With the increasing number of foreclosures, lenders have too many properties to sell. To avoid eroding the value of your repossessed properties, banks often keep an inventory of unlisted repossessed homes. These unlisted properties can be called phantom inventory and you can benefit from these unlisted foreclosed homes.
How did all this happen? Job losses, subprime mortgages, a slow economy; all this has led to the current situation.
Homeowners en masse have moved away from their homes because they can no longer afford to make mortgage payments. Because they owe more than the house is worth, they cannot sell enough to pay their mortgage. Very often, the only solution is to allow your homes to go into foreclosure.
With this huge glut of homes, home values have fallen more and more. Lenders aren’t eager to lose even more money, so they avoid listing all of their foreclosed homes, lest they flood the market.
On the other hand, they really don’t want the expense of keeping their foreclosed properties for longer than necessary.
It is a vicious circle. As more homes are listed, the value of individual homes slides even further. In fact, some real estate experts estimate that only about a third of foreclosed properties are listed for sale. The rest is kept as inventory.
Banks don’t like to carry phantom inventories. And that’s where you can benefit from these unlisted foreclosed homes. Lenders eventually sell these properties at auction or wholesale, for a fraction of their value.
As an investor, or even an individual looking for a home to rent, you can take advantage of this phantom inventory. Plan to attend auctions, check listings on foreclosure websites, or contact local banks directly for local foreclosure addresses.
As a buyer, you are in the driver’s seat. The longer a bank has to run the property, the more it will cost you. Taxes, maintenance, and repairs, not to mention the money the lender has tied up in this phantom inventory, are reasons you can benefit from unlisted foreclosed homes.
