BiggerPockets

Mike, not sure about Nationwide, but your problem is consistant here in SO CAL, home of the REOs and here is my opinion of what has been going on.

Banks have been slow to get the REO's to market.
Banks took a more relaxed/delayed (for lack of better terms) process to foreclose during the holidays (Nov./Dec)
Many banks for the last 6 months have been testing the market and pricing even the messed up homes at full retail value.
Trustee sales over the last 6 months got very VERY competitive and investors were bidding up homes above 80% of value, this caused the banks to try pricing REO's higher.

I have no idea if I am correct or not, but I do know that times have been tougher to lock great deals so far this year.

That stated, I see a slight pick-up now and for whatever reason, I am now getting deals again.

Just locked a property for $250k with only $10-$15k in rehab and the exit will sell all day long at $400k, $419k likely. I'd say that is a grand slam deal.

It seems to be a problem with pricing and not necessarily quantity, although I know the two are related. There are still plenty of REOs on the market, but banks are not as aggressive with the pricing as they were even 6 months ago.

Hopefully that will change as they start dumping more inventory. The time of year probably also has something to do with it.

On that note, if someone has a good deal in the Cleveland area, let me know. Looking to buy 4-5 properties with cash in blue-collar suburbs.

I don't think it's the banks. In my view, the problem lies with demand.

Not three hours ago I received a call from someone who wanted to meet and show me his business plan, in anticipation of borrowing money. (A business plan is always the tip-off.) After a brief conversation, I learned he has no deals and no money, but a plan to get into flipping. He wanted to borrow the purchase money from me (100%, naturally) and borrow the rehab money from "his investors." Of course, I politely refused.

I'm receiving more and more of these calls in addition from those who are buying at over 75% of ARV using some pretty severe hard money. Last night at a RE club we met someone who is flipping two houses with two loans each and said she will likely lose money. She shared that regretfully, she wanted to get in so bad, price didn't matter. I know the room was filled with many like her.

Five years ago it was no money down on pre-construction. Today it's REO's and short sales. I really believe we're in a small flipping bubble that won't last for everyone. Meanwhile, the wannabes and over-payers are driving prices to ridiculous levels. The banks, which seem to have an infinite supply of shadow inventory, could fuel this bubble for a long time. As demand increases however, I can see them releasing more inventory thus stabilizing or reducing prices. Or, the neophytes will simply put themselves out of business causing prices drop. Problem is, there seem to be a lot of neophytes.

Jeff

We are having the same issues here in Ft Wayne. Banks do not seem to be nearly as desperate to unload inventory.
I tried to get some deals in December and they would not budge. I put offers in on 15 Dec for a 30 Dec cash close. The banks response was only to come down a percentage or two off of the asking price.
Interestingly though, one of the banks came back to us in January and offered enough of a discount to take the deal. That one is now rehabbed and we will put that one on the market next week.
We are finding that we have to be persistent and make offers on multiple properties to get the houses that we want at the right price.

"I'm receiving more and more of these calls in addition from those who are buying at over 75% of ARV using some pretty severe hard money. Last night at a RE club we met someone who is flipping two houses with two loans each and said she will likely lose money. She shared that regretfully, she wanted to get in so bad, price didn't matter. I know the room was filled with many like her."

So true. people overbidding daily and losing. but they were so happy they got the "reo" ... i am constantly calculating how much some of these "investors" are losing as i see their property dropping in price and margin diminishing to even and worse negative.

I have not noticed much of a difference down here recently. Of course we have a large amount of inventory to sell through before we have to worry about that.

Ditto. Seeing same thing here in central VA. Last year, I exclusively bought REO's - literally stole about 5 properties from the banks, and a few more well under 70% ARV after all my rehab costs.

This year, not seeing squat. Going back to marketing directly to sellers because there's nothing on MLS to look at.

If you are interested in flipping homes, you might be able to find help at http://www.rebuildus.com. Let me know if that helps.