Spanish banks becoming estate agents

According to a recent article in the Spanish Daily paper ‘El Pais’, default rates have risen to 3.29%, a level not previously seen since 1997. As I had previously predicted banks are getting back into the property game and are setting up real estate agencies to sell repossessed stock.

CAM Bank, Banco Sabadell, Unicaja, Caixa Galicia, Caixa Catalunya, Cajasur, Banco Popular, Santander, Banesto and Ibercaja are created or are in the process of creating estate agencies to try and liquidate their property portfolio.

But will there be bargains amongst the repossessed properties?
It has been claimed that the banks will offer hefty discounts to help shift the stock. A good example is CAM, with 450 repossessions, will offer discounts of 20% and 100% mortgages.

So if the price was originally 300,000€ you will now be able purchase that same property for 240,000€! But it is worth noting a few things. First most of these properties were mortgaged in the last 2 years, when the market was substantially over-valued. Second the bank, in most cases would have only given 80% of the sales price (CAM offered in general higher % than other banks). So their sales price covers the original mortgage cost from the bank! A point I had made in a previous article about how banks in Spain work.

And as always the choicest properties will never get onto they estate agents sites. The tens of thousands of bank employees and existing banks clientele, which the banks know have the assets will get first option to buy.
It should also be noted that this is in keeping with what happened during the last property recession in the early ‘90s. Unwilling to simply shift the stock quickly and recover some of the monies, the banks will turn to rentals/sales etc… to make the best of the situation. And if history sets any precedent, the banks will make a profit.

Andrew Belles

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