Spanish Banks have started the race of selling repossessed houses and flats by offering large price discounts and also by decreasing lending to buyers coming from State Agents.
Banesto, La Caixa, CAM and Caja Madrid have launched aggressive marketing campaigns to attract home buyers in order to reduce their stock. Like in a high street after Christmas, buyers have now 50% off marketing campaigns plus added value messages such as “we –the Bank- pay the notary cost” among others.
But the strategy of the Banks does not seem to be limited to marketing and discounts. The General Council of the Association on Spanish States Agents (Consejo General de los Colegios de Agentes de la Propiedad Inmobiliaria (COAPI)) has recently reported that 70% of the property sales of State Agents are “blocked” by the Banks because the clients do not get finance. In short: the Council point out that the Banks only finance Bank’s property transactions.
The prestigious economist Jesus Gil said to the newspaper El Mundo that in 2011 Banks will need to be more aggressive and not only regarding price: “Banks are putting everything at stake to sell properties, but unfortunately there are too much sub-prime properties in Spain”.
Banks’ portfolio could be mainly classified in three categories:
1) New built house and flats that developers could not sell at the time because of their poor location and expensive price.
2) Poor quality and sub-prime properties that were repossessed from low profile borrowers.
3) Coastal second residences.
Given the circumstances, announced property market value with big discounts, do not correspond with the real market value, since many properties do not worth the supposed original price. The property may match the selling price, but not the market price that Banks pretend with such big discounts. Be careful. You pay what you get: there are not bargains.
Do not rush… prices may drop a bit further in 2011 and probably 2012 and 2013.
We strongly advice buyers to search the local market before taking any firm decision.
Articles related to this post