Where's the Inventory...

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optimusprime_IHB

optimusprime_IHB

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Oh there it is <a href="http://www.cnbc.com/id/28898377">http://www.cnbc.com/id/28898377</a>



CNBC.com

An interesting little factoid from RealtyTrac, the online foreclosure sale site that tracks all kinds of foreclosure data.



Apparently about 70 percent of foreclosures in its database have not yet been listed on the MLS. I'm wondering why? Why are the banks sitting on all these properties instead of listing them for sale?
 
I am just guessing but one of my theories is that people this time have given up.



Unlike when subprime collapsed this time people know the market is down and the news has been bad all over.



Why put your home on the market when you know you are underwater. No sense in listing your house for a million when the last comp came in at 750k especially when you still owe a million.



Might as well just wait for the process to play itself out. Then leave when the Marshals show up.
 
[quote author="optimusprime" date=1233286537]Oh there it is <a href="http://www.cnbc.com/id/28898377">http://www.cnbc.com/id/28898377</a>



CNBC.com

An interesting little factoid from RealtyTrac, the online foreclosure sale site that tracks all kinds of foreclosure data.



Apparently about 70 percent of foreclosures in its database have not yet been listed on the MLS. I'm wondering why? Why are the banks sitting on all these properties instead of listing them for sale?</blockquote>


If the banks dumped all the shadow inventory they had at once it would drop prices like a rock. A lot of the banks are holding off so they do not have to show them on the books and hope for a bailout from the Feds.
 
Last time I talked to him, Deuce said he was going to take a picture of one of the other agents in his office desk. This agent only does REO's and it was literally covered in 6" of paper.
 
I asked for permission to take a photo and was denied. The stacks are still there, though, each file waiting patiently for its turn.



The thought is that if they send these through in a controlled, orderly fashion, each makes it through with the least amount of damage to the assets.

But if all of them were flooded through, the result would look something like this...



<img src="http://www.co.thurston.wa.us/em/LogJam/images/logjam14_01.05.jpg" alt="" />
 
[quote author="IrvineRealtor" date=1233302030]I asked for permission to take a photo and was denied. The stacks are still there, though, each file waiting patiently for its turn.



The thought is that if they send these through in a controlled, orderly fashion, each makes it through with the least amount of damage to the assets.

But if all of them were flooded through, the result would look something like this...



<img src="http://www.co.thurston.wa.us/em/LogJam/images/logjam14_01.05.jpg" alt="" /></blockquote>
So they'll be slowly leaking these REOs into the market while the backlog piles up higher and higher...smart. Sooner or later the damn will burst and the market will be flooded with these waiting REOs, which could be the moment when we hit bottom.
 
[quote author="No_Such_Reality" date=1233320168]Homes rot when they sit empty.



The REO backlog is at what? 6 months, 9 months? A few more months and summer heat and the homes are DOA...</blockquote>


Who says they are sitting empty? Many/most here are occupied with former owners essentially garnering "free rent" in exchange for their doomed credit rating.



[quote author="usctrojanman29" date=1233319733]So they'll be slowly leaking these REOs into the market while the backlog piles up higher and higher...smart. Sooner or later the damn will burst and the market will be flooded with these waiting REOs, which could be the moment when we hit bottom.</blockquote>


Maybe trojanman, but this might be their best option. Think about what would happen if all the fans tried to leave the Coliseum <strong>at once</strong> on a Saturday afternoon through a single exit. An orderly exit helps avoid disaster.



What I think is most interesting is that this is a true prisoner's dilemma. If all banks "play nice", then each benefits from the held pricing. If one player (bank) makes a bold move first, to liquidate their high-risk portfolio faster than anyone else, they may "win" but may start a panic. So far, it is merely an interesting read...
 
That's the one's they haven't foreclosed on.



They haven't listed 75% of the homes they've already foreclosed on. What's the average bank hold for the stuff they have listed? 6-9months? It seems like the bank's foreclose and it takes 6 months or more for it to show up. If they still only have 25% listed, that's just going to get worse.
 
[quote author="IrvineRealtor" date=1233322700][quote author="No_Such_Reality" date=1233320168]Homes rot when they sit empty.



The REO backlog is at what? 6 months, 9 months? A few more months and summer heat and the homes are DOA...</blockquote>


Who says they are sitting empty? Many/most here are occupied with former owners essentially garnering "free rent" in exchange for their doomed credit rating.



[quote author="usctrojanman29" date=1233319733]So they'll be slowly leaking these REOs into the market while the backlog piles up higher and higher...smart. Sooner or later the damn will burst and the market will be flooded with these waiting REOs, which could be the moment when we hit bottom.</blockquote>


Maybe trojanman, but this might be their best option. Think about what would happen if all the fans tried to leave the Coliseum <strong>at once</strong> on a Saturday afternoon through a single exit. An orderly exit helps avoid disaster.



What I think is most interesting is that this is a true prisoner's dilemma. If all banks "play nice", then each benefits from the held pricing. If one player (bank) makes a bold move first, to liquidate their high-risk portfolio faster than anyone else, they may "win" but may start a panic. So far, it is merely an interesting read...</blockquote>
So after these properties have been taken back by the bank they are allowing the owners to stay there? I guess it's good from the standpoint that the owners will somewhat maintain the property. Is the listing agent responsible for processing the evictions for the banks?



I know it's their best option IR2, but the problem with their plan is that the REOs will keep piling up higher and faster than they will choose to release them for sale into the market. It'll work for a while, but at some point the damn will burst with all those mounting REOs and there will be a bank who will try to head for the door before the music stops playing. If that happens then it will indeed result in a panic drop in homes (resulting in price capitulation) and probably put a bottom in.
 
From working on that side of the world, some loss mitigation officer will sell out his fellow prisioners somewhere in the immedate future. The onslaught will not be pretty.
 
problem with the free rent thing is that the squatters will not do any expensive maintainance. one burst pipe, or even leaky pipe in the wall, and its all over. leaky roof? yardwork? even paying the waterbill for the yard? pools?
 
[quote author="irvine_home_owner" date=1233369936]It's gonna' be like the falling DOW but in slo-mo.



Is it a sin to look forward to watching this happen?</blockquote>


More like a guilty pleasure.
 
[quote author="optimusprime" date=1233286537]Oh there it is <a href="http://www.cnbc.com/id/28898377">http://www.cnbc.com/id/28898377</a>



CNBC.com

An interesting little factoid from RealtyTrac, the online foreclosure sale site that tracks all kinds of foreclosure data.



Apparently about 70 percent of foreclosures in its database have not yet been listed on the MLS. I'm wondering why? Why are the banks sitting on all these properties instead of listing them for sale?</blockquote>


Foreclosures don't necessarily = MLS listings. Here's a theory:



(1) The cream of the crop properties are scooped up on the courthouse steps by cash buyers...the ones that aren't become REO inventory.



(2) Banks negotiate large blocks of REO inventory with investment groups who have capital because it allows them to chunk off their burden and it keeps the transfer of these homes from doing maximum damage to the value of the banks' assets...what does the most damage? Publicly Listed MLS sale comps.



(3) Some homes end up offered to agents to sell. What do you want to bet these agents make a few phone calls to their known friends, family, and long term clients to try and double end the commission on a smoking deal before listing it on the MLS?



(4) The leftovers hit the MLS.



Maybe I'm just a conspiracy theorist...But the MLS REOs I've had a chance to view have been absolute dumps (admittedly, they were all in north OC). The last one I was taken to had been on listed on the MLS for 2 days. When I walked in the front door there were 47 business cards from RE Agents on the kitchen counter.



I'd love to think if I hold off for just another few months I can get the turnkey home of my dreams at a fraction. But I'm beginning to have my doubts.



-Devil's Advocate
 
[quote author="Geotpf" date=1245238326][quote author="Mcdonna1980" date=1245215423]deleted</blockquote>


More like bumped. :-P</blockquote>


No more like after 15 minutes of trying to post this you tube video on shadow inventory, to no avail, I gave up and posted delete
 
[quote author="Mcdonna1980" date=1245240508]No more like after 15 minutes of trying to post this you tube video on shadow inventory, to no avail, I gave up and posted delete</blockquote>


Was it the Jim the Realtor video that CR posted?
 
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