I recently had a very interesting idea about foreclosures. Normally they are a great opportunity because they are perceived as sub-par or below market value. In normal times they are, but what happens when they saturate the market? Business is always guided by fundamentals f supply and demand. What happens to the market when too many foreclosures come on? Can they be absorbed? Here is my opinion! I don't think foreclosures are selling, and they are coming on at such an overwhelming rate they are not being absorbed!
Recently a friend of mine had to negotiate with an agent that was a mega producer in foreclosures, and they are haggling over another agents 200K listing that is not a foreclosure. It is just not making sense, that a foreclosure specialist that normally dad so much business you could never even get a call back from them for several weeks! So it came to me that this person has or had big staff, and earned really big money, why would they personally negotiate one lowly deal? It doesn't make sense, unless the tide has changed! It would make perfect sense if sales had stopped in foreclosures. That would nessessitate why these big agents are now venturing out to do to do sales to pay the bills. I also had another agent that has a very big foreclosure team and over 100 foreclosure listings ask me for buyer leads. Now I am starting to connect a few dots and now I am thinking the foreclosures are coming on too fast to be absorbed, and now buyers are realizing they are not a great deal!
Right now the market is under a moratorium for taking on any new foreclosures. Remember the "Red letter day?" This was the agreement for the big mortgage companies to slow down the process! In the Atlanta area in January we had over 7000 foreclosures, and in February it was over another 10700. We are only selling 3000 homes a month! There is a cumulitive listing effect on the current home inventory wiht a very high number of listigns and declining sales. I'd love to hear your thoughts? What are the numbers in your market? Do you have statistics to share? The numbers are not adding up!