Massachusetts Bank Owned Properties
Once a bank auction has failed to find a buyer, the property "reverts" to the bank and the bank now owns the property. At this point, the bank will put the property up for sale as a "bank owned property".
Usually the banks will list the property at a high price and then slowly reduce the price over time. Each bank/lender works a little differently, but they all have similar goals. They want to get the best price possible and have no interest in "dumping" real estate cheaply. Generally, banks have an entire department set up to manage their foreclosure inventory.
Although buying a bank owned property sounds like a great bargain but you need to be prepared for potential downside. The condition of the property may be in disarray and the costs of renovation may be making buying the property not worth it. Banks do not clean up/fix up properties as a normal home owner would in preparation for listing their property. In addition, evicted home owners may have left damages and the property in bad shape. Don’'t get caught up in a "bidding war" and pay over market value.
Once you make an offer to purchase, banks generally present a "counter-offer." It may be at a higher price than you expect, but they have to demonstrate to investors, shareholders and auditors that they attempted to get the highest price possible. You should plan to counter the counter-offer. However, the negotiation process may sporadic and unpredictable.
Your offer or counter-offer will probably have to be reviewed and approved by several individuals and companies. Even once an offer is accepted, the bank may insert wording like “..subject to corporate approval with 5 days."
Banks always want to sell a property in "as is" condition. Most will provide pest certification and agree to a home inspection contingency which allows termination of the sale if the inspections reveal unanticipated damages that the bank will not correct. However, any items found during inspection will not be fixed by the banks.
Bank Owned Property Pros
Good deals: You can get great deals buying foreclosures but you need to be patient and careful about fixup costs.
Home inspection: You will be able to cancel a purchase as a result of a home inspection
Bank Owned Property Cons
Uncertain Negotiations: You will be negotiating with the bank's foreclosure system and there is not one person to who makes the decision. Sometimes offers are rejected without any explanation or sound reasoning. A bank employee can care less whether the home is sold sooner rather than later. They just want to meet corporate goals which can be complex and fluctuating.
Property Sold As Is: Banks will not fix up any deficiencies in the property
