Look at it this way; there are 15 REOs in the neighborhood that you would like to buy in. 5 are on the market and available to purchase. 10 are being horded by the banks for whatever reason and are not for sale. Why does it make any sense to get into a bidding war on one of the five available REOs?
If you went to a fruit stand to buy oranges and the stand had 15 oranges sitting on the table but the stand owner declared the price has been increased because there are only 5 oranges left. What would your reaction be to paying a price based on a scarcity of 5 when you are looking at 15 oranges on the table?
People make really dumb decisions when it comes to housing (their single biggest purchase) that they would not consider making even with fruit.
I applaud the folks that admit that they are buying because they are just sick of waiting and admit that prices have further to fall. The knife catchers who try to give rational reasons why housing could ever be near bottom when 70% of the REO inventory is being kept off the market (yet is in plain sight for all to see) are kidding themselves and looking for company. The banks must be laughing that people are actually falling for this blatant, in your face scam to keep prices inflated.
Face it, the truth is that if you choose to buy today you will be FORCED to bid in a market with a heavily manipulated supply. And the manner in which it is being manipulated can have NO OTHER affect than maintaining higher prices than should normally exist in this housing environment.
