Analogy – Flippers and Bankers’s Dilemma
House flippers buy a house low, put money into it, and they sell it for a low price, a non-comparable present price for the neighborhood. This sale brings the neighborhood comps down . . .
Banks, if they were to sell aggressively the homes in foreclosure, would have to book, or realize, more losses on already non-profitable homes. So they’d rather not sell, not foreclose.
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