Boston MA Bank Foreclosures « General Interest

Boston MA Bank Foreclosures

Boston MA Bank Foreclosures

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 usually sells the real estate by direct sale or market their inventory through a Realtor. The lender is motivated to sell the property quickly and qualified buyers may benefit from an aggressive market price.

The foreclosure process begins when the homeowner defaults on their mortgage. The first step is to obtain the right to sell at auction. In Massachusetts, this process takes a minimum of 75-90 days and if the homeowner contests the process in court or files bankruptcy the delay can be significant. To obtain current bank owned and short sale listings go to Boston MA foreclosures.

Boston MA Short Sales

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 is no assurance that the lender will accept any offer presented.

If the Boston homeowner has entered 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. In this program, most of the barriers to a successful transaction have been removed.

MA Laws Governing Foreclosures

In Massachusetts, 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. If a homeowner files for bankruptcy, the court can overturn the foreclosure sale if sold for less than market value. 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, buying from the lender after the auction is a better option. As a result, not many Boston MA foreclosure auctions end with a bidder being successful with an accepted offer. The lender takes back the title and possession of the property. These properties are referred to as REO (Real Estate Owned) or Bank Owned properties.

Boston Bank Owned or Foreclosed Real Estate

After a bank (lender, financial institution) forecloses on the property (after an unsuccessful auction), they mitigate items owed by the prior borrower, such as homeowner association fees. The lender also tries to get the IRS to remove any tax liens against the property. The current owners are usually evicted or provided financial incentives to vacate.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.

Lenders want to move their foreclosed assets quickly maintaining REO inventory is a costly process. Additionally, managing a foreclosed property may see further reductions in value and is a “headache”. Lenders that have significant REO inventory often have a separate department to manage their inventory.

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. Some lenders will negotiate repairs and concessions, but in most cases their preference is to sell “as is” at a “discounted price”.

State and Federal requirements regarding property disclosure must be followed by lenders. 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. If a buyer is unreasonable in negotiating the lender will move on to the next potential buyer.

A Boston MA bank owned property isn’t always the best value for a consumer. It’s an old myth that “foreclosures” are a bargain.

Negotiating a Contract for 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 does your agent deliver the offer?

The negotiating process can be very frustrating for buyers as the typical timelines do not apply and understand that lenders do not work on weekends.
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 be negotiated aggressively There are fewer qualified buyers for 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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