Sellers May Benefit from a Potential Price Increase

By now you’ve probably heard that Attorney Generals in all 50 states have launched a joint investigation into questionable, potentially fraudulent, foreclosure practices by the nation’s major banks. JPMorgan and GMAC have halted foreclosures in the 23 states that require judicial review for foreclosures after acknowledging “robo-signing” practices where employees sign off on foreclosures without verifying the accuracy of the foreclosure documents. Bank of America has halted foreclosures in all 50 states for the same reason. Today we learn that Wells Fargo, the nation’s second largest bank, may also be using “robo-signing” practices.

It appears that for the short term, no more foreclosures will be coming on the market. This could cause as much as a 30 percent decrease in the supply of homes. Today Freddie Mac announced yet a new historic low on mortgage interest rates which should at least keep active buyers motivated. Assuming buyers’ demand continues and inventory drops, houses that do go on the market right now could potentially benefit from a bit of a price increase. Even if there isn’t a price increase, less competition for the few buyers that are out there will increase a seller’s chances of going under contract–all good news for people that have been thinking about selling.