Definition of "Shadow Inventory":
1) Inventory held by a bank that is not on the market or otherwise made available for sale.
2) A scary notion of unknown, unsold inventory
The press and many in the REO business have made a major issue of saying that the number of homes held by banks is in the millions. When you read articles about shadow inventory the articles are often nebulous and equate a notice of default to a foreclosure. Many reports of shadow inventory use the number of default notices as a means of projecting how many homes will foreclose. That's a valid basis for a hypothesis but it isn't a guarantee. It's an opinion and not concrete evidence.
Here's what I do know. I've been in a sales training conference for the past 2 days with Brian Buffini. I've listened to a lot of great stuff but of all the things he said, one that really stood out is his statement that "there is no shadow inventory". This statement was made because he met with the CEOs of the top 4 banks in the country and they all said that they are not holding onto inventory. OK, so why all the talk about it in the media and with REO agents? Here's what I think:
There is shadow inventory...just very damn little.
I've looked at the shadow inventory in Los Altos and there are a few bank owned properties. There are a few bank owned properties in Los Altos Hills too. I can count on one hand between both towns how many bank owned properties are not on the market making them "shadow inventory". I get similar counts in nearby towns Mountain View, Sunnyvale, and Palo Alto. There are very few homes owned by banks that aren't on the market.
So, if the bank CEOs are saying there isn't any shadow inventory and there are very few bank owned homes in the area, why is there so much media fear mongering? I'd like people who deal with the banks to weigh in on this. Is there proof that the banks hold a lot of inventory off market? In this pocket of Silicon Valley, there's nearly nothing.
Is shadow inventory an urban legend or is it real? You tell me.
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Bryan Robertson, Broker Associate | T: 650.799.9951 | Email: bryan@serenogroup.com | Website: http://www.BryanRobertsonHomes.com |CA License: 01191946 | Sereno Group - Los Altos branch | 369 S. San Antonio Road | Los Altos, CA 94022
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