Today’s Outlook column looks at how bank-owned foreclosures and other involuntary home sales will govern the pace of home price declines over the coming months.
Banks and other companies that sell REO, or real-estate owned, properties are typically faster to reduce prices than traditional sellers, so they tend to speed along any price correction. That’s why it’s a good idea to keep an eye on the share of distressed sales—including foreclosures and short sales, where banks approve a sale for less than the amount owed.
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