Short Sales, bank raising price

jane__nyMay 27, 2011

I have been looking at real estate in my area for over a year. I have noticed homes, which were listed for sale, raising prices by $10,000-$25,000. When reading the property facts, I notice the listing states the property is a short sale and 'bank wants full amount.' It then shows the new, higher price.

These homes (some I had saved as favorites) were on the market for a year and hadn't sold. They were not listed as short sales.

Why would the bank think they could sell the property for a higher amount if they hadn't sold at the lower prices?

I had saved these properties hoping the prices would drop, instead they are now short sales at higher prices.

I thought this was strange.

Jane

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brickeyee

"Why would the bank think they could sell the property for a higher amount if they hadn't sold at the lower prices?"

When it comes to RE most banks are pretty stupid.

They are so used to getting their way and dictating terms to borrowers and dealing in commercial properties. They fail to recognize they are in an open market, just like everyone else selling single family housing.

They probably are adding accrued costs to the sale price.

While they wallow around any value the property had is likely to continue to decline.

    Bookmark   May 28, 2011 at 10:15AM
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marie_ndcal

Being retired from the banking fields for several years, I am annoyed with the ""new"' rules and regs. I have worked in almost every dept of the bank, including loans except escrow and it scares me to see the changes. We all need to be on alert when and if we deal with them for any reason.
Years ago, we knew our customers, and yes we denied some loans, or helped them work out details, but that was before many of the people started over pricing their homes. Our officers were paid fairly, but they worked for the bonuses and wages. If the lending institutions had not ripped so many people off, and not sold the loans over and over, we would not be in this mess.

    Bookmark   May 28, 2011 at 11:35AM
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terriks

but that was before many of the people started over pricing their homes

Sellers may overprice their homes, but if no one is willing to pay the price, they won't sell. Unfortunately, easy credit did make it possible for many previously unqualified people to enter the market, increasing the demand for homes. And you know that increased demand often equals higher prices.

    Bookmark   May 28, 2011 at 1:48PM
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brickeyee

"If the lending institutions had not ripped so many people off, and not sold the loans over and over, we would not be in this mess. "

At least as much blame beplongs on the people who signed up for mortgges they could not afford, claiming income they did not have.

They "new" they could sell before it exploded in their face.

The selling of the loans did not create most of the mess, it was the securitizing of lower quality loans and the wide dispersal of the bonds with weak backing that finally brought things to a head (all without adequate warning to purchasers about the notes behind the bonds).

Countrywide was a leader in 'Alt-A' mortgages and bonds backed by them.

    Bookmark   May 28, 2011 at 2:47PM
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jane__ny

I just saw another listing with a raised price and it's a short sale. House was on for 8 months $10,000 lower and didn't sell.

What's up with this? Maybe a NY thing?

Jane

    Bookmark   May 29, 2011 at 1:05AM
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pamghatten

Thank you brickeye ... there is a lot of blame to go around, not just the bad, bad banks.

Greedy people getting stated income loans and inflating their incomes so they looked like they qualified, have plenty of blame too. We call those "Liar loans".

    Bookmark   June 1, 2011 at 1:42PM
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ColorfulLair

brickeyee said:

At least as much blame beplongs on the people who signed up for mortgges they could not afford, claiming income they did not have.

Certainly some fault attaches to the people who defaulted, no question. But the financial products gambling on those loans were bigger by orders of magnitude and played a *much* bigger role in causing the crisis. Blaming the homeowers is like blaming the first pebble that shifts for causing an avalanche. The problem is that the whole thing was unstable to start with.

    Bookmark   June 1, 2011 at 4:42PM
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bus_driver

ColorfulLair, I do not at all claim to be knowledgeable about today's home financing. I did excel in a college course called The Mathematics of Investment about 50 years ago. What fun to do financial math by hand! But what crisis would exist if there were no defaults?
I blame those (of the government) who forced, by threat of legal action, the lenders to offer loans to those who did not meet the traditional underwriting requirements.

    Bookmark   June 1, 2011 at 6:58PM
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brickeyee

"Certainly some fault attaches to the people who defaulted, no question. But the financial products gambling on those loans were bigger by orders of magnitude and played a *much* bigger role in causing the crisis. "

Someone had to make the loans.

The massive rise in 'Alt-A' loans that then then became the asset for the bonds (both private bonds and Freddie & Fannie bonds).
Once the value of the bonds tanked (from the much higher than anticipated foreclosure rates) everything quickly spiraled out of control.
'Mark to market' rules only managed to accelerate the crash.

While 'easy money' did not help, the overall decline in the underwriting rules (often based on government pressure) allowed loan originators to profit and then move the risk off to someone else (often without clearly identifying the lower quality of the notes backing the security).

Just as with the folks who are claiming first time tax breaks on new homes who turn out not to qualify (some did not even purchase a home) if there is a weakness in the system someone will try to take advantage.

I have used 'no docs' loans multiple times over the years to purchase investment property.
30%, 40% or 50% down makes even the commercial lenders feel safe. The risk is very low since I am also in an expensive market.

The abuse of 'no docs' loans by folks claiming to purchase personal residences and having very little money in the game eventually led t the failure.
With nothing really at risk they just walk away.

    Bookmark   June 2, 2011 at 4:01PM
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