Tuesday, December 17, 2013

Where has all the Inventory gone? Lots of money chasing very few deals.

While driving to a few auctions this weekend I started wondering to myself where is all the inventory? I know the banks are holding back a lot of inventory but what about regular home sellers?  People move, get new jobs, get divorced and even pass away.  Values have come back for many people who couldn’t sell before.  Maybe not all, but many. So why aren’t sellers putting houses on the market? The answer basically comes from this: Stubborn sellers.  We may be transitioning to a period where sellers are realizing that they CAN’T get what they think there home is worth anymore. As values started to go up people got excited and then they started realizing that maybe I can get my 2006 value back. Fast forward to today and the seller thinks his house is worth $300,000 and then goes to an agent and the agent tells them that they can’t get $300,000, but maybe only $250,000.  The stubborn seller will then decide to wait.   

Frustrated Investors may find comfort in seeing lots of price reductions. This tells us that if we stick to our guns and continue to find deals we should be rewarded. A house that is worth $300,000, but has a market value of $250,000 must be purchased by an Investor at close to $180,000, not including repairs. What’s frustrating to most Investors and bird dogs is that people are telling us that this is probably impossible. The truth is not anywhere close to the fact.  The fact still remains the deals are out there but they’re farther and fewer in between. 

How can we benefit from this current little trend? Right now you should be helping yourself to a buffet of capital connections that are so frustrated about not finding deals that they’re asking anybody where they can find them. Personally I am still looking for properties in this market but right now what I am doing is spending time carefully building Investors contacts and cash money private lenders. We have built a giant list now and have had more private lenders come to us in the last few months then we have in the last few years combined. Investors are so frustrated that they are begging for deals.  When an Investor has his guard down it easier for new contacts to approach them. Say “hello I’m a bird-dog or I’m Wholesaler and I have deals for you. Can I put you in my contact database.”  As a bird dog you should not stop looking for deals but you should spend the time looking for Investors for future deals.  Springtime and the summer is around the corner and at some point seller will break down and begin to sell again.

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