REO Setbacks

Looks like our fellow REO Broket/Agents are going the wrong direction! Most likely they have no choice - the lenders are still dictating the asking prices - but the REO properties coming on the market are being priced EVEN HIGHER than the ones in the past year.
Let's explore the possible reasons...

1. Prices are being inflated to counteract the low offers the sellers are receiving. They might think we base our offers on a percentage of asking price - rather than what we think true value is for that property. The sellers are mistaken - and if you are basing your offers on a percentage of asking price without doing due diligence on value - you are in trouble.
2. The lenders are having little success selling their inventory and are raising prices to increase book value for the impending bailout.
3. BPOs are not accurately reflecting the values of properties because the highest BPO gains most favor with the lender, and might even get the listing.
4. The quality of the properties coming on the market is increasing. This is true - however this does not justify unrealistic pricing. Now we are going to have a ton of Nice houses on the market
5. Properties are selling fast at full price and we are back in a sellers market! Not!

The fact is that inventory is increasing, market time is increasing, and failed deals are increasing. Please do your homework. The stories of multiple offers and a recovering market are being brought to you by the same people that denied we had a housing bubble, the same people that declined short sale offers at 80% of value only to ultimately take back the property and not be able to sell it at 1/2 of that short sale offer, and the same people that say sales are up year over year. The fact is, if you pay asking price for any property today, REO or otherwise, it will be worth significantly less in the next 12 to 24 months. It has not even hit yet!

All the government bailout help in the world can not put Humpty Dumpty back together again. Values are continuing to decline and until the sellers make an effort to price with the purpose of unloading - rather than shopping - the majority of smart investors will just stay on the sideline.