bank owned homeWe’ve talked here previously about shadow inventory, which is the real estate portfolio held by banks and other corporate owners as home values bounce back around the country. If you want a good, behind-the-scenes look at how the next wave of REOs is shaping up to hit the market, check out this insightful article published over the weekend in the Sarasota Herald-Tribune. The basic takeaway demonstrates what I’ve mentioned on this blog before: While REOs can present a number of incentives and advantages to qualified buyers, their sellers are as competitive as any. And as values climb, expect their listings to find their way to the market with increased regularity.

The whole article is well worth reading, but here’s a general overview of what’s fueling this market:

The idea is that the banks would turn down bids at auction — presumably from a local flipper or investor — to instead list the property on public Realtor databases, where it can draw higher offers from owner-occupiers.

The lenders hope to mitigate their losses on their bad loan by cutting out the middleman and waiting for prices to increase.

“A strong real estate market is changing strategy quite a bit,” said Charles Brown, chairman and chief executive of Sarasota’s Insignia Bank. “There’s a stronger market now to move properties and banks don’t feel like they’re getting fair value at auction anymore.”

Here in the Sacramento region, I’ve worked with REO sellers for 25 years to bring these listings to buyers. Keep an eye on this site (as well as my Facebook page) for new properties in your area, and please contact me today with your questions about listing or buying REOs — and where the market might be headed next.

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