Today's Sacramento Business Journal reports that Sacramento ranks #10 in foreclosure filings in the U. S. In fact, eight of the top 10 metro foreclosures in the country are happening in cities in California. I just posted how Sacramento inventory has been continually dropping since early this year and, in fact, has fallen more than 35% since the same time last year.
So where are all those foreclosures you keep hearing about? Well, in truth, not every Notice of Default results in a foreclosure and the majority of those are reinstated. However, there is no inventory. By no inventory I mean we have fewer listings of attractive and well priced homes in desirable areas. Almost every REO (bank-owned) home is receiving multiple offers. It's such a competitive market right now that some buyer's agents are saying to heck with running after REOs and are instead chasing the short sales, which attract less attention.
When I was at a closing this week, the signer who worked at a small bank shared with me that banks are sandbagging the REOs. They aren't releasing them all at once because they want top dollar. The REO lenders are hanging on to their inventory and slipping a few each week into MLS to continue to drive up the demand. That makes sense, when you think about it, doesn't it?
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Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
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Playing games Elizabeth by the banks with the REO inventory sounds sneaky to me. But if they can get a higher price for them based on demand, they are just looking out for their own financial best interest.
Once the bank owns the property, they are going to do their fiduciary duty, so attempting to get as much equity out of each property as they can is expected. If it means releasing one house at a time, then they will do so...
Hi Elizabeth,
It sounds to me like a smart way to handle a difficult situation. Eventually they will have to release them all, but slowly is better for the market.
All the best!
Hi Elizabeth
The day will come when this whole market will be regular.
Yesterday, Yahoo said it rated ten counties to live in the US as the best. Two of them are mine in Waukesha, and the one next door in Ozaukee.
What is it about these hayseed counties?
Sincerely
Tom Braatz
Hi Gary: Well, if I were a bank, I'd do the same thing. It's unfair to buyers, but whoever said sellers have to be fair?
Hi Kevin: They better hurry up, though. There is not enough to meet demand as it is.
Hi C: You'd think banks would want to cut losses sooner than later. But I guess they only deal with what comes down the pipeline.
Hi Tom: Of course, the market will stabilize. It always does. Those who think otherwise may as well move to Montana. (no offense to those who live in Montana). I have no idea about hayseed counties and can't even begin to speculate. :)
I have more people trying to figure out foreclosures. They think they can pick up great bargains. I have not found that to be the case in our area.
Well, Barbara, maybe lenders in your area are sandbagging as well. Or maybe you just don't have very many foreclosures!
Someone at a REO management company told me that huge amounts of foreclosed properties are being "bundled" and sold on wall street to investors and that it will take months for them to come to the market. She said these "investors" are not individuals, but lenders that are more solid and have more assets and less foreclosures. My mom in law lives in San Diego and she said the market is loaded with them there.
Hello Lane Realty: I spoke to a woman a couple weeks ago who said she is buying bulk REOs at 65 cents on the dollar.