Words: Ashley Rigg
Published: 7th September 2011
*Spanish banks selling properties at 40% mark ups
A new study published today reveals that repossessed residential properties on the Spanish mainland are being offered at up to 40% higher than their true market value.
Adicae, the bank and insurance customers’ association, looked at data in 11 Spanish cities and found that customers are being enticed into buying overpriced units by offers of 100% mortgages and repayment periods of up to 50 years.
The association notes that is some cases banks are acquiring distressed property at 50% to 60% of market value and then putting them back on the market for up to €10,000 above similar units on the same street.
Adicae points out that the terms being offered are often more generous than those promoted in the later part of the boom years leading up to 2007.
Comment
Banker economics lesson one – If you struggle to sell something, raise the price!
Unfortunately this is not news to many of you. The banks have long been offering preferential lending terms to properties on their own books. It is however good to see an independent study verify that many banks are inflating the prices to compensate for the generous mortgage terms.
If similar terms could be offered across the board, it would go some way to helping the Spanish property market out of the doldrums.
Source: Global edge
User Comments
And how exactly is "true market value" determined at the moment? Is it by the final agreed price on a sale where the owner is desperate to leave Spain at any cost and the buyer doesn´t need to go cap-in-hand to the bank? Or is it by the price tag slapped on a property by a bank employee whose main interest is pleasing his/her boss than making a quick sale, and where the bank will offer 100% finance? There is a world of difference but in any case, if you want the best price/finance deal you have to be willing to negotiate, rather than just pick something off the shelf.
Andy Fox,
Spanish Bank Property
This is another example of greed run amok! The Spanish are in a hole, and they just keep digging deeper. Is there no government regulatory authority?
John Aliyetti,
David Walsh & Associates
Certainly not happening around us in Ayamonte. banks are offering the good mortgages but house prices are less than half the original. For instance a 2 bed 2 bath apartment in a gated community with shared pool and on a golf complex are selling for 70K euros!!
Malcolm MAXWELL,
LifeonthLuz
Totally in agreement. Luckily I don't have to compete with banks for similar properties here in Valencia where they just finance their own but even so they are impossible to deal with at the moment, even on subrogaciones.
I have written an article abut it in numbers here referencing this page
http://www.houses-for-sale-in-spain.net/houses-for-sale-in-spain/why-you-shouldnt-buy-a-bank-repo-property-part-4735
Graham Hunt,
Valencia Property
I´m frequently amazed at how and why Spanish banks allowed to blatantly inflate the valuations of properties on their books and then offer mortgages on them?
I also wonder what sort of property agent would actually encourage their clients to invest in them?
The result of all this is that lots of naive buyers are going to get (forgive me) screwed, but they won´t purchase anything close to the amounts of properties needed to reduce the current oversupply and return some semblance of market normality to the area.
The last thing needed is for more banks to engage in these practices.
Colin Murphy,
Torcana Ltd
And please also don't forget that properties owned by the banks are not the best of the block or in A1 locations!
Fred van Krimpen,
ELITE Inmobiliaria
Just what we have been telling OUR clients. There is a perception that if it is a repossession then it MUST be cheaper - usually NOT the case but people keep falling for it. Just like they caused the current crisis it will be the Banks that prevent a recovery by being greedy. Just look at what they are spending pushing their over priced properties!
Roy Hayes,
Kasas Royale