Bank repos 20% higher than open market prices

I have cut and pasted this article published by a leading property organisation - so beware of those 'discounted bargains' and 'distressed property sales'

The following article was cut and pasted 15/01/2014:

A study by a Spanish banking association concludes that bank repossession properties are on average twenty percent more expensive than properties sold on the open market.

The association of Users of Banks, Savings Banks, and Insurance (Adicae) looked at 96 properties offered by six banks.  It found that in many locations banks were charging a huge premium for the “priviledge” of mortgage finance, effectively undercutting local agents while at the same time making a large profit from consumers unable to find comparable lending terms on the open market.  In one case a property was priced at 132 percent above comparable properties in the area.

Interestingly the problem is more acute for local agents than for our readers in the overseas property industry.  Buyers in coastal areas are more likely to be international and to have higher deposits or buy cash meaning banks have less pricing power.

Property stock in coastal areas also has a higher proportion of developments which have never been occupied which banks are keener to sell off in bulk which is another check on bank repossession prices.

The fact remains that any self respecting international agent would not touch the vast majority of stock on banks’ books.  However, due to the lack of property information and photos on bank websites, it can be difficult for consumers to compare “like with like” which is confusing and increases the sales cycle for the industry. 

It’s not just banks competing unfairly on financing which is inhibiting international sales, it’s incompetent marketing too.

Absolutley, this is what I've been suspecting all along.

While I was buying my present property, i was negotiating with several Spanish banks to get a mortgage.

Several first said they would give me the money, but later back-pedalled. When i asked why, they told me they would rather sell me a property from their own portfolio. So basically they're trying to squeeze buyers by restricting their alternatives. As I wanted this property and no other I finally bit the bullet and financed it a different way. But I was very fortunate that that was at all possible. Other buyers might have ended up going for a bank property, or going home empty handed.

Unfortunatley banks have always done what they wanted in Spain, and it doesn't appear to have changed in the slightest. Like any business they look after their own interests but they are going too far. Some banks now are even charging commissions for putting money into a bank account. Where will it end? I went to put some money into a bank account the other day, cash, with La Caixa and they charged me two euros to put the money into the account...Madness

On a recent ‘enforced’ shopping trip with ‘er indoors’ I was parted from my mobile money supply inside a mall specialising in woman’s clothes shops - naturally, so I was obliged to use a Spanish bank card to withdraw a few quid so I could  pay for refreshments in the bar and wait for the bride to surface.

Because my bank wasn’t represented on the precinct I used another and was informed that my 50euro request would cost me 4 euro....... I declined! There is no charge in Portugal or UK for using any bank ATM so why is Spain charging for an essential service?

So it costs 2 euro to deposit money and the 4 euro to get some out – not a bad business for doing b*****  all.

Quite a few banks in the UK are now charging to withdraw cash if you don't have an account with the bank, not to far from me is an ATM that charges £1.75 per transaction. 

I closed all my business accounts down with Barclays because they charged me for paying in cash / cheques, and then to withdraw cash / cheque yet another amount, I could't negotiate any type of deal...so I closed every account with them, even sent the barclays credit / debit card machines back, and then went with another bank that charges me nothing to pay in or draw out.

If you can this seems to be the only way to beat banks...Hopefully.

Even 56,9%  more expensive by Banks than by individuals.

I read about this today in the ADICAE online bulletin I receive. Adicae is an association for Financial Services Consumers Protection.

They posted this chart ( I am translating it to English):

Thanks for those figures Maria – just goes to show us all what a load of old ‘cojones’ the banks, press and estate agents have been feeding us for the last couple of years -  but we should know that the banks don’t give or do anything for nothing (except help themselves to our money). So now we know the terms ‘repossessed’ ‘distressed sale’ and ‘massive reduction’ all mean the same thing – still over-priced (mainly crap properties) and we are still having you over!

There seems to be a ‘death wish’ in Spain led by the native banks and unless they get a grip it will be too late to pull back. On a recent UK-Spain transaction, after the usual fight over the stupid EU IVA/VAT rules (yet to be harmonized and agreed in the EU although temporary measures were introduced in 1966) concerning who charges VAT/IVA on what and at which rate etc, a client in Madrid transferred under 15k euro to our trade UK account from BBVA and was charged 600e by these bandits for the service! It involves exactly the same time and effort to transfer one euro or 1m euro.

Is it any wonder that businesses are flocking to Global Enterprise Zones and leaving Europe by the droves? The problem is that politicians and banks, always the cause of economic problems, are too stupid to realize that there are choices and the EU isn’t very high up in the charts at the moment! 

Our agency has tried to work with the banks over the last few years and have actually managed to sell some repos for them.  However, it is so frustrating to work with them, as they keep changing their prices and terms and conditions.  Over the Xmas holidays I had 3 enquiries for a property and when I checked with the bank (Sareb) at the start of the year I found they had put the price up by 20,000€!  When I queried this they said that the old price had been a special offer - despite the fact I had sold three of them previously for even less!  They said that I should show the properties and then they would accept an offer - but wouldn´t give me any idea of what kind of offer they would accept!  Unbelievable!

Another bank selling on the same development has a property listed which is not theirs - they do own one, but not the one described or photographed.  I have emailed and phoned them but they have not changed their ad.  The only solace for the actual owner is that their price is so high that no-one would try to buy it!

I was actually interested in another bank property for myself and did some checking and found that it was an illegal build on rustic land, and could be demolished at any point!  The bank refused to answer my questions about it and sudddenly couldn´t find the keys to show it to me!

The moral of the story is that you need to know the local prices to know if you are getting a bargain or not.  If the price is too low (as in my last example) then ask lots and lots of questions before committing yourself.