REO Attrition Warfare

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Def. Attrition Warfare – Attrition warfare is a military strategy in which one side attempts to win a war by wearing down its enemy to the point of collapse. The war will usually be won by the side with greater resources and superior numbers.

Def. REO Attrition Warfare - A banking strategy in which the bank attempts to wear down the enemy/buyers to a point of collapse/bidding. The war is always won by the side with greater resources, superior numbers, and ability to manipulate the market by starving the enemy/buyers of a material/affordable REO properties.

So how many of you can relate to this? A bit extreme you’re thinking, well, perhaps not. What about the missing shadow inventory consisting of tens of thousands of foreclosures and the ongoing extend and pretend practices of the major banking institutions?

If you looked at Countrywide’s nationwide total inventory of REO’s on the market one year ago, it totaled approximately 21,500 properties. As of October 7, 2009, that number is now approximately 6,000. Then think about the increase in the number of foreclosures in 2009 over 2008, and the fact that the recent 3rd qtr 2009 was the worst three months of all time.

So far this attrition warfare in foreclosure appears to be working like a charm. Starve them of properties and they will bid themselves into defeat. Then there is the opposite extreme, just plain good old greed.  Consider the bank owned, one bedroom, 826 SF condo in the Cosmopolitan located in the prestigious South of Fifth neighborhood of Miami Beach, with an asking price of $410,000 or $496 per square foot. Good luck with that listing!

Bottom line. As long as the government is providing the banks with free TARP funds, they will continue to hold back REO properties. At this rate, we will be dealing with short sales and foreclosures over the next decade!

Are you looking for a Miami or Miami Beach property at a deep discount? Are you looking for a discounted short sale or bank owned property? Ross Milroy of Miami Angel Properties, LLC may be reached at 305-673-5300 or info@miamiangelproperties.com.

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