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Foreclosure Crisis Make Home Sellers Suffer

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By : Cassiano Travareli    99 or more times read
Foreclosure homes keep flooding the market, driving median home prices lower. Yes, lower prices are good if you are the buyer but for home sellers, low home prices mean cheaper sale and that really hurts them.

According to the data from, prices of foreclosed homes are 40% lower than normal property listings.

Foreclosure sales put great pressure in the housing market. A great part of all foreclosures in the market are REOs. It has always been hard for ordinary home sellers to sell their houses for it is a competition against lenders’ real estate owned properties.

REOs are offered in very cheap prices since the banks want to do away with the costs that will be incurred as the property stays longer in the market such as property taxes, maintenance, and insurance fees. Foreclosed homes just depreciate as they stay in the market.

In all over the country, median home prices for REOs are lower than the non-REOs. Given this situation, home buyers would be more enticed to purchase REOs for its lower price, causing home sellers to suffer since it is harder for them to sell their houses. This actually makes it hard for homeowners to relocate.

According to Dan Immergluck who is a professor in Georgia Tech says that foreclosures have a great impact on home prices, the REOs even more. First, a rapid rise in REOs is considered a supply-side shock wherein markets are surprised and unable to handle such a rapid increase in inventory. Second, lots of vacant foreclosures fall into disrepair, attract crimes, and disfigure neighborhoods. Lastly, REOs are not disregarded when looking at comparable home listings for they account for about 40% or 50% of the housing market.

To make sales, homeowners have to be as aggressive as the banks. Prices come down fast that is why desperate sellers must keep up with the lenders no matter how much it is hard for them.
Cassiano Travareli has been educated in the finer points of the foreclosures market over 5 years.

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