shoppingaround left such a great comment that we’ll call it a guest post:

So, the good news (for those looking to buy a “deal”) is that this law shouldn’t stop too many foreclosures if so many banks were given exemptions. The question is how well will the banks move this inventory out to market.

For a long time, I, too, was in the “there must be a huge shadow inventory” camp. I track a few areas (mostly Carlsbad, Encinitas and parts of Fallbrook & Bonsall) using (Jim’s recommended) “fidelityasap” site to see if distressed properties, which I know the homeowner didn’t sell, are scheduled for the courthouse sale. And if they are, I watch for when the bank takes possession. And if they do, I watch for their REO to come onto the market.

First observation…this process, starting with tracking distressed buyers unsuccessfully lowering their price, and ending with the bank finally listing the REO can be an incredibly long time.

Second: Once the clock starts on property A, somewhere you add in Property B, later C, etc. One day you see that “C” shows up in the REO listings before “A”. That gives you the immediate impression that A nd B are being held back as shadow inventory. But maybe bank C is just more aggressive, or efficient. Once you get to “H” or “Q” you are beginning to feel as if it’s a downright conspiracy!

Third: Having been watching potential REO properties since last October, I now believe the banks generally are not holding back property, per se. As of today, I can say that EVERY home I’ve been tracking (except some which were foreclosed mid-construction and may have structural issues) has eventually come onto the market or is still (re)scheduled for the courthouse steps. No, they do not come onto the market swiftly and not often at prices I’d hope for, but they all have appeared eventually (with noted exceptions above).

Fourth, I think the contrast of how the banks are handling mid-tier & up homes has been different; with the low-end, many times they were tossed onto the marketplace “as is,” as we’ve all seen in Jim’s videos. But they generally don’t seem to be doing that with more mid-range+ properties. They seem to be trying harder to get a better value out of these assets.

So, I’m beginning to believe, that as Jim implied in one of his previous posts, it could be just that “that one” we’re waiting for is the exception–maybe it needs too much done to it first, so they are working on it, etc.

Any similar or different experiences?

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