I have spoken with a few REO brokers now after looking at comparables the other day blew me away to find out, “What the heck is going on??”……no new REOs, and the ones on the shelves are selling like hotcakes.
It seems that Countrywide a.ka. Bank of America, and Washington Mutual/Chase did indeed impose a moratorium on auction sales.
All brokers I have spoken with have not had any new recent listings…their existing inventory is selling quickly as well…they are actually a little nervous because the faucet has temporarily been turned OFF.
If you had read my blog entry titled “The Bailout” several weeks ago this is exactly what I had predicted. I said the government/asset managers/loan servicers would start restricting the supply – this makes sense because it creates more demand, holds up values, and stops the relentless bombardment of inventory….and the difference is that now they CAN because the government is taking some of pressure off of the banks with a tool called “cold hard cash”…..
and this is exactly what is happening…
…less inventory (supply) = more demand, and this creating a strong support level for prices (in my area at least).
Personally, this is not as good for our business because it becomes a little more challenging for us to get deals…hey, if it benefits the whole, which I think it does, I am all for it…..and I’m always up for a challenge anyway ; )
(besides, if it is trickier to get deals, it makes FarBelowMarket.com services more valuable, so maybe it’s not such a bad thing for us)
Anyway, to recap, inventory is flying off the shelves and there is almost nothing available in my area that is not a short sale..
….this is HUGE for retail flippers, HUGE, HUGE…
For flippers, it may be a little tougher to get a deal, but once you get one you know you can move it fast….I would rather flip in that environment ANY DAY, over a dead market where you can get a deal fast but selling is a crap shoot.
It’s not quite as good of news for long term holders (not horrible news, just a little tougher to get a deal). Also, perhaps restricted supply will keep the rental market strong, but that is a total guess.
How long this freeze will last and if the floodgates will come gushing again I can’t say, but you will hear it here first if and when that happens.
Be Happy and Prosper,
Kurtis
P.S. I am reiterating my advice that if you are used to shooting REO fish in the proverbial barrels like we are, you might consider adding some diversity to your strategy i.e. direct mail, “We Buy Houses” signs,
just in case…we are. (don’t interpret this to mean that REOs will stop being a source of deals, they will be for a long time, but maybe not as easy as we’re used to).
Tags: Bailout, bank owned foreclosures, FarBelowMarket.com, Kurtis and Cindy Squyres, Palm Springs Bank Owned, REO Listings
