with the lender’s approval. In many cases, it helps homeowners:

- Avoid foreclosure on their credit report

- Exit an unaffordable loan with dignity

- Relocate without the stigma of foreclosure

- Reduce or eliminate deficiency balances

From the lender’s perspective, a properly structured short sale often results in a better financial outcome than foreclosure—especially in markets where property values may not justify REO holding costs.

But short sales are not simple transactions. They require extensive documentation, lender negotiations, accurate valuations, and constant follow-up. This is where many Michigan deals fall apart—not because the seller or buyer did anything wrong, but because the process was underestimated.

That’s why many agents and homeowners rely on **professional short sale coordination and negotiation support** to keep deals moving forward. At Crisp Short Sales, this is exactly how we help distressed homeowners and agents navigate complex lender requirements.

### What Michigan Homeowners Should Do If They’re Behind

If a homeowner in Michigan has received a notice of default, missed multiple payments, or is simply struggling to keep up, timing is everything. The earlier a short sale is evaluated, the more options exist. Once a foreclosure sale date is set—or worse, completed—those options shrink dramatically.

Starting the short sale process early gives homeowners a chance to:

- Understand lender expectations

- Prepare the right documentation

- Market the property properly

- Avoid last-minute emergencies

Homeowners can begin that process by understanding what lenders require and how the process works before foreclosure accelerates. This is why we guide sellers step-by-step when they’re ready to start a Michigan short sale.

### What This Means for Michigan Real Estate Agents

Agents across Michigan are seeing more listings labeled “short sale,” “subject to lender approval,” or “bank negotiation required.” These deals can close—but only when they’re handled correctly.

Agents who succeed with short sales typically:

- Partner with experienced short sale negotiators

- Set realistic expectations with buyers

- Maintain consistent communication with lenders

- Avoid pricing and documentation mistakes

Crisp Short Sales works behind the scenes helping real estate agents close short sales faster while allowing them to focus on marketing and client relationships instead of lender portals and negotiation delays.

### Michigan Is Early—But the Window Is Closing

Michigan’s distressed housing numbers are rising, but they’re not yet at crisis levels. That’s actually good news. It means homeowners, agents, and investors still have time to act proactively rather than reactively.

Short sales are most effective when they’re started early, structured properly, and managed by people who know how lenders operate today—not how they operated ten years ago.

As foreclosure filings continue to climb across Michigan in 2025, short sales will play an increasingly important role in helping homeowners exit difficult situations and helping transactions actually reach the closing table.