Many bankers have fancy degrees earned studying for 4-6 years on how to make smart financial decisions. They have studied economics, finance, and other sophisticated financial subjects.
They understand amortization, arbitrage, and other financial subjects that only smart financial people understand. So, bankers always make smart financial decisions, right? Actually, in some cases they do not make smart financial decisions. I'll give you an example today.
We have seen many examples of where banks foreclosed on a house and then waited 6-12 months to put the home on the market. Say what you want, but waiting 12 months to sell a home is a poor financial decision. When the housing market was declining by 10-15 percent annually in many areas, that meant they lost $20,000 to $50,000. They could have sold that home for more money and avoided wasting money on property taxes and homeowner's insurance. Besides, they could have loaned that money to someone else and earned 12 months worth of interest. Besides, vacant houses are targets for vandalism. A lot can happen to a house that sits empty for 12 months. Mold, water damage, and other problems pop up all the time.
They understand amortization, arbitrage, and other financial subjects that only smart financial people understand. So, bankers always make smart financial decisions, right? Actually, in some cases they do not make smart financial decisions. I'll give you an example today.
We have seen many examples of where banks foreclosed on a house and then waited 6-12 months to put the home on the market. Say what you want, but waiting 12 months to sell a home is a poor financial decision. When the housing market was declining by 10-15 percent annually in many areas, that meant they lost $20,000 to $50,000. They could have sold that home for more money and avoided wasting money on property taxes and homeowner's insurance. Besides, they could have loaned that money to someone else and earned 12 months worth of interest. Besides, vacant houses are targets for vandalism. A lot can happen to a house that sits empty for 12 months. Mold, water damage, and other problems pop up all the time.
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