How much does it cost the bank to foreclose on a house?

Asked by Roberta, Brentwood, CA Mon Aug 18, 2008

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Frank Alvarez, Agent, Palm Springs, CA
Fri Sep 25, 2015
I find it hard to believe a bank pays $30-$50k to foreclose on a house. These numbers certainly include lost interest and loss of equity not to mention real estate transaction costs to liquidate. In a non-judicial foreclosure state, all that needs to happen is serving papers and some filing of paperwork with the county. I couldn't imagine it costing more than $5k to handle
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John D Fink, Agent, Brentwood, CA
Mon Aug 18, 2008
HI Roberta, Ute is pretty close on that number. I have heard the same, however the banks don't share that information. We have REO properties in our inventory as well and even we don't know what the total costs are. What we see are the cost we pass on to the banks for utilities, clean up and maintenance. If we have to evict someone we have to hire an attorney and those costs have to be added in as well. Cost becomes a major factor in whether a bank will do a short sale vs. a foreclosure. If the bank takes a great loss on the foreclosure then they are more likely to approve a short sale. That is why it is very important as Realtors that we properly price a short sale because if we make it too low, then the bank will foreclose instead.

Hope that gives you a bit more insight.

Have a great day!
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Ute Ferdig, Agent, Auburn, CA
Mon Aug 18, 2008
Hello Roberta. That's a very good question. The answer to your question depends on which foreclosure procedure the banks have to follow. In CA, we see mostly non-judicial foreclosures which are faster than the judicial foreclosures because the banks don't have to file a lawsuit. I have heard that the cost can run anywhere from $30,000 - $50,000 in CA. The reality is probably closer to the higher #. That # does not take any post-foreclosure cost into consideration. Repairing damages to the house and cost of evictions is extra.
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