|
Foreclosure Sales:
Guess what, nobody buys an asset at the actual
action. The real deal comes maybe 6 to 8 months later the auction date.
Quick overview of procedure:
Property Owner goes 60 or 90 days late
Bank assigns to collection, prepares to file notice of default
Eventually Default notice filed, bank petitions court to foreclose.
Bank Lawyer and/or auctioneer post notice of sale,
advertise, schedule auction. Usual time frame is 4 months after default filed and no bankruptcies filed.
Auction held, bank is high bidder yet again and takes ownership
Bank pops locks, winterizes property, gets 3 price opinions
2 months later property listed with Realtor
Most of the time the
best deals on bank owned assets comes 6 to 9 months after it has been on the market and experienced as many as 15 price reductions.
The Actual Auction: So you show up at
the auction, the auctioneer verifies your identity, certified funds. give you an auction package.
The auctioneer will read the preamble to the sale, may offer information about secondary or tertiary lenders, and any back due taxes, condo fees, etc. Do not, absolutely do not, assume that the auctioneer is obligated to provide any and all information about what is owed on the property. You will be responsible for any mortgages or liens on the property that are not handled specifically at or before the date and time of the auction. Yes, you could buy a property at auction and then find out later that a mortgage is still owed on it.
It doesn't happen frequently but it does happen.
Now normally the bank is going to factor in the amount of back due taxes to the municipality and back due condo fees, betterment moneys, and assessments from a condo association in their minimum bid, but, you can't rely on that. You need to go to the local tax treasurers office and get the skinny on what is owed to and including the date of purchase (30 days after the date of the auction). You want to contact the condo management company or trustee to find out exactly what is owed for back due condo fees and you want to spend some time on line at the registry of deeds web site to find out who has additional mortgages out on the subject property and if there are any mechanic liens, etc.
Make sure you know if the property is occupied
because you are not going to be allowed to view the premises before or during the auction sale. A tenant in place will become the responsibility of the
new owner together with any moneys that would be owed to the tenant such as last month and security deposits including interest due under Mass. law.
As a practical matter, the lender who is foreclosing
needs to meet guidelines for the Mass. Uniform Fraudulent Conveyance Act which among other things means they want to get a "reasonably equivalent value"
at the time of the sale. Reasonably equivalent means "market value" not quick sale or discounted value.
You will find that in most cases the bank is going to send their minimum bid with the auctioneer for all that is owed on the property including late
fees, interest, legal fees, advertising and auction costs, back due taxes, back due condo fees, etc.
Many times the borrower being foreclosed upon is someone who didn't have a lot of their own money or equity in the property and typically the minimum bid price of the lender at the auction sale will exceed market values of similar properties for sale in the town or region.
So often times the best foreclosure deals are
the ones where the bank grinds out the price with multiple reductions and then lets it go at a fire sale.
The key is knowing when they do the price reductions. Once a property has been beaten down on pricing it can gather quite a bit of interest and multiple offers.
Timing then is
critical We are tracking dozens of Bank Owned properties right now We have good deals in good areas-if you want to know our top 20 foreclosures or would like regular information about available bank owned properties in your area, please contact us. Request Bank Owned Property Info Quick on line form
|
