Shadow Inventory Jumps 18% In Just 3 Months
Shadow Inventory Jumps 18% In Just 3 Months
One of the many problems in real estate today is the abundance of inventory from the rising number of foreclosures. According to an October 2010 issue of the Wall Street Journal, lenders now have over 100 months of "shadow inventory". Yes, that means 9 years to sell off the housing inventory.
Perhaps the most alarming thing to note is the amount of inventory took an enormous jump in just the past 3 months. In just the last 3 months the amount of inventory jumped close to 18% which added another 16 months of inventory to the market.
What fueled this recent jump?
How about failed loan modifications!
According to the Wall Street Journal, "a new wave of defaults appears to be coming in, in part related to the high rate of failures on government modifications. As of September, some 1.9 million homeowners had missed one payment on their mortgages, up 14% from March".
What does this mean if you are currently hunting for a buyer for your short sale?
It means at least two importantthings:
Enormous competition in the form of bank owned properties.
Downward pressure on home values.
Simple supply/demand analysis would point toward lower sale prices over the next 18 months and more.
What about the homeowner in need of a short sale?
You can expect very little interest in your short sale listing from the typical retail buyer. Retail buyers simply have easier options to close with the overflow of bank owned property on the market.
Experienced Realtors, such as Short Sale Expert Judy Delucchi, say:
"Finding a buyer that will not only make an offer but will stick around and see the process through is the Achilles Heel of the short sale process"
Finding a committed buyer to follow through until close on a short sale can be extremely difficult to find. One option more homeowners seem to take today is working with knowledgeable real estate investors.
While working with an investor may result in a lower sale price, it does come with a number of benefits including a shortening of the listing period, working with a buyer who will "stick around" to close the short sale, and can generally lead to a much higher likelihood of short sale success.
For most homeowners who are facing an inevitable foreclosure, closing the sale and therefore avoiding a foreclosure is, by far, the top priority. Working with an investor is not only a viable option. It is often the best option for a distressed homeowner in this market with so much excess inventory.
How to find a local real estate investor?
Here is a tip. Just Google and you will find them. Search terms such as your area with keywords such as "Short Sale", "Home buyer", or "Real Estate Investor". Searcha term likeLas Vegas Homebuyersfor an investor such as LasVegasNevadaHomeBuyers.com, or Pittsburgh Short Sale for an investor like HomeParachute.com from the Pittsburgh area, or Oklahoma Short Sale for an experienced short sale investor in Oklahoma such as NewDawnREInvestments.com.
It really is that easy to find local investors. Just combine your area (city, county, or state) with the keywords listed above. Do a little search and you may find the buyer you need for your short sale property.
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