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“If a buyer wont even pay that then the owner has to walk away – the bank then takes it”
But isn’t that one of the reasons why properties in auction often don’t reach reserve?
An example being. A prospective purchaser makes an offer, say x€
The vendor turns down the offer and puts it to auction at x+15%
The property does not reach resrve. The funder reposesses and sells privately for x-30% with the security that the borrower is still responsible for the difference between the proceeds of the sale less costs and expenses, and the amount borrowed.
A business decision would be to wait for reposession and buy off market.