BB&T Shadow Inventory

Shadow Inventory

Just received this interesting email from a friend.  Shows how little we actually know about what’s going on with the economy other than what we hear on the news.

For everyone who is ready to speculate in the market again, I would caution you.  When you buy, buy because it makes you money today, not because it may make you money in the future.  This weak economy may be with us a bit longer so it’s best to remain cautious. There are lots of great real estate deals out there and there will be for some time to come. Get training and know what you’re doing when you invest!

Here are excerpts from the email:

“None of us  wants an ever increasing supply of distressed home sales, which of course put continued downward pressure in home prices. I met with a distressed home seller last week who works for BB&T. He attends the meetings with bank brass as they discuss the numbers of homes they have in inventory and discuss how they will manage existing inventory as well as more incoming bank foreclosures.

According to this seller, BB&T brass state that they have 200,000 homes right now that they are holding that are not for sale. The bank feels that as market conditions improve (i.e. less defaults) they will be able to slowly release this shadow inventory at better sale prices. For right now though, they hold these properties on their balance sheet at full fair market value, which of course makes the balance sheet look better than it actually is.

Once the bank releases these foreclosed properties for sale they have to write down the value in accordance with what they normally receive in distressed sale prices.

The bottom line is that the bank brass forecasts another TWO YEARS before they begin to get back to some semblance of balance. However, my seller prospect said that he told the bank brass THREE YEARS. In either event, we all seem to agree that things will get better, eventually. In the meantime, there are a TON of SWEET opportunities right now for investors who are taking the time to execute on their Biz plan.”

Do you have a plan?

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