(The person who eventually bought it lived down the road and drove past the property every day.) After the bank refused to work with the buyers, each waited for the listing to appear. When it didn’t show up in searches, they gave up. Ultimately, both buyers moved on to find other pieces of land. Meanwhile, the property sat on the market, unnoticed, with no interest generated. In Canada, bank foreclosures are rare, since the economy and market are generally strong. In many provinces, they aren’t used at all. Rather, a Power of Sale is used, which doesn’t involve the court right away but rather allows the lender (bank) to take control of the property and sell it within weeks, rather than the months-long foreclosing process. So, in this case, the bank used a Power of Sale, but before the property was sold off, the man who lived nearby did some research and found the listing online, priced well below market value. Had the bank and agent not made mistakes, the two originally interested buyers would have made offers and likely started a bidding war. There is a good chance the two buyers would have driven the price up to the fair market value, or even higher. But the bank suffered a significant loss due to these errors.
ERRORS IN PRICE ADJUSTMENTS ARE COSTLY
There are times when pricing adjustments may need to be considered. For instance, let’s look at Tim and Sue’s situation.
Comparable Home A: $968,000 Comparable Home B: $949,000 Tim and Sue’s Home: $945,000 Comparable Home C: $945,000 Comparable Home D: $933,000
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