Shouldn’t bank owned properties be offered at a bargain level rather than above-market price?

 

Swamp Hollow

26 Stag Lane has been foreclosed on by Citi and is now on the market at $3.399 million. What’s up with that? This house was built by (the good) Rick Harris and is a fine piece of craftsmanship but Stag Lane, with its Merritt Parkway exposure, has never been a street that commands high prices and #26 is down a very long, steep, shared driveway – not a draw. After building it in 2005, Rick was fortunate to sell it in 2007 for $4.250 million. Those buyers tried to sell it five months later for $4.795 and failed, despite leaving it on the market until June, 2011 and dropping its price to $3.995.

Now Citi owns it, which is nice for them, but I’m not impressed with their pricing. Foreclosed homes rarely get the loving attention owner-occupied homes do and in addition, buyers know that somewhere in Citi’s books this loan was written down to zero – anything the property division gets for it is found money.

Even if this weren’t a bank owned property it would encounter difficulty achieving anything close to its current asking price. As it is, I know where I’d counsel a client of mine to start bidding, and it’d be a number that did not start with a 3 – in fact, I’d look for a considerable discount from what is being asked. As always, that’s just my opinion, and your’s may, possibly will differ – in which case, be my guest.

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4 responses to “Shouldn’t bank owned properties be offered at a bargain level rather than above-market price?

  1. The listing copy says……………
    HOME BUILT IN 2006 AND RENOVATED 2008

    What POSSIBLY could a brand new home need in terms of “renovation” so quickly? Perhaps the better term is “redecorated”?

  2. Appraisal Continual Education 2012

    Citi had to get an appraisal to determine FMV price. Or, I can see banker friends buying lots of real estate at very low prices. So, somewhere an appraiser must factor in the black cloud of foreclosure to adjust the price downward — foreclosure is not a protected class (like you can not factor in the bad aura of sexual persuasion, death,drug use, or can you?)

    I think there is a scar that lays on a foreclosed house, but I would not know how to value it.

  3. AJ

    Written down to zero? Found money? Apparently, you’re not familiar with the practice where money not made is considered a “loss”. Such as in cases where businesses were closed for whatever reason and the money not made is counted as a loss –usually by politicians. You know how much it costs me every time you go to the bathroom? Aye!

    • In my dealings with banks in these situations it’s been my experience that the department that took the loss is entirely different from the department handling the sale. It’s “found money” for the latter department when they unload the property and receive payment therefore. Of course the loss affects the organic whole, but so far as the bean counters are concerned, there seems to be no connection between a loss there vs. a gain here. Sort of like our own government’s accounting.