Lending institutions are not in the business of managing rental properties. When they foreclose the clock starts ticking and they have to sell the asset off. If a market segment racks up enough REOs (banking jargon for “Real Estate Owned”) they absolutely do drive the pricing trend for the remaining sales because they represent the alternative and they are the competition. When two lenders compete against each other the one with the shortest fuse will get discounted the most because there are no options for them.