Friday, June 15, 2007

Bank-Owned Properties Drive Down Prices

Bank-owned real estate isn’t being discounted, insists Patrick Carey, the executive in charge of foreclosed properties at Wells Fargo & Co.’s real estate division.

"The impact on the neighborhood and the community is vital with us," Carey says. "We don't want to flood a community with below-market-priced homes and cause further deterioration."

But research suggests that if that’s true, it may be temporary. Owners are likely to discount their asking prices 20 percent or more in communities where foreclosed homes make up 8 percent or more of sales, according to the study by Christopher Cagan, an economist with title insurer First American Corp.

In 1995, at the depth of the region's last housing downturn, lender-owned homes accounted for 7 percent of all sales — and sold at an average discount of 15 percent, the study found.

Source: Los Angeles Times, Annette Haddad (06/08/07)

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