Read up on the shadow inventory AND the mountain of REOs coming. If you get caught up in bidding wars this spring you are playing right into greedy banker’s hands.
How can we have bidding wars during the greatest RE meltdown since GD1? Here’s how:
Four San Diegan housing bulls walk into BofA to bid on BofA owned REOs.
Mr. Banker says: Thanks for coming, today we are bidding on 2 fine REOs, one on Main St. and one on 3rd St. We’ll start at $200k for the Main St. property and $160k for the one on 3rd.
SD Bull #1: But I see 250 REOs on your list for the neighborhood we are interested in.
SD Bull #2: Why can’t we just make you an offer on any one of the 250 we prefer?
MR Banker: It does not work that way. There are only 2 available for sale. So there is an extreme, dire shortage of these affordable houses.
SD Bull #3: Makes sense! Here’s my bid on the one on Main St. My realtor said I need to get ahead of the bidding if I expect to win one of these 50% off REOs so I’m gonna go with…. $220k
SD Bull #2: I bid $225k!
SD Bull #1: I want to bid but I am worried because I see 250 REOs on that list right now and I read somewhere that there is a tidal wave of even more foreclosures coming soon.
Mr. Banker: The average wage for people in this area has been re-adjusted upward by removing the lower income earners from the equation so affordability ratios are now at all time lows, first time buyers will now come from wealthy islands and not from apartments anymore, SD has wonderful weather, It’s different here, Its different this time. Mortgage rates are low. PF Changs is busy. You had better hurry and put an offer in on this house on Main St. because it seems everyone wants it!
SD Bull #1: Well Bernanke did say he saw some green shoots, and that house on 3rd St. is a mess so….I’ll go $230k on Main St!
