The Future of the REO Market: What's Your Prediction?

Reblogger Lisa Wetzel
Real Estate Agent with RE/MAX Realty Affiliates

An interesting perspective from Steve Orear, enjoy this great blog!

Original content by Stephen Orear

I am an REO listing agent, and have several REOs at any one time. Lately, I have been wondering when they will start to dry up. There seems to be no sign of it. I didn't get started representing REOs until October 2008 and have listed and sold many REOs since that time. 

Foreclosures and REOs

Where did this REO market come from? In my opinion, it is all a result of loosened lending standards that have lead to a tangled mess in the housing market. The beneficiaries are the first time home buyers and investors who are out in droves buying up foreclosures. I have mixed feelings about those who lost their houses. They range from the family who didn't borrow too much and had some financial event that threw them overboard to the ones that borrowed so they could buy the Hummer and big boat.

I just did an occupancy status check on a property and discovered that all the interior doors had been removed along with the door jams and trim. They didn't stop there. The interior window trim was missing along with the baseboard and floor coverings. What possible value could that stuff have to the previous owner? By the time you tear out floor coverings the result isn't worth the effort unless you are doing it to replace them. Even the dishwasher was gone. It seems like a lot of wasted energy to me.

The sad thing is if the owner actually perpetrated the destruction they could end up paying for it if and when the bank pursues them for a deficiency judgment. So sadly, they really were just hurting themselves.

(Photograph courtesy of timesharerelief40 - Flickr.com)

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 Posted By: Stephen Orear - Northern Nevada Real Estate Agent - REALTOR
with RE/MAX Realty Affiliates, specializing in Carson City Real Estate and Northern Nevada Real Estate

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Rainmaker
558,669
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Hi Lisa -- Real estate is a very complex endeavor frought with risks as your post points out. Wow!

Aug 17, 2009 07:44 AM #1
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Terrie Leighton
Ferrari-Lund ~ Reno's Premier Real Estate Company - Reno, NV
Reno Real Estate Agent ~ Selling Homes in Reno

Hi Lisa ~ Great subject to re-blog about. It just amazes me that there people out there that will do this to the property before they leave!

BTW ~ you are getting close to 100,000 point ~ you have been a blogging phene (sp?) lately ~ great work.

Aug 17, 2009 06:00 PM #2
Rainmaker
107,127
Cathy McAlister
Cathy Ashley McAlister, GRI CDPE - Broker / Sacramento - Sacramento, CA
Sacramento DRE#00648507

Lisa, 

I have been licensed since 1977 and this is truly the most unusual time in real estate I have ever witnessed.  It has been my opinion that both REO's and short sales will continue to dominate the market for the next two years and slowly recede thereafter.   For the Sacramento valley region - we have a very high percentage of distressed properties and we must embrace them in order to manage them.  If not, they will just continue to roll over the buyer's, seller's and Realtors as we try to navigate this huge situation.  We just need to remember that our role as professional realtors is to be part of the solution.

As to the REO's specifically, my predictions...

1.  At some point they will have to release more product - I cannot believe they can delay any longer than six months.  But, for a combination of reasons (including appreciation), they are being held back.

2.  The REO product will get released to more agents, but knowledgable and prepared agents.

3.  I believe we will see some sort of rent/lease back program for homeowners - in order to minimize abandoned properties.

4.  Lenders will become even more organized and structured in how they manage and sell their REO product. (i.e. systems, agent relationships, etc)

Aug 18, 2009 12:07 AM #3
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Lisa Wetzel

CDPE, SFR carsonvalleyland.com
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