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Short sales and REOs can add affordable inventory for first-time buyers

HousingWire notes foreclosure notices are issued monthly to more than 40,000 homeowners, and more than 2 million borrowers are behind on mortgage payments, creating a large pipeline of potential short-sale listings.

Reported · Written up by our desk · Residential

HousingWire argues that many buyer agents overlook distressed properties, particularly short sales, even though those homes can represent an affordable inventory pool for first-time buyers when documentation is complete and the workflow is followed.

The outlet says short sales often stall for operational reasons, including incomplete paperwork and inexperienced listing agents, rather than lenders simply refusing to approve the deals. It also links the opportunity to the current size of mortgage distress, saying more than 40,000 homeowners receive foreclosure notices each month and that more than 2 million American homeowners are behind on mortgage payments.

HousingWire adds that distressed sellers typically prioritize getting a resolution over maximizing proceeds, which can lead properties to be priced at or below market value to support a faster sale. It further notes REO homes can offer similar advantages, including sometimes being priced aggressively from the start.

The outlet also points to certain government-backed and institutional programs that can include “First Look” periods, which limit investor participation during a defined window. HousingWire says this can allow owner-occupant buyers to submit offers without competing against cash investors during that period.

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