Tips For Buying Massachusetts Foreclosure Homes
Author Bill Gassett owns Maximum Real Estate Exposure.
Buying a home that is in foreclosure can be a profitable experience if you know what you're doing. Doing so takes far more research to ensure you aren't making a bad decision.
Foreclosure properties are sold in where-is, as-is condition, so they are usually best suited for real estate investors or general contractors who have no problems fixing up properties.
Many bank foreclosures are properties that have not been well maintained due to the owner's lack of funds. Let's look at the most essential things about buying foreclosed homes.
What is a Real Estate Foreclosure?
A real estate foreclosure is a legal process by which a homeowner’s right to their property is terminated due to their failure to make payments on the home’s loan or deed of trust.
In most cases, the mortgage lender will initiate the foreclosure process with a notice of default sent to the homeowner. If the homeowner does not remedy the default by coming current with their mortgage, the lender will file a foreclosure action with the court, and the home may be sold at a public auction.
The foreclosure process typically begins when a borrower defaults on the loan. The lender will then send the borrower a demand letter outlining the default terms and what must be done to remedy the situation.
Notice of Sale Will Be Issued With Foreclosures
The lender will file a foreclosure action with the court if the borrower does not cure the default. After the foreclosure action is filed, the court will issue a Notice of Sale, publicly posted and published. The Notice of Sale will also be sent to the homeowner, allowing them to remedy the situation and stop the foreclosure process.
When a homeowner does not fulfill their obligations to the lender, the home will be sold at a public auction. The proceeds of the sale will be used to pay off the loan and any other costs associated with the foreclosure. If the sale price is insufficient to pay off the mortgage, the lender may pursue a deficiency judgment against the borrower.
Sometimes, the lender may agree to a short sale, where the home is sold for less than the amount owed. This is done to avoid the costly foreclosure process and to save the homeowner from the burden of a deficiency judgment.
No matter the outcome, buying a home that is in foreclosure is a risky and complicated endeavor. Researching and consulting with a real estate attorney or agent is important to ensure you understand the process.
What Are The Benefits of Buying a Massachusetts Foreclosure?
Buying a Massachusetts foreclosure property can be extremely beneficial for buyers. The primary advantage is foreclosure properties are often priced below market value, giving buyers the potential to purchase a home at a discount.
Additionally, foreclosure properties may have less competition than traditional homes for sale. In a low inventory environment, purchasing a foreclosure gives buyers another avenue to find a home that meets their needs.
What Are The Drawbacks of Buying a Foreclosure Home in Massachusetts at Auction?
The main drawback of buying a Massachusetts foreclosure property is that they are sold in an as-is condition. The buyer is responsible for any repairs or renovations the property may need.
Additionally, traditional home inspections are not allowed, and buyers must make a cash purchase typically within 30 days of an auction.
There also could be problems with the title or liens against the home that a buyer would be stuck with when sold at auction.
Foreclosures have the potential for significant problems with the property. These homes are often neglected, with no maintenance or updating. It is not surprising to find potential problems with the structure, plumbing, or electrical systems.
Finally, buyers should be aware that the lender may attempt to recoup some of their losses by adding additional fees and costs to the purchase price. Buyers may end up paying more than expected for the property, so it is essential to research all fees and costs before committing.
Buying a Bank Owned Home is Safer Than an Auction Purchase
Bank-owned homes usually have more information regarding the home's condition, so making an informed decision about the purchase is more straightforward.
Additionally, because the lender will have already taken ownership of the home, the purchase process is often simpler than an auction purchase. Finally, bank-owned homes are often priced below market value, giving buyers the potential to purchase at a discount.
More importantly, buying a Massachusetts bank-owned home is safer than an auction. When a bank takes ownership of a home through foreclosure, it will clear any liens or title defects associated with the property.
Doing so helps buyers avoid any potential legal issues from buying a home at an auction.
Furthermore, most banks will also allow a home inspection before purchase so that buyers can get an idea of the condition of the home and any potential repairs needed.
Buying a bank-owned home is a safer and simpler option than buying a home at auction. With the help of a real estate professional, buyers can make an informed decision about their purchase and potentially get a great deal on their new home.
Final Thoughts on Foreclosures
When purchasing a foreclosure home, a team of professionals must be in your corner. Undoubtedly, a real estate attorney representing and protecting your interests is vital.
Did you enjoy this advice on buying a foreclosure home in Massachusetts? See other real estate articles on NewsBreak for more timely tips and advice. Bill often writes about general real estate, mortgages, finance, moving, and home improvement.
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