We all hear the buzzwords "Foreclosed", "Short-Sale", "REO". It makes the average investor salivate. Post 2012, these Bank owned properties have typically fetched a feeding frenzy of buyers that actually lead to higher prices. This is good for sellers and bad for the buyer who thought they were getting a good deal.
Banks still have a lot of inventory that they need to sell to the
market. With the traditional supply/demand curve in mind, if you were the only seller in town such as the banks with these homes you control the supply. Banks have strategically placed these REO properties by
releasing a small supply at a time that will lead to the highest selling price. This works despite holding costs
of keeping homes vacant. If they
released their entire supply to market the prices they would tank.
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