I speak with agents and other players in the real estate business everyday and one subject that seems to creep up lately is “shadow inventory.” Shadow inventory includes properties that are abandoned by their former owner, typically due to foreclosure, plus a few other oddities.
Here’s a better definition, from Investopedia: “real estate properties that are either in foreclosure and have not yet been sold or homes that owners are delaying putting on the market until prices improve. Shadow inventory can create uncertainty about the best time to sell (for owners) and when a local market can expect full recovery. Also, shadow inventory typically causes reported data on housing inventory to understate the actual number of inventory in the market…”
Here’ s local example – a house listed for short sale in Ormewood Park for a few months in 2009. The sellers failed to sell, and were notified that the bank seized their property in foreclosure in December 2009.
Nearly 20 months later, the house has a “winterization” sticker on it from the winter of early 2010. That sticker has no contact information on it. My closing attorney, David Barrett, researched the preliminary title for me, and the title indicates that it is still owned by the folks who owned it for years and years up until late 2009.
It is likely that no one with responsibility has visited the property since the Winter of 2010.
The taxes are not delinquent. There are no red flags in any system that indicate that this property is in distress, that this property is foreclosed, or being foreclosed, moreover there is no record of any Georgia attorney filing a foreclosure deed.
My client wants to buy this house on his street as an investment, and I have not been able to identify a seller who can sell it.
I even called the former listing agent, and she says that the former owners are long gone, that they were notified about the foreclosure by their lender in 2009 and that they indeed lost the house to foreclosure…or, so they thought.
This Reuters article blames the whole debacle on cost-cutting and sloppy paperwork!
An estimated 125,000-150,000 properties in Metro Atlanta, are items in the shadow inventory…wish me luck as I try to figure out the next steps on this Ormewood Park mystery…