Was it distressed inventory clearing or credit freeing up that drove the market back up? Serious question and I’m not being argumentative.
I don’t think banks were hiding their inventory, I think they weren’t acting on their inventory. I also think their incompetence in dealing with distressed assets actually played to their eventual benefit as efficient processing of everything in their pipeline would, IMO, have much more greatly impacted the market.
The short sale we bought and others we bid on are all good examples. For our house, we were the 2nd round bidders after the first short sale fell through after nearly 6 months. Our bid then took another 6 months reach a deal and then close. Having meet the owners, they moved out of the house at the beginning of the first deal and quit making payments close to a year before the first deal to force the banks hand on the short sale.
Other short sales situations were similar were we talked with owners and they’d simple quit making payments and the banks basically ignored them.
Meanwhile, on an open house, I’d be standing in line to get in to see the property.
I even looked at some of the banks foreclosure listings, I couldn’t buy them. Literally, could not get anyone to talk to me about an individual listing. I was ready with 100% cash for the place, couldn’t get people to return a call.
So I agree, they were not hiding their stuff, they were just incompetent. Sadly, they were like a person trying to lose 5 lbs, they kept plugging away at the five pounds and slowly watched their weight crawl up to 400 lbs.
I still tend to think if that backlogged inefficient under performing assets would have been acted on in a more timely manner how much worse it would have made it.
