Framingham MA Foreclosure and Bank Owned Real Estate Defined

Framingham MA 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 Framingham 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. 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. Go to Framingham MA foreclosures and register to receive a list of distressed real estate.

Framingham Short Sales – Buying at Pre-Foreclosure

There are cases where a Framingham 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 the net proceeds and additional resources would cover the balance owed on their mortgage. This is commonly referred to as a short-sale and requires the lender’s approval. Obtaining approval can be a long and difficult process. Additionally, there is no assurance that the lender will accept an offer at or above the listed price or any viable contract presented.

If the Framingham homeowner is negotiating for a short sale under the HAFA program (Home Affordable Foreclosure Alternative) offered by the government, 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.

MAForeclosure Law

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. 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 Framingham Massachusetts at Foreclosure Auction

For most potential buyers, 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 Framingham MA foreclosure auctions end with a bidder being successful with an accepted offer. The title reverts back to the financial institution holding the lien. The property is now “bank owned” and is often referred to as REO (real estate owned).

Framingham 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 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 hopes to obtain a higher net sales price with minor improvements.

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”. Some banks have experience in managing REOs and foreclosures and often have a department dedicated to them.

In most cases, the lender will list their foreclosures with Framingham real estate agents who market and manage the property. Bank owned listings compete with other available listings and buyers have the opportunity to inspect and investigate property prior to the final 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. If a buyer is unreasonable in negotiating the lender will move on to the next potential buyer.

A Framingham 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 Framingham Property

Before submitting an offer, have your agent obtain all available disclosures and information on the property and ask questions such as: Are there any inspection reports? 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.

Do not expect lenders to “give away” property as they understand what the property should sell for in the marketplace. As mentioned earlier, properties that need substantial structural and mechanical repairs will sell for less. 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 Framingham 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.