A new study finds that Spanish bank repos are often more expensive than similar properties offered by private individuals.
Adicae looked at 96 properties offered by six banks and compared them with similar homes offered by private vendors. The typical bank repo cost €89,845 compared to €71,547 asked by private vendors for similar homes in the same area. On average bank repos were 20pc more expensive.
For example, in Tarragona, a bank is asking €90,500 compared to a private vendor asking €39,000 for a similar property on the same street. With a difference of €51,500 the bank repo is 132pc more expensive.
It is not secret that bank repos in Spain are often more expensive than other properties, the reason being that banks favour their own portfolios when it comes to granting mortgages. So bank repo prices tend to reflect the privilege of getting mortgage financing.
This is mainly a problem for local buyers in Spanish cities catering to domestic demand. With low savings Spaniards need mortgages, and given the present credit restrictions, Spanish buyers can’t be too choosy. For them it’s take it or leave it.
On the coast it’s a different story. Here the market is dominated by foreign cash buyers so mortgage financing has less pricing power. Other research suggests that bank repos on the coast where foreigners tend to buy are as cheap or cheaper than private homes.
Bank repos on the coast are also more likely to be repossessed new developments never occupied, rather than homes from which families have been evicted, ripping out anything of value as they left. As a result, the condition of repos on the coast is often better.
The study by Adicae identified another problem with bank repos, namely their poor presentation. According to Adicae, buyers looking at repos listed on the websites run by bank real estate divisions can expect “little information and few pictures” so buyers have no idea what to expect. Where pictures are provided they usually show that full refurbishment is needed.
Private vendors do a better job of giving buyers the information they need. “Their adverts provide a lot of pictures where you can see the state of the property, and if reforms are needed the adverts say so, whilst the majority are sold furnished, providing a saving of €4,000 to €6,000 which is the minimum it costs to furnish a home,” say Adicae.