As previously noted, banks don't know how to complete the paperwork necessary to foreclose on a house. They also don't know how to sell a house.
It is already well-known that banks take forever to respond to short sale offers, which discourages offers from being made, resulting in more foreclosures. When banks try to sell a foreclosed house the traditional terms are pretty much guaranteed to discourage buyers or at least insure lower offers. Sellers make no repairs unless they feel like it and take no responsibility for how the repairs look. If the repairs make a mess, that's too bad. Potential buyers are prohibited from contacting government agencies to inspect the house and must inspect the house at their own risk and expense after making an offer but before the offer has been formally accepted. If an offer is ultimately accepted, the buyer will get a second rate deed, and, in the event of a dispute, among other things the buyer waives the right to a jury trial.
A new issue has arisen. Buyers of foreclosures sometimes have their own buyers already lined up at a higher price, so buyers are now often prohibited from reselling the house for a number of months at more than a modestly higher price. Of course this may reduce the number of buyers, since they were looking to make a profit. Perhaps they intended to make repairs, even cosmetic repairs. Perhaps they were going to offer their buyers a standard residential real estate contract, instead of the one-sided contract forced on them. Perhaps repairs and a fair contract would make the houses worth a lot more and even banks could get more for the houses.
