Most estates put up for sale by banks as part of foreclosures are not selling at the first try as a result of buyers' low interest, and such auctions do not get too much promotion, so that they get to be offered again, but at 25% discounts.
In the case where a property is not sold at the first auction, lenders are allowed by law to cut the starting price by 25% from the initially estimated value and accept the best offer they get.
Bank bailiffs say, though, that banks are not willing to sell the estates at a petty price or below the value of the receivable they have to recoup. "We're not selling for less than the value of receivables the bank needs to recoup. The bank I work for does not agree to have the property sold below 75% of the assessed price and this seems normal to me under the current difficult economic conditions," says Valentin Dobre, a legal executor with Alpha Bank.
These conditions imposed by banks are further delaying the debt recovery process, and in some cases are rendering it even more difficult as penalties and interests keep piling up in debtors' account, putting more pressure on him or her. There are cases, though, where once the collateral is auctioned, the debt is frozen at the level of that moment.
Most of the times, the shortage of buyers is caused by the fact that auctions are very quietly promoted and only a few banks, including Raiffeisen, Alpha Bank, Banca Romaneasca or Leumi, that publish offers on their own websites. At the same time, banks rarely resort to ads published in major newspapers.
The law says sale announcements should be published at the city halls of localities in the areas of which auctioned goods are located, but these situations are also rare.
The low demand for homes during this period completes these shortcomings, putting more pressure on banks to cut the starting prices of auctions
