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Why does The Shadow Inventory Grow

By Al Raymondi

Real Estate Broker/Owner with Ocean View Realty Group in Ormond By The Sea Florida BK559597

July 10, 2011 12:39 AM

There are 2 reasons I have heard recently that explain why there Shadows at the beach

are foreclosed properties that have not yet hit the market for sale. Some of the foreclosures I have been following were foreclosed on months ago by the lenders.

First let me tell you I am not a banker and I have no source of inside information. These reasons are what I have "heard."

1. Lenders and Fannie and Freddie are making sure all their paperwork is in order to be sure they know who has the right to sell the property.

2. The Fed allows a bank to borrow 3 1/2 times the troubled asset value at very low interest rates.

The numbers of foreclosures appear to be less than last year but those that are now REO do not get to the market as quickly IMHO.

Any thoughts as to the validity of these reasons and do you know of any other reasons why the shadow inventory grows or why there are foreclosed properties that are not yet on the market?

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Roy Kelley

Retired - Gaithersburg, MD

There is not end to the speculation on the shadow inventory. The best we can do is to help our buyer clients take advantage of the available bargains as they become available.

Blooming for you!

Jul 10, 2011 03:26 AM

Al Raymondi

Ocean View Realty Group in Ormond By The Sea Florida - Ormond Beach, FL

Ormond By The Sea Florida - Home and Condo Sales

Thanks for stopping by to read my blog and to comment Roy. There are some good deals out there for those in a position to take advantage.

Jul 10, 2011 04:30 AM

Than Maynard

Coldwell Banker Heart of Oklahoma - Purcell, OK

Broker - Licensed to List & Sell - 405-990-8862

One of the problems is the ever changing rules from the Feds. Do this, no do that, wait you have to do this too. Everyone gets a chance to reduce their interest rates, so they are in the house longer.

No longer is it:

Stop making payments
Get letter announcing foreclosure proceedings
Foreclosure completed
Owner gets out

Now it is long, tedious and ridiculous. Everyone can stay in "their" house for 12 months now! Really? They aren't making payments----IT'S NOT THEIR HOUSE!

Jul 10, 2011 04:53 AM

Chris Ann Cleland

Long and Foster Real Estate - Gainesville, VA

Associate Broker, Bristow, VA

The shadow inventory myth to me is like Big Foot. I'll believe it when I see it. I can't see banks holding on to inventory.

Jul 10, 2011 05:01 AM

Thanks Than, the process sure seems to keep changing and the government keeps comming up with new programs.

Chriss Ann, I have been following a few properties that have been foreclosed on waiting for them to hit the market and they have been sitting vacant following foreclosure for several months now. One was forclosed on in December. I just thought that if I knew of few others must know of some too. Maybe I'm the only one.

Jul 10, 2011 07:36 AM

Ron Marshall

Marshall Enterprises - Saint Michael, MN

Birdhouse Builder Extraordinaire

I have noticed that there are many, many vacant homes in my area, too. And, they aren't getting to market even though they have been vacant for over a year, and some, I know, were given money to get out early.

Jul 10, 2011 03:23 PM

Thanks Ron. The vacant properties are not good for home values since the maintenance is usually not done as it would be if an owner was living there.

Jul 10, 2011 11:13 PM

Why does The Shadow Inventory Grow

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