[Anonymous]

We all know that the banks are swamped with repos. We also know that things are going to get a lot worse for them before long. If you look at the various sites offering ‘bargain repossessed properties’ however, it quickly becomes apparent that the asking prices are no different to those you’d see for normal resale properties in any agents window.

My question thus is, how much are the banks actually prepared to budge from the advertised prices? I’m aware that some of you (Logan??) have been in discussion with them and would be grateful if you could share any knowledge.

[Anonymous]

I tried to buy a couple of places through CAM bank, they were a disorganised mess and didn’t appear to have any strategy for dealing with offers, they just gave us loads of BS and in some cases never got back to us

So, IME they seriously expect to get the asking prices

The house I bought in the end was a private deal, just before the bank repossessed the house, we subrogated the mortgage and in the end we got IMO a good deal, but even so the bank messed us around on the mortgage terms

We took the opinion that we were doing the bank a favour, as we reduced the outstanding debt and avoided another repo going on the books, but it took a few weeks of discussion to get them to see sense

So, IME they are still just unrealistic fools, the longer they hold out, the worse it will be for the banks

If you are looking to buy a bargain, a distressed seller is a lot better prospect than a bank repo IMHO

[Anonymous]

“they were a disorganised mess and didn’t appear to have any strategy for dealing with offers, they just gave us loads of BS and in some cases never got back to us”

Are you surprised. People working in banks get their positions through contacts. They are not trained or the Banks believe in spending any money on training them, staff from Manager down to a Cashier are de motivated. They prefer to cheat & rob people rather than actually do a transparent trascation.
(Charging €100’s for a bankers draft is a good example).

The Banks like all other institutions in Spain do not work they are simply dissjointed.

[angie]

Not just Spanish Banks either.

There was little mention although it slipped out recently, that to get around the obscene bonus culture of Banks, HSBC decided to double the salaries of ALL their Investment Bankers.

This the same Bank who claims it does not need our cash, it’s cash rich so effectively screws it’s customers on interest rates and charges.

This mass bank fund withdrawal planned for 7th December, I’d love to see HSBC take a hit, the greedy b

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s 😡

[adiep]

I seem to remember that they need to write down 30% of the properties value after 12 months. So, given that, they will move by at least 30% from the mortgage cost to them.

[Anonymous]

No, they will be mortgage cost plus the (excessive) costs then -30%, so still more than they are worth

[Anonymous]

For personal reasons I’ve done a great deal of research into local housing costs where I live in Spain. The true number of houses actually for sale is ridiculous, and is added to on a daily basis as the banks throw more properties on to the market. Only yesterday, through a link supplied on this forum, I found another 2,000 recent listings.

My figures are not statistically accurate (and I suspect that the figure is even higher), but for an average sized town I would estimate that as many as half of the private properties are for sale, and there are very few buyers around.

There are also very few bargains around, distressed sales can only drop to a certain level and ‘private’ sellers are following the bank’s lead in maintaining unrealistic high prices.

However, I can partly follow the bank’s (market’s) logic in maintaining the price levels. There are far too many houses on the market and they will never sell in any great numbers whatever the price. The internal market is dead, the crisis has frightened the life out of people who are witnessing unemployment levels at close hand.

The external market has largely dried up too, the Brits have stopped coming over (and a lot of them are returning home, often abandoning a property they can’t sell, at any price).

I suspect that’s how it will remain for some time.

[Anonymous]

@Rocker wrote:

There are also very few bargains around, distressed sales can only drop to a certain level and ‘private’ sellers are following the bank’s lead in maintaining unrealistic high prices.

For the most part I agree, but your comment about distressed sellers seems to suggest that these will be expensive too, of course in reality every case is different

I think that I take a pessimistic view of the market, and generally consider property to still be 20-50% overpriced in our area, even so our purchase was in my opinion a sensible price (after haggling), in the end I paid what I wanted to pay, it’s cheaper than our rented home, and better in every respect

So, although few and far between, it is possible to buy at sensible prices, it just takes lots of work (we have been looking for over six years!!)

[zoro]

@El anciano wrote:

I think that I take a pessimistic view of the market, and generally consider property to still be 20-50% overpriced in our area, even so our purchase was in my opinion a sensible price (after haggling), in the end I paid what I wanted to pay, it’s cheaper than our rented home, and better in every respect

So, although few and far between, it is possible to buy at sensible prices, it just takes lots of work (we have been looking for over six years!!)

Hi El anciano. Are you able to say what kind of discount from the peak prices of a few years back, you achieved? Assuming your seller is typical (a big assumption I know) and since your purchase represents a real life selling price it would be interesting to know what kind of discounts from the peak years, sellers are accepting these days.

[Anonymous]

I struggled to get a realistic peak value, my best guess is that the house peaked around 280K

We finally got it for a little under 145K, but I don’t think this is really any reflection on what sellers will accept, in my case it was just the outstanding loan, and a little for fees & the retention

So, in this case the sellers were walking away with basically nothing, but that was better than getting repo’d

[zoro]

@El anciano wrote:

I struggled to get a realistic peak value, my best guess is that the house peaked around 280K

We finally got it for a little under 145K, but I don’t think this is really any reflection on what sellers will accept, in my case it was just the outstanding loan, and a little for fees & the retention

So, in this case the sellers were walking away with basically nothing, but that was better than getting repo’d

Thanks, that’s interesting.

I’m working on the premise (rightly or wrongly) that property in Spain could fall by as much as 50-60% off peak prices. I’ve come to this conclusion because it’s widely reported that the Irish property bubble has resulted in falls of this magnitude hence causing the current bank problems there. As is well documented on this forum, the Spanish Banks exposure to property is likely to be of a similar order, hence my reliance on those figures.

Your experience seems to roughly bear out those numbers.

My own interest is because I’m looking to buy and although I don’t expect a seller to drop to those kind of prices I would naturally feel more comfortable if I had at least some kind of margin of safety but finding a motivated seller who accepts this just isn’t easy.

Last week I made an offer on a property that equated to about 63% (i.e. a 37% drop) off what I know to have been its peak asking price some three years ago. I thought that was a fair offer given that it never sold at that asking price at the peak and how far the real value might drop next year. However it was refused, the seller, although motivated, would only drop 32% off that and I wasn’t willing to accept any more risk even though I liked the property.

I recount all of this just to highlight that even though it seems clear to all that prices can only go down over the next few years it’s really hard work getting sellers to accept it.

My search continues.

[Anonymous]

El anciano wrote:

I struggled to get a realistic peak value, my best guess is that the house peaked around 280K

We finally got it for a little under 145K, but I don’t think this is really any reflection on what sellers will accept, in my case it was just the outstanding loan, and a little for fees & the retention

So, in this case the sellers were walking away with basically nothing, but that was better than getting repo’d

I would say that prices in general have fallen 50%from the peak, this is not after a scientific survey but from prices friends have had to accept . The banks really do not want to know about mortgages on properties they do not have on their books ,(repos) a friend did manage to sell last week but the bank was causing problems up to the time of signing in front of the notary, they give any tame excuse not to lend. Couple only cohabit , work contract must be “indefinido” How many workers in Spain have one? They want “avales” signed by parents etc it just goes on and on.

Why does n´t the government give the property market a big boost and slash the costs of buying a property? Now that Hacienda will not accept low valuations it is necessary to declare the actual sale price on the sales document, or something near, paying 10% extra in IVA, notary,land registry etc is a sizeable sum. Reducing costs by half could lead to more deals.

For the past three years I have advised prospective purchasers to rent rather than buy, this still makes sense to me, later if there is a forced sale or a really good property comes along
then think about buying.

[Anonymous]

Certainly the costs of buying here are a big problem, I know plenty of people who want a house but they would struggle to get a mortgage even though they have permanent contracts, even if they got the funding they don’t have the spare cash to pay the taxes & other costs

[Anonymous]

I know of one agent who is bucking the trend. He’s English, recently arrived in the area, but very well experienced in his field. His operation is a large one and he employs Spanish, German, Scandinavian as well as English staff.

He offers the complete package from his large premises; a valuation and excellent marketing package for the seller, and a guaranteed mortgage to the buyer along with insurance etc etc, at over 100% if required. It can all be arranged within a few days.

He’s selling around five properties a week, to the envy of all other estate agents in the area. His portfolio includes properties for sale in the US, Bulgaria and Turkey, for the foolhardy.

He charges a normal commission to the seller, but has a unique way to maximise his earnings by charging the seller too, which invariably involves a cash payment – all totally legal, and the only losers appear to be the banks.

The Germans are the main buyers at the moment, for some reason from the former eastern part of the country. Apparently, they are prepared to sign anything and regard it as normal to pay for part of the transaction in cash.

[Anonymous]

@Rocker wrote:

He charges a normal commission to the seller, but has a unique way to maximise his earnings by charging the seller too, which invariably involves a cash payment – all totally legal, and the only losers appear to be the banks.

Sorry if I’m a bit dim, but can you just clarify why the banks are the losers in this particular case?

[Anonymous]

I’ll try but I’m not sure if I’ve got it right. If the seller is a friendly bank, a fresh valuation (by a qualified valuer) is put to them and they reduce the price accordingly, at branch level, and the buyer pays the agent for the reduction.

If it’s a private seller, who is prepared to drop the value substantially, known to the agent but not the buyer, the buyer is persuaded that a cash payment has led to him paying a lower price.

I may have the mechanism wrong.

[Author]

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