Massachusetts Foreclosed Homes

Couple Wins Auction, But Can't Buy House

Buying a home at a multi-property auction has been difficult, if not impossible, in Massachusetts.

Another winning bidder, Alexandria MacKinnon, on an allegedly foreclosed Massachusetts home auctioned by Real Estate Disposition Corp. has found she can't close on the home because the foreclosure process is not yet complete, The Boston Globe reported May 14, 2008.

 

After a March auction, Real Estate Disposition Corp. told MacKinnon and her husband to prepare for a closing by May 8, 2008, so the couple gave notice to their landlord and qualified for a mortgage loan. Then the closing was postponed indefinitely because the mortgage company that was working for the buyers told them it couldn't make the loan because the seller did not yet own the home.

"Real Estate Disposition was warned by state regulators before the March auction against including any properties it did not have the right to sell. The company has said it auctioned several such properties at a previous event in November."

Buyers are faced with a great deal of frustration when dealing with banks and the companies that represent them. Buyers also make the mistake of attempting to complete the process without professional representation.

Read The Boston Globe Article

Trashed Bank-owned Properties

The headline is a little misleading. It suggests that there are some bank-owned properties that aren't trashed. Well, there are, but not many.

The Boston Herald reported April 28, 2008 that many ex-owners of foreclosed properties take lighting fixtures and trash homes on their way out the door.

It's absolutely true, and it happens more often than not. It's to the point where I am amazed to see a bank-owned property that isn't in really crappy shape (Herald Photo).

"People rip up walls, kick in doors or take bathroom fixtures or copper wiring - sometimes to sell, other times just to get back at lenders."

Here's a tip: Don't open any refrigerators left behind.

"Figures on vandalized foreclosures are hard to come by, because owners can legally do what they want with homes until lenders seize property titles. Crooks also sometimes hit homes after former occupants have moved out."

When I hear about investor wannabes buying foreclosed property at auctions without seeing the inside I cringe.

“'You drive up and say, ‘Wow, what a nice house!’ ' the broker said. 'Then you look inside and say: ‘My God, what happened here?’ Short of taking the shell of the house, everything is gone.'”

Read The Boston Herald Article

About 170 Homes For Sale At Boston Auction

About 170 foreclosed Massachusetts properties were up for sale at an Auction at the Hynes Convention Center March 29, 2008, the Boston Herald reported.

Real Estate Disposition Corp, an Irvine, Calif.-based company, held the auction, but is under investigation by state officials for allegedly selling some houses at a November 2007 auction before the foreclosure process was completed, according to the Boston Herald.

I'd be a little nervous when the people working the auction are wearing tuxedos (Herald photo). After all, these are properties with leaky roofs, filthy carpets and wet basements.

Read The Boston Herald Article

Interested In Buying Foreclosed Property?

Buyers Brokers Only, LLC is sponsoring a home buyer seminar on Saturday April 5, 2008 from 10 a.m. to 12 p.m. at the Best Western (401 Lowell Avenue, Haverhill, MA) in Haverhill.

Learn about every aspect of buying a home: mortgages, pre approval, finding a home (single-family, condos, multi-families, new construction), the multiple listing service (MLS), buying bank-owned properties and short sales, negotiating the best price, home inspections, purchase & sale agreement, the closing, tips and advice from the professionals and an opportunity to ask all your questions.

Space Limited: Please RSVP by filling out the form online or by contacting Alexa by March 31, 2008 at 978.457.4552 or astone@buyersbrokersonly.com. Space is limited to 50 people.

Knowledgeable Speakers:
Richard J. Rosa, Esq., Buyers Brokers Only, LLC: Rich is a real estate broker, lawyer and co-owner of Buyers Brokers Only, LLC. He has practiced law for 12 years, and he is a member of the Massachusetts Association of Buyer Agents.

David S. Kres, Esq., Buyers Brokers Only, LLC: Dave is a real estate broker and lawyer, as well as co-owner of Buyers Brokers Only, LLC. Dave earned the North Shore Association of REALTORS® (NSAR) Rookie of the Year award in 2006 and currently is the president-elect at NSAR.

Robert Barr, VIP Mortgage: Rob is the vice president of sales for VIP Mortgage, located in Danvers, MA. He has 20 years of experience in the mortgage industry and has helped more than 1,000 individuals/families finance their first home.

Jeffrey Stelman, Esq., Schribman & Stelman, LLP: Jeff is a partner in the law firm of Shribman & Stelman, LLP, located in Salem, MA. He has practiced law for 17 years and has conducted more than 1,500 real estate closings.

Josh Amsler, Jackson Home Inspection: Josh works for Jackson Home Inspection in Andover, MA. He has more than 10 years experience as a licensed home inspector and has completed more than 6,000 home inspections. He also is a member of the National Association of Home Inspectors.

Donation: $15 per person. All proceeds going to Rebuilding Together Greater Haverhill, Inc., which helps revitalize homes and neighborhoods for low-income homeowners and communities in need, especially the elderly, the disabled and families, helping them to live in warmth, safety and independence. Please make checks payable to Rebuilding Together Greater Haverhill Inc., and please mail checks to Buyers Brokers Only, LLC, 7 Kenoza Avenue Haverhill MA 01830. Space limited to first 50 people, so please RSVP.

November Auction Winners Still Aren't In Homes

Nearly a quarter of 300 winning bidders from a November auction still have not taken title to the properties auctioned, despite representations from the auctioneer that the deals would close within 21 days, the Boston Globe reported March 22, 2008.

"The rules were simple: The high bidder on each property paid a $5,000 deposit, signed a purchase agreement, and arranged a mortgage. The company, Real Estate Disposition Corp., told bidders they would close within 21 days of the auction. But some sales have been delayed for months because the auction company accepted properties from mortgage companies before those companies completed the process of foreclosing on the prior owners. In other cases, bidders say they have received no explanation for the long wait."

For those of us helping clients purchase bank-owned and short sale properties, nothing is a surprise. On most occasions, banks are neither operating in good faith with buyers nor making rational decisions about the sale of properties. It's no wonder so many lenders are faced with a mountain of bad loans.

"In one instance, three friends made the winning bid of $130,000 on a house in Lee. The mortgage company delayed the closing, then sent a letter in February offering to return the deposit. Before the friends responded, the company put the house back on the market for $179,000, then quickly agreed to sell it to someone else."

Real Estate Disposition Corp. apparently holds auctions to sell foreclosed homes that mortgage companies can't sell on the open market, often because the properties are in poor condition.

The article pointed out something that most people don't realize about these multi-property auctions. Most properties being auctioned have a reserve, which means if the highest bid does not reach the reserve price the seller does not have to sell the property.

The company auctioned about 300 properties over two days at the Hynes Veterans Memorial Convention Center. According to an article in the Globe at the time, some people bid on properties they never saw. My guess is that the vast majority of those people had no idea what they were getting into.

Real Estate Disposition Corp. plans to auction roughly 170 more properties at the Hynes next Saturday. That ought to be interesting. I think many of these "wanna be" investors don't seek professional advice because they don't want to hear anything that contradicts their dreams of striking it rich.

Below I have attached a brochure I give potential clients that includes basic information about foreclosures.

Read The Boston Globe Article

Foreclosure_Short_Sale_Brochure

Analyze A Property's Investment Potential

The free widget below provides a basic analysis of a property's investment potential. A paid version also is available and provides more flexibility in the way data can be imputed and analyzed, but the free version below provides a decent analysis.

I tell clients interested in investment properties who want to take a conservative, and I would suggest smart, approach to investing in real estate, such as a multi-family property, to assume rental property will be rented 45 months out of the next 60 months (on average nine months per year). For example, if the rental income is $2,400 per month, then multiply $2,400 by nine to get a conservative estimate of annual income.

Your property may be fully rented in the first two years, but vacant nine months in year three. You just can't predict it. If it does better than that, great, you have that much more cash to invest in your second property.

Of course, if you plan to occupy a part of the property, then your analysis would be a little different. If it is a commercial property, and you are certain you can obtain a long-term lease with a financially solid tenant (two big "ifs"), using 45 months rented out of the next 60 for your analysis might be a little too conservative.

Use the link in the right-hand column to get foreclosure property listings in communities you are interested in.

Powered by iAnalyzeREI: Real Estate Investment Analysis