Gazumped by the Banks

It’s now official. The recession is officially one year old this month, marked by the crash of Lehman Brothers in the USA which sent shock waves through the financial markets.

Much of blame of the present economic recession has been laid firmly at the feet of the banking communities around the globe, who lent unwisely and required bailing out by National Banks and governments. During the Spanish housing boom, Banks were notorious for offering 100% or even 120% mortgages on very small deposits, The entire Real Estate market crash can be partly attributed to them ceasing to lend money to qualified clients or to developers, in order to protect themselves from further loses.

Now the banks and real estate companies are facing a further quandary. On the one hand Real Estate agents need the banks to lend their prospective clients money, in the form a mortgage. On the other hand, thousands of mortgages have been defaulted and the banks, unwillingly, have reposed many properties.

There was a time that many of the top agents handed such repossession sales for local banks, taking a small commission for their trouble. However, relationships between many of Torrevieja’s banks and top agents has reached breaking point as some banks have been accused by some agents of ‘double-dealing’ and putting the banks in a conflict of interest position when it comes to mortgages.

Picture if your will: Agent takes client to bank; Client asks for a mortgage; bank counters the request by offering a similar property, in a similar area, or even the same apartment building or urbanization; for a lesser amount! The bank sells a property to a client that was brought to them by a real estate agent. The bank does not pay the agent a commission. The bank has sold both a house and also self-financed it though their own mortgage department. Client leaves bank and tells agent that they have bought a similar but cheaper property thanks to the help of the bank!

Some local Banks are now playing this dangerous game as they are now so desperate to sell their glut of reposed properties that should this be at the expense of their former associates, few seem to care who it was that provided them with record profits for the last fifteen years or so!

For the buyer; the positive is that a great deal may be at hand; the negative is that once bought from the bank, chances are that you shall receive little if any aftermarket support and once bought, you are on your own. Bank Managers might like to note that much like the Elephant, Real Estate agents also have long memories and shall recall those who double-crossed them when the good times return!