Boston MA Foreclosures
Boston MA Foreclosure and Bank Owned Real Estate Defined
Boston Massachusetts foreclosures, bank owned and REO (Real Estate Owned) are terms commonly used to describe properties that are owned by a lender (financial institution; typically a bank), after an unsuccessful sale at a foreclosure auction or property obtained by a “deed in lieu.” The lender will then resell the real estate by direct sale or market their inventory through a Realtor. Buyers often benefit by purchasing Boston MA foreclosures as the lender’s interest is to dispose of the asset quickly and aggressively price them to reflect market conditions.
The foreclosure process begins when the homeowner defaults on their mortgage. The first step is to obtain the right to sell at auction. This process will take a minimum of 75 days with substantial delays possible if the homeowner uses the law to their benefit. To obtain current bank owned and short sale listings go to Boston MA foreclosures.
Boston Short Sales – Buying at Pre-Foreclosure
There are cases where a Boston MA homeowner will attempt to sell their home before the bank starts the foreclosure process. The homeowner is either already behind on their mortgage payments or will not be able to sell for a price that would cover the mortgage. This is commonly referred to as a short-sale and requires the lender’s approval. Obtaining approval can be a long and frustrating process. Additionally, there are no guarantees that the lender will accept any offer presented.
If the Boston homeowner is negotiating for a short sale under the HAFA program (Home Affordable Foreclosure Alternative) offered by theUS Treasury Department, the process is streamlined and offers the lender, homeowner and potential buyer additional incentives. Home buyers have a better chance of purchasing the property if a Seller is participating in this program.
MA Laws Governing Foreclosures
In MA, non-judicial foreclosure is the most common method; judicial foreclosure is rarely used in MA. Lenders usually have a power of sale clause and must abide by stringent notice requirements. The bankruptcy court allows sales to be overturned if the amount of the sale was less than the market value of the property. Therefore, lenders in Massachusetts are very cautious in meeting the requirements set forth in the law. Review Massachusetts Foreclosure law for government legislation about MA foreclosures.
Buying Boston MA Homes at Foreclosure Auction
For most consumers, purchasing at a foreclosure auction is a “risky” undertaking and, in most cases, they will opt to purchase from the lender after the auction. As a result, not many Boston MA foreclosure auctions end with the sale of the property. The lender takes back the title and possession of the property. The property is now “bank owned” and is often referred to as REO (real estate owned).
Boston Bank Owned or Foreclosed Real Estate
After a bank (lender, financial institution) takes possession of a property (after an unsuccessful auction), they mitigate items owed by the prior borrower, such as homeowner association fees. The financial institution also tries to get the IRS to remove any tax liens against the property. If the property is occupied, the lender will make arrangements for the owner or tenant to vacate by eviction or with financial incentives.The property is cleaned and minor repairs are made to the property. The lender wants to make it more attractive to potential buyers and maximize the value.
Banks want to sell foreclosed property quickly because they don’t want to tie up their money in capital reserves. Additionally, managing a foreclosed property may see further reductions in value and is a “headache”. Some banks have experience in managing REOs and foreclosures and often have a department dedicated to them.
Most lenders hire experienced Boston real estate agents to market their properties and list their inventory in the Multiple Listing Service (MLS) to ensure full market exposure. Buyers have the opportunity to view, investigate and inspect the property prior to final agreement to purchase. Lenders often market property “as is” which puts the potential buyer on notice as to the lender’s position on minor repairs.
Banks understand that they must conform to federal and state laws in regards to property disclosure. They usually state that they have no knowledge of the property and can make no representations as they have never occupied the property. Banks may or may not provide owner financing on their REOs but in most cases, this would apply only to property that was in very bad condition. Property that has major structural defects or will require extensive repairs will be the buyer’s best value.
Buyers with accepted contracts have the option to conduct full home inspections even though the property is being sold “as is”. If major unknown material defects are found, the lender usually will negotiate to either a substantially lower price or make the repair. Generally, negotiating with a lender is an easier process than negotiating with a homeowner. Lenders are typically unemotional about the process and are interested in making a “good business” decision for their stockholders. It is not in a buyer’s best interest to attempt to renegotiate a contract over trivial items that were disclosed or obvious prior to negotiation of the contract.
Consider all properties for sale as a Boston foreclosure isn’t always the best value for every buyer.
Making an Offer on a Boston Property
Before submitting an offer, have your agent contact the listing agent and ask typical questions you would ask of any seller and some additional ones such as: Are there any documented inspections? What work has the bank agreed to? Are there required bank addendums?How quickly will the lender respond?How is the offer negotiated?
Since lenders do not typically work on weekends and due to the volume of REO inventory, the negotiating process may take longer and create frustration for the buyer.
Make sure that your offer contains your “credit” approval which demonstrates your qualifications as a buyer as the lender is more motivated to negotiate with a qualified buyer.
Understand that lenders will sell at “fair” market value and do not expect “fire-sales” that you have seen of heard of in the media. As mentioned earlier, properties that need substantial structural and mechanical repairs will sell for less. There are fewer buyers qualified to buy these properties so lenders will offer greater discounts.
Virtual Homes real estate agents will provide you with a list of Boston MA foreclosures and bank owned real estate for sale. In addition, we can represent you as a Buyer’s agent and represent your interests in the property search, research, negotiations, home inspection and closing of the transaction.
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