market value of $1.4 million in cash. However, the bank refused to consider offers until it was listed on the open market. Due to an oversight, the property was listed at only $1.2 million. First, the bank underpriced the property by $300,000. Second, the listing agent failed to market it properly. Errors in the MLS listing prevented it from appearing in search results for other agents. The incorrect address meant it did not show up on real estate websites with map displays. Lastly, the agent neglected to put a sign on the property. The two eager buyers waited for the listing to appear. When it never showed up in their searches, they moved on to other properties. Meanwhile, the property sat unnoticed and eventually went into foreclosure. A local, who passed the property daily, discovered through court records that the bank had foreclosed on it. He searched online and, after some effort, found the listing. To his surprise, the price was well below market value. Had the bank and agent not made these mistakes, the two initial buyers would have submitted offers, likely starting a bidding war and driving up the price. Instead, the property was overlooked, and the bank suffered a massive loss. The eventual buyer purchased the land at the listed price, saving $300,000 due to the bank’s and agent’s errors. Most bank-owned properties are priced below market value because they sit vacant for months, and banks lack firsthand knowledge of their condition. However, in this case, the property was raw land with no hidden defects. The bank’s mistake resulted in a significant financial loss, while the buyer walked away with a bargain.
ERRORS IN PRICE ADJUSTMENTS ARE COSTLY
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