Short Sale Investing And Shadow Inventory: How Does It Affect The Real Estate Market

Shadow Inventory will have a significant role in Short Sale Investing. If you’re a real estate agent that works with short sales, or a short sale investor, this is important information that you need to know.

Some experts say that the shadow inventory doesn’t exist, or that it doesn’t pose a problem, while others insist that the shadow inventory will cause another real estate market crash.

I’m going to discuss what shadow inventory is and how it will benefit short sale investors and real estate agents that deal with short sales. Let’s cover Shadow Inventory.

1. There are millions of homeowners who are currently holding off on selling their property because they want to wait for the market prices to go up. These homeowners would otherwise sell, but because of the suppressed market are waiting. When they do sell, it will all be at once, because market indicators and the news will tell them that everything is great, and the time is “right” to sell. This will crush the housing market with inventory and take prices lower, which is just the opposite of what we want.

2. Let’s talk about the six hundred thousand homes that lenders are holding in their REO inventory. Most people don’t know that when a lender forecloses on a home, they don’t have to sell it right away. They can hold it until they decide to sell. What are they doing? Well, they too are “waiting” for the market to go up so they can add their huge inventory to the market.

3. There is an estimated 7 million homeowners currently in default in the US. this is massive beyond all measure, and will add to the 2 above. They will be trying to sell before losing their home to foreclosure, or simply adding to the banks’ inventory.

There is a solution. Real estate agents being aggressive and working with short sales, and people who are doing short sale investing hold the key. These two solutions will provide to be the saving grace for the nations failing real estate market. Normal sellers will not be able to compete with short sale pricing. If you’re not in the short sale markets, you need to be.

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