Profile picture for ruby41

Faulty Real Estate Pricing

I've talked to many real estate brokers in Mass who are managing large numbers of bank owned properties and they say that banks will not accept the true value of the homes.  I looked at a house that was listed for 289k total rehab.  A week earlier a similar property with the exception that it had been rehabbed from top to bottom sold for 300k, In regards to the total rehab property the broker said they told the bank it was worth 120K tops.  The bank said they would not entertain prices under 280k.  So now you have banks who not only got bailed out but also are selling what they have on the auction block for over inflated prices.  It seems like double dipping to me.  I have heard similar stories from other RE Agencies and from people whose homes have gone to foreclosure that the banks do not want to take what the property is actually worth but want to fluff up the price against a failing market.   Seems to me that the citizens of this country are getting worked over twice. Interested in anyones take on this.
  • May 13 2009 - Gloucester
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Answers (6)

Profile picture for sunnyview
I think that the bailout money gave banks the ability to hole onto those bad assets until they feel like selling them. They do not have to cash them out to rebalance their books and keep their door open. The government gave them an incentive not to dump those houses on the market and so now buyers have to deal with banks who are being subsidized while they leave the houses empty and unsold. It makes me happy that the neighborhood where I live has very few foreclosures. The thought of empty houses or a bunch of neighborhood houses kept as low grade investor rentals is not a good one.
  • May 13 2009
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Profile picture for Douglas Leone
Obviously if the banks want to sell them they have to accept below market value prices on their forclosures. The market will prevail.
  • May 13 2009
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My opinion is that banks will soon begin to find that the money they want on these homes will not come in. Buyer's are not willing to pay more for something that isn't worth what it's listed for. Once they begin to feel the pinch of low flow, they will have to relax their pricing on these homes. Otherwise they will hold the properties for much longer than they would like. Whatever money they have from the government or otherwise, will not last forever, there needs to be movement in order for any gains to be made.
  • May 15 2009
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Profile picture for CubsfaninWA
Or they could be picking the best property the have in foreclosure and then start their own property management company, renting them out.  I know if I was a bank president, this what I would do.  Take this negative on my books and turn it into cash making machine and 3 to 5 years slowly start selling them off, thereby getting a better price hopefully
  • May 15 2009
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Suspension of the mark to market FASB rule allows SpankBank to carry the asset at inflated values until they can ease it of the books, probably to a consortium that will cash-flow it until it can be sold. PPIP is a government subsidized program to dispose of these toxic assets at the tax-payers expense.
  • May 15 2009
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Profile picture for AAPL
ahhhh......... mark to model.   god bless it !
  • May 17 2009
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