“Why is the empty short sale house we offered so much money on in early December till vacant?”

Amen to that, times three.

In the areas that I watch I am starting to see some more REO activity. Houses that have had auction dates posponed over and over are starting to get foreclosed (back to bene, not sold to thirds). In my extremely miniscule sample it appears that the banks will list the vacant properties first and let the occupied ones slide for awhile, perhaps collecting some rent from the former owners.

I don’t think there will be a tsunami. The banks will be careful not to let that happen. I do think (hope) that there could be enough REO inventory coming on the market to keep prices in check, possibly trending down slightly. Based on what I see on Foreclosure Radar, it’s going to take a couple of years to work through all the distressed inventory.