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Letter from Prospective Homebuyers: "Let More Inventory Out NOW!!"

As a Buyer's Agent for REO's I want to voice the opinion of so many prospective home buyers out there today.
RELEASE MORE INVENTORY!! We all appreciate the 'measured' approach that Banks/Asset Managment companies are taking to market REO's (Supply) in order not to flood the market and cause prices to decline even further at a more rapid rate. Yet the BUY (Demand) side is screaming for more REO's to hit the market and hit it now!

Clearly there is a very methodical and measured release of this inventory that is being 'gobbled' up by homebuyers as they hit the market provided they are in decent condition and priced right. Yet there are so many 'would be' homebuyers that want to purchase an REO based on their perceived value yet get discouraged quickly once they lose out on a couple of multiple offers, selling the day it hits the market and of course, CASH BUYERS!

I feel like this is WAL MART the day after Thanksgiving at 6AM right before the doors open! Where the customers are literally pounding down the door and trampling employees to get what they want when they want it. Buyers have become like the spoiled millionaire girl in the movie Charlie and the Chocolate Factory, "But Daddy I want it and I want it NOW!!!"

There is a special need to release more inventory up here in the North. Yes WINTER is coming which will only deterioate conditions of the asset no matter how well it is Winterized which will only decrease the value. These REO's are remaining vacant for far too long and the buying public is READY, WILLING and ABLE to buy (1st Time Homebuyer Tax Credit or Not).

Why not let good ole market forces work here. Believe me when I say, RELEASE THE INVENTORY AND THEY WILL BUY!!!!

Any comments from my fellow REO Comrades???

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Comment by Carlos H. Silva Sr. on August 24, 2009 at 11:38pm
Banks are required to have a certain amount of reserves for Troubled Assets that is much higher than their usual reserves for money they lend out. If you want to learn more check out Managing And Marketing Troubled Assets-CCIM CI 411 or IREM REM 845 which was written to deal with the Savings and Loan failures of the 1980's.
Comment by Dominique Vescuso on August 23, 2009 at 3:24pm
It seems here in So Calif. that the banks are starting to release inventory just slowly. I think the last thing they want is to make this release news worthy. I work with BofA and it seems the they have been releasing 2 for each one that closes.

I believe they had stopped releasing houses to show their $3.4 billion in profits last quarter. The trick is they do not have to show the decrease in the value of the home until it is appraised to be placed on the market. So if it is not marketed then there is no decrease in value. If these loans are being paid for by insurance and tarp monies yet the house is still worth the $650,000 that the loan was for it is all profit until the house hits the market.

So why would the banks want to release these houses and not just let them sit on the books at full value?
Comment by Henry B. Torn on August 23, 2009 at 9:12am
Carlos, This is what is what I suspected and is frankly very troubling for my business in the near and medium term! Clearly it is taking much longer for the 'Eviction' process and we all know that the vast majority of residents in foreclosure would prefer to stay in their homes. Good for them yet for selfish reasons well you all know!!
Comment by Carlos H. Silva Sr. on August 22, 2009 at 2:46pm
Banks are restrained by the new tenant laws recently passed. Some of you REO listing agents might want to prepare yourselves to become property managers. Granted banks will most likely try hard to persuade tenants to do CKs.

There are some who think the REO market is going to be bombarded with REO inventory due to another wave of FCs. Banks are also under pressure to work with non-profit entities and in some cases sell the assets to them prior to offering it to the general populace. Furthermore, there is the little known low equity program available to investors only. Please don't ask me how the low equity program works because there is a reason why it's little known.
Comment by Lisa Crawford on August 22, 2009 at 11:45am
I agree! I represent many buyers on REO proeprties in the Denver area and it has become very frustrating for my buyers. We're averaging about 17 offers before the buyer actually receives an acceptance, frequently competing with 10-20 other buyers. I have several buyers who are waiting each day for any REO that hits the market (both investors and owner occupants). These assets have to be released at some time and it seems like this summer into the early fall would be perfect timing, with so many buyers looking to take advantage of the tax credit. We have seen some REO price increases in my market and yet the buyers keep coming. It'll be interesting to see where all of this goes!
Comment by Carlos H. Silva Sr. on August 21, 2009 at 12:37am
Make that 44 offers...we received two more.
Comment by Albert W. Jackson on August 21, 2009 at 12:10am
John, I've been trying to find out about some form of extension since the end of May. I haven't heard any mention of an extension, but have to think it may be highly unlikely. I mean look what's happening to that "Cash for Clunkers" which I believe was supposed to be originally funded through the end of the year. I'm in agreement with Henry, these banks need to get the properties out on the market before the lending (no matter how strong it may or may not be now) freezes up.
Comment by George Bellino on August 20, 2009 at 8:43pm
My record was 20 offers and that was a pain in the #$%. I can't imagine 42 offers!!
Comment by John J. Keitzer on August 20, 2009 at 2:40pm
Not to mention the added pressure of the upcoming deadline for the $8,000 first time homebuyer credit. It is my opinion that many people, such as myself, will be entering the market soon in order to take advantage of this.

Anyone think this will be extended into next year?
Comment by Henry B. Torn on August 20, 2009 at 5:30am
42 offers! Is that a record? Fact is 41 of those buyers will not buy this property and will presumably still be looking to buy another one. Why have to wait? To the all the AM's out there.......Give us the REAL REASON why you are holding back!

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