I've been involved in several distressed property purchases this year. David Hanna, 2009 Chicago Association of Realtors President, comments on the REO (bank owned property) situation in Illinois. Even with willing and able buyers these properties and the buying process many times are handled in mysterious ways. For instance, lender's make it tough to buy due to over stringent und and changing rwriting rules, real estate brokers don't answer calls, banks take too long to negotiate and accept offers etc... Here's a excerpt below from David's full post:
"In Chicago (and the overall metropolitan area) we are already adding REO inventory at a pace well in excess of the absorption rate. We hear anecdotally that there is a backlog of foreclosed property being held off market by banks and asset management companies in response to the unforeseen precipitous fall in average and median sales price in many areas.
Yes, inventory is dropping, albeit slowly. The biggest factor in the dip is the number of owners taking property off the market because they cannot sell it right now for a price they are willing to accept.
Yet many of the same banks now selling these foreclosed homes are loath to consider a purchase offer with any type of financing contingency, and they continue to accept lower cash offers on property, effectively closing the door on many buyers looking to pay fair market price for a home.
Plus, added governmental regulation created daily to deal with vacant property adds a burden of time and cost to each transaction.
The solution to clearing out the REO inventory is to prevent it (as much as possible) from entering into the system by:
1. Having people working--and providing access to lending based on rational criteria;
2. Having adequate resources directed to the implementation and support of the Obama Loan Modification program;
3. Leveling the playing field so home buyers have an equal opportunity to buy foreclosed property with investors and speculators; and
4. Allowing for governmental policy that weighs the economic and social costs of widespread displacement of millions of American households."