Investors Outbid Each Other Over REO Properties for Sale
June 1st, 2009 by 
Joseph Smith
Just like in previous years, some homebuyers are still having difficulty finding REO properties for sale. Most of the time, they find a property to buy only to find out that they have been snatched up by other buyers from the market.
Industry experts observed that investors have been outbidding homebuyers because they have an immediate cash to pay for the property that took their interest.
According to Ed Evans, a broker at RE/MAX, in some cases, investors purchase a property and pay with cash more than the sale amount just to ensure that they will get the home. Evans noted that this trend has been going on for awhile as the availability of REO properties for sale decreases.
However, a second wave of foreclosure is expected to hinder the recovery of the housing market in California. In the first quarter of this year, about 230,915 foreclosure filings were made in the state, an increase of 35 percent from the last quarter of 2008 and 36 percent higher compared with figures in the first quarter the previous year.
In March, the state ranked number 3 nationwide in terms of foreclosure rate as filings increased by 33 percent from February and 67 percent higher than the March 2008 total.
In the city of Visalia, about 448 properties are facing the risk of foreclosure in April, an increase from the 428 reported in March. Evans said that the increasing foreclosure rate has not yet affected sales of properties in the city. However, he is concerned that foreclosures would slow the housing market recovery. He hopes that the supply for properties to buy will be able to keep up with the growing demand.
Meanwhile, Jordan Link Century 21’s Bill Jordan agreed that the inventory for foreclosed properties is down and lots of investors are still looking for good bargains. In fact, he noted that foreclosed sales or short sales declined.
He pointed out that first-time homebuyers accounted for a big percentage of home purchasing activity in California.
On the other hand, Evans said that home sellers would prefer to sell their properties to individuals who pay cash rather than a typical homebuyer who have to wait for a Federal Housing Administration (FHA) loan. He noted that it is not unusual for a foreclosed home to have multiple buyers, adding that if REO properties for sale are priced attractively, they would be sold immediately.
