Shadow Inventory - Big Opportunity for Investors

[Matt Robinson]

Real estate investors who feel like they may have missed out on the big foreclosure opportunity of the last few years should think again. According to a recent report by Esther Cho on DSNews.com, the shadow inventory at Freddie Mae & Fannie Mac out paces their REO inventory 6-1. While at the same time, HUD's shadow inventory was almost 20 times greater than their REO inventory.

Shadow inventory is made up of homes that are in the foreclosures process but have yet to be legally acquired by the foreclosing entity, while REO's are homes the GSE's hold title too, and can legally list and sell to an end buyer. The shadow inventory numbers recently released reveal that the GSE's still have a LONG way to go to clear out the massive amount of non-performing loans on their books. This means the opportunity for creative real estate investors to capitalize on the foreclosure boom will continue for years to come.

Homeowners who are still in the "shadows", those who are delinquent on their mortgage but not yet foreclosed on, make up a huge majority of distressed properties in the United States. These homeowners are the perfect candidate for the creative real estate investor's targeted marketing, as they are plentiful in numbers and highly motivated...the perfect combination for the guerilla marketer.

However, don't be lulled to sleep over the fact that this problem could linger on for years to come. The opportunity of a lifetime must be seized during the lifetime of the opportunity, and the clock is certainly ticking on the chance to capitalize on the biggest foreclosure epidemic in our nation's history. According to Cho’s article, the inspector for the FHFA is already working to improve on the lack of oversight at the GSE's, and is implementing an audit and evaluation strategy to monitor performance and begin reductions in the shadow inventory.

Do you have a plan to bring some of these owners out of the "shadows", and monetize your ability to create win/win situations with homeowners and their lenders? Have you deployed a marketing strategy or advertising campaign to reach out to distressed sellers who need your expertise to save their home from foreclosure? Let us know in the comment section below!

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