| So I am writing this for all of us real estate investors | | | | bottom anytime soon in the real estate market. Once |
| out there that either bought a property or are looking | | | | you see the inventory decreasing, then maybe we are |
| to jump into a home, all of us there that are into | | | | near the bottom. |
| foreclosures and bank REOs either for investment | | | | Now a good question is how do we find a good |
| purposes or because they are looking to buy the | | | | measure of how many REO properties are sitting on |
| home of their dreams and finally all of us out there that | | | | banks' books? |
| have been waiting for the real estate market to | | | | A good website where you can see that is one that |
| collapse and are trying to see whether the 30%-plus | | | | displays all banks' REO foreclosed properties. What I |
| decline in home prices in Southern California, Nevada, | | | | do actually is I go every week and I check to see the |
| Arizona and Florida represents the bottom or not. | | | | bank REO of the biggest banks that are listed there |
| So how do we know if we have reached the bottom | | | | (Countrywide, Bank of America, Citigroup and Wells |
| in the real estate market? | | | | Fargo are all there). Then I see how many houses |
| We can listen to the news, look at statistics etc but by | | | | they have and I write that number down. There are |
| the time the news makes it to the headlines, we are | | | | many other banks on that website but I wouldn't |
| already past the bottom and we are off to the races. | | | | bother with them since they are smaller. The big boys |
| By the time the economists tell us that we have | | | | would give you a good idea of what's out there. |
| reached the bottom, it'll probably be too late. We need | | | | Now, this is not the complete picture as many other |
| some simple tools to see for ourselves before | | | | events affect the level of bank REO inventory at any |
| everyone else. | | | | given time. For example, California put a moratorium on |
| A good quick tool would be to gauge the depth of | | | | bank foreclosures from Nov 2008 to Jan 2009. Banks |
| REO inventory on the banks' books. REO, for those | | | | could not foreclose during that time. As a result |
| not familiar with the jargon, stands for Real Estate | | | | Countrywide's Bank REO inventory went down up until |
| Owned, which means properties that are owned by | | | | Jan 2009 but then rose again in February when banks |
| the banks. What happened to those properties is that | | | | could foreclose again. Please remember that this is just |
| they were foreclosed, they went on the auction block | | | | a tool and a very useful one but it doesn't solve all the |
| and nobody bid high enough to buy them at the | | | | problems nor can it predict the weather on its own. |
| auction. The bank then exercised their right to buy | | | | You need to keep your eyes and ears open to watch |
| back the property as the auction's highest bidder and | | | | out for other things that might affect supply and |
| now they are owned by the bank. But the banks are | | | | demand in REO inventory and real estate in general. |
| not in the business of owning real estate and they are | | | | That's my two cents. Good luck in the future finding |
| trying to sell this inventory. As the REO inventory | | | | and buying your dream home or investment at the |
| increases, the supply of REO (or you can say | | | | bottom. I hope I helped. |
| foreclosed) homes increases, which signifies no | | | | |