Why do banks refuse to negotiate asking prices for foreclosed properties even after houses have been empty for long periods of time (1 to 2 yrs)?

Asked by Sam, Austin, TX Fri Oct 2, 2009

Also, why do banks price foreclosed properties higher than the competition?

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Greg Hodge’s answer
Greg Hodge, Agent, Round Rock, TX
Fri Oct 2, 2009
Hi Sam,

This is a great question! No property is handled quite the same way either. Ever bank transaction is different even within the same bank. I found that establishing good communication with a bank contact early on is the key to moving forward. It is true banks also have a bottom line. What is funny is that they don't want anyone to know what this is, so they keep everyone guessing. This process creates delays and really is a broken process. "Short Sales" are the main issue with negotiations and most foreclosures have the bid process to work through.

Congress is suppose to be streamlining the process, which in and of itself seems like an oxymoron. It is no sweet sorrow that our banking system is a serious joke. If congress ever comes out of the cold fire and deafening silence to resolve this situation, I will personally treat you to a plate of jumbo shrimp!

Happy buying and remember to laugh to keep from crying!

0 votes
Pam Jernigan, , Round Rock, TX
Fri Oct 2, 2009
In a lot of cases, the lender depends on an appraisal for "market value" and will not budge from that value. As we know, appraisals are not an exact science and in some cases are just not correct, or even close. The bank does have their "guidelines" and unless you can get to someone who can make a decision, the file just sits on someones desk. That has been my experience with short sales or pre-foreclosures. I find that the more knowledgable I am and persistent, the better my results in getting to someone who can make a decision to either get a new appraisal or has the authority to make a change in value.

Pam Jernigan, Realtor
Keller Williams Realty
Mail to:ladybug@kw.com
0 votes
George Kiefer, Agent, Austin, TX
Fri Oct 2, 2009
Pricing and negotiation strategies will vary with each bank. The condition of the home and if the home can be financed (and what type of financing can be used) also impact the banks pricing and negotiation strategy. Normally banks will obtain price opinions from several real estate professionals (a mix of agents and/or appraisers) before they decide on a list price. These opinions can sometimes be off the mark on occasion. There are exceptions to the rule; however the majority of banks are very negotiable. Especially if the buyer is highly qualified and/or a cash buyer.

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Walter Rock, , Round Rock, TX
Fri Oct 2, 2009
In my experience, the best answer is bureaucracy. Banks have procedures that they must follow and, usually some form of government insurance is involved with the loan. In many cases, the original lender is no longer around and the properties are being disposed of by mortgage servicing companies and asset managers.
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Jeff Kessler, Agent, Austin, TX
Fri Oct 2, 2009
Banks have a bottom line, just like everyone else. I had a short sale take 5 months, because the bank would move on the price.

Also, the bank wants to get a good price for the home and not just get what they owe.
Hope this helps.
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