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Shadow Inventory

July 31, 2011

Shadow Inventory basically includes a couple areas of the Real Estate market.

1 – properties owned by the banks (REO’s) after foreclosure that haven’t yet come on the market
2 – properties that are delinquent but the bank has not yet foreclosed
3 – some studies include homes that are in the modification process because so many of those fail & will become foreclosures
4 – and still others include a percentage for sellers who are waiting for market prices to go up

The Shadow inventory is important because it effects price and inventory. REO’s are typically priced lower than standard sales.

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