Nearly 50% of all home purchases are distressed properties, either a foreclosure or a short sale, according to the latest Campbell/Inside Mortgage Finance Monthly survey of real estate market conditions. What is so fascinating about this finding is that just a few months ago, in November of 2009, this figure was 37%. What has caused this rapid rise in distressed properties and what does it mean to real estate investors? Good questions. That's what I intend to share with you.
1. Temporary Foreclosure Moratoriums - In many states, during the fall and winter, the government placed foreclosure moratoriums on homes nearing their foreclosure date. This temporary postponement of the inevitable caused many homes to sit in idle. These homes were therefore not sold (or transacted).
2. Loan Modifications - As was the case with the entire year of 2009, the government pushed for loan modifications to be completed on past due borrowers. Very similar to a foreclosure moratorium, any veteran of the loan modification industry will tell you that a "loan mod" is usually nothing more than a postponement of the inevitable. As much as many homeowners would love to believe that if they just had their loan re-worked, all would be well, the statistics show a much different story. Once again, these homes that were tied up in loan modifications were not sold (or transacted).
3. Phantom REO Inventory - During 2008 and 2009, banks began taking back homes through foreclosure and then just sitting on them, or building up what is called "phantom REO inventory". The theory they had was to hold onto these properties until the market rebounded and to then sell off their REOs then. Little did they know that the housing slump would be far from over in 2010. In fact, as a general rule nationwide, house prices continue to decrease as of this month. It's March 2010, the temporary foreclosure moratoriums have been lifted, loan modifications have been turned down by lenders and further, the government has turned their attention from loan mods to the short sales. In fact, numerous publications have dubbed 2010 "The Year of the Short Sale." Plus, banks have built up so much phantom inventory over the years, they are stuck having to dump some of it right now. Add to these conditions, such factors as a very generous tax credit for prospective homebuyers as well as ultra low interest rates and what you have on your hands is better than the perfect storm...it's the perfect perfect storm. I have pleaded for years that every investor should be in the short sale and foreclosure game so that they can take their slice of the $50 Billion pie that is available. If you have been sitting on the sidelines up until now, please heed my words and get in the game. If you are in the game and are struggling, you shouldn't be...you're doing something wrong. Let us help you. Register for my upcoming webinar HERE and let me show you exactly how to turn your efforts into some real money. If you are unfortunate enough to have a short sale you need done on one of your properties, GO HERE and someone on our team that is closest to you can help you. And finally, if you have no interest in becoming an investor but simply want to buy a home right now at a great bargain, let us show you how. My upcoming webinar will show you everything you need to know. Register for my upcoming webinar HERE You're welcome to add your thoughts to the comment section below: