Why would a bank hold a foreclosed property for over a year?

[Tashina Taylor]

Hello,

I am starting to catch the rehab bug. I've been dreaming about doing this for quite a while, and not only do I now find myself in a position to get started, I may have found a great first property to shoot for. 

There are a few things about this property that I don't understand and I hope you can all give my some insight. 

First and foremost, the bank foreclosed on this property back in June of 2017 on $77k. They basically sat on this property until October 2018, and then asked $160k. As of today, they are asking $120k, having dropped $10k/month in asking price over the last couple of months. 

The property sits on 40 acres, has an old stick built converted to storage, an uncared for 2002 mobile (but not run down, appears to be made easily habitable with no major damage apparent from pics). It also has a brand new detached shop (appears <5 years old). From the pictures on zillow, that's about it. Google maps and other parcel pictures show there is basically a junk yard of older vehicles on the edge of the property, obviously not pictures on zillow. The driveway is not done. The area is about 20 minutes out of town.

Similar properties that are "cleaned up" but not very different have been selling to close to $250k. I am getting an appointment to go see the property and get a proper list of "must-do's" in order to come up with an offer. 

My main question is - why would a bank hold on to this property for this long? Is it possible they truly expected to get more for this property even though it needs so much work just to make it not look junky anymore? I am anticipating only offering $50k because I have a feeling it's going to take a lot of work on just the property itself. 

Am I on to something, or do the details scream run away?

Thank you!

[Adam Gollatz]

Zillow is notoriously inaccurate on foreclosure information, and county records often lag as well. Zillow does do a relatively good job of pulling data from the local MLS's in most markets, so if its actively going through price drops, that is likely true. What Im getting at is they may not have been holding it as long as you think.

All that aside, there are a lot of reasons they could be holding it longer and it will be caused by internal bank processes specific to that bank. Real estate is a numbers game and when you got bank money (literally) you can operate differently. They could see the potential for getting an extra 10k outweigh the relatively low holding costs.