WHY DO BANKS TAKE SO LONG TO GET A PROPERTY ON THE MARKET?

This mornings questions is: "Why do some banks take so long to get a property on the market after they foreclose?"

When a bank buys the property back at the foreclosure auction, there are several steps it has to go through to get on the market. The first thing to know is virtually all banks do not sell their own properties. The use an asset management company to sell their properties. After the foreclosure, the home is given to this company to sell. The company assigns an asset manager for that area. That asset manager then assigns th listing to a broker who is on the approved list of brokers in that area.Brokers are ranked by past job performance and the amount of bpos's they have completed.

The next step is checking occupancy, if it is occupied, eviction begins. Once it is vacant the property is cleaned, appraised and then placed on the market and the current market value less repairs and damages.

Sometimes there are several reasons a bank may own a property for an extended perior of time without being able to sell it, the most common 2 reasons are evicting the current occupant or former owner. Some people know how to work the system and can fight an eviction for an extended perior of time, we just went through a 15 month eviction filled with out of state attorney mistakes not knowing the state law and not serving all the occupants.

The second most common is clearing the deed. For various reasons liens or other mortgages or discharges of former mortgages may have not been filed properly and the deed must be cleaned before it can sell.

The property is then placed on the market to sell.

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August 21 2010 - Manchester
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Replies (8)

They are slow because thay received so much of tax payers funds that they can take their sweet old time.

There are a lot of people hurting in this country right now and the Banks' Government and Wall Street could care laess. It is all bout making money and keeping the thumb on the samll guy.

Used to be a republican,

Leo Hamill
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August 21 2010
Leo with all the money they received, you would think they would be loaning some of it back out instead of hoarding it.
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August 23 2010
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One other reason is less obvious.

Once the property is on the market it could actually sell. Once it sells the real value MUST be put on the books. At that time the loss is real and appears on the books. Until such time as a house sells the banks can look better than they are financially by not admitting to such losses.

Yes, once a house sells the banks has a real loss on its books. Until then it is not held against them or their books.
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August 23 2010
The "shadow inventory" is real.  There are homes that are being left empty on purpose.  Many investors (who own the loans) would rather wait for property values to rise rather than accept the loss as Dan just suggested.
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August 23 2010
I completely agree they are slowing down everythng on purpose to reduce the losses. An asset manager told me "i actually sold a house too quickly"...
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August 23 2010
A few comments:

- I think asset managers are holding the properties per instructions from the bank.  Just like the S&L crisis, banks may be curbing sales until they rebuild reserves.
- It seems like we run into a fair amount of REO's that don't have the deeds cleared and we end up with delays in closing...So I'm not sure I buy that one.
- Finally, if asset managers are waiting until prices recover...that could be a long wait.
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August 24 2010
There are many reasons, however, one of the most interesting reasons I'm hearing is that banks are accumulating so many properties, that putting them all on the market at once, would bring values crashing down.

Perhaps a more intriguing question might be, how many properties are banks holding on to?

We may not want to know the answer!  
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August 25 2010
Banks need to decide which quarter they want to take the loss in. The executive bonuses are tied to profits...they sometimes delay the sales to beef up their bonus.
Remember, until they dump it it's still an asset on their books !
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September 07 2012
 
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