Shadow inventory is defined as properties whose borrowers are 90 days or more delinquent on their mortgage payments, ones currently or recently in foreclosure or those that are back in hands of the banks.
This shadow inventory will slow down the housing market recovery. Monthly foreclosure numbers will remain high through 2012 and the REO Inventories will remain high through 2013 possibly even 2014. The banks hold about 800,000 REO and three quarters of those are not listed for sale.
The shadow inventory keeps home prices down for months and even years. States like California, Florida, Illinois, Georgia and Ohio have the largest shadow inventories. It takes more than a year for the bank to put up “For Sale” Signs. All of the people 90 days or more past due are all potential foreclosures if they can’t accomplish a modification or a short sale.
Many short sale prices are not an accurate reflection of true market value. Many buyers gravitate toward short sales for two reasons. The first is that the price is attractive and the second is that the potential buyer believes the seller is desperate.
Short sales are on the rise as the foreclosures have slowed over the last few months. This gives distressed homeowners who do not qualify for loan modification or refinancing a viable option to foreclosure. Short sales also give lenders the opportunity to avoid the long, costly and increasingly messy process of foreclosure
and the responsibility of reselling the property as an REO.
Once a property is foreclosed upon, the bank usually will not be able to get a higher price for the property. Many
times if the bank can negotiate with the seller’s buyer on the offer price for the property, they are going to get more for that property than if they take the property to sale.
So….if you are looking, go get a deal on a short sale or if your mortgage challenges have got you down, call me at 619.985.6528. I will take very good care of you in San Diego or refer you to the best CDPE, CRS in your area.
Free book Fighting Foreclosure – get your copy NOW!
