I’m actually curious about a specific situation within that, when a LOT more is owed on a property than it’s worth. Let’s say there is a property that is reasonably worth $100k but there is over $200k owed on it to the bank via non-payment, interest, whatever. What does the bank do then? There, in theory, will NEVER be a buyer for that property at that price. What becomes of it then?
In: Economics
I believe you that you have seen this happen.
My guess would be the bank was required to auction but did not want to lose the property. Especially if this was recent. Prop values were going up so quickly they must have thought holding on for another 6 months would pay off.
So they attend the auction and bid double the value. They “win” but are essentially buying it from themselves. They pay the auctioneer a fee and see what happens on a few months.
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