Investor Caution: Beware of Heat in Distressed Housing

by Diana Olick - CNBC

As real estate investors rush to buy distressed properties and reap the rewards of a still-heating rental market, two distinct phenomena are suggesting caution, perhaps extreme caution.

Paul J. Richards -Getty Images

The first is in sales of foreclosed homes that the banks now own (REO) and short sales (when the home is sold for less than the value of the mortgage, with the bank eating the loss).

With banks looking to unload not only homes they’ve repossessed but homes with delinquent mortgages, they are courting more investors.

Reports of bidding wars are growing louder, but home prices are not moving higher with all the action. In fact, most homes sold in April received just two or three offers and sold for below list price, according to a new survey from Campbell/Inside Mortgage Finance.

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