Some experts say that the shadow inventory doesn’t exist, or that it doesn’t pose a problem, while others insist that the shadow inventory will cause another real estate market crash.

I’m going to discuss what shadow inventory is and how it will benefit short sale investors and real estate agents that deal with short sales. Let’s cover Shadow Inventory.

1. Millions of homeowners that are currently “safe” with their payments, and in no trouble with their loan simply want to move for location sake, upsize, downsize etc. Many of these homeowners are waiting to put their properties on the market, because they feel like the market will “turn around” and they can get a much better price. The end result will be when these millions of homeowners decide to sell at the same time, creating an oversupply of homes on the market, thereby driving prices down.

2. Let’s talk about the six hundred thousand homes that lenders are holding in their REO inventory. Most people don’t know that when a lender forecloses on a home, they don’t have to sell it right away. They can hold it until they decide to sell. What are they doing? Well, they too are “waiting” for the market to go up so they can add their huge inventory to the market.

3. There is an estimated 7 million homeowners currently in default in the US. this is massive beyond all measure, and will add to the 2 above. They will be trying to sell before losing their home to foreclosure, or simply adding to the banks’ inventory.

If you’re a real estate agent working short sales, or if you’re doing short sale investing, you are part of the solution. Without these solutions, the market will most likely get worse. Worse then we’ve ever seen it. Now is the time to learn about short sales, if you’re involved at all, you can help. It can also be very lucrative.

You can get a free ebook and the top 10 mistakes to avoid with foreclosure at our foreclosure training website. The 3 best strategies on buying foreclosed homes is also available there as a free gift.

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