How can banks drop price so much?

[Heather C.]

I just looked on Zillow at a foreclosed house that we are considering (http://www.zillow.com/homedetails/1712-Loberg-Ln-Jonesboro-AR-72401/76106778_zpid/) and I'm just baffled how the bank can drop the price from $123,000 in November to $79,900 on January 1. What am I missing? House appears to be in decent shape so I just don't get it. Last sold in 2002 for $104,000, but assessor shows value at $131,200.

[Patrick L.]

There was also a price cut to $99k in November so it wasn't a $40k price cut all at once. Most banks want the properties off the books so they want a price that's going to result in a quick sale. If it were worth a lot more than the current price in it's current condition then somebody would have probably bought it. If it's worth a lot more than $79k they'll probably get multiple offers and still be able to get over asking.