Make an offer they (the bank) can't refuse

Some positive news (we think) from South County broker Vince Bindi, who told the OCR's Jon Lansner: "The number of homes Pending In Escrow increased again this past week … this time by 5% for the week of Thanksgiving and the number of Homes Active for Sale dropped by 1.5%, resulting in the overall months of Inventory dropping to its lowest level (13.5 months) since August of this year. Of even more interest, the low end of the market (Prices less then $450,000) is leading the way and now has the lowest months of inventory at 10.7 months."

I'd prefer to hold off judgment until we see the actual closed sales stats. Particularly since even some in the media (the mainstream variety, not extremists) are saying there could easily be another credit crunch unfolding sooner rather than later.

And, one week alone doesn't reverse a downward pattern. Check out a visual of the foreclosure numbers now versus 1992, from OC Register reporter Matt Padilla.

Now, on to an REO trainwreck that could be on to something in terms of cutting-edge of bank pricing strategies: "Can't find a buyer? Steadily cut the price every week or so until you can"...

This 3-bedroom, 2-bath Lake Forest property was purchased for $636,000 in January 2006, and Redfin shows it as being purchased again for $750,000 in September 2006 (is this merely a mistake, or something else?). Looks like it eventually went back to the bank in August and is now on the market as an REO.

Here is the listing description: ONE OF THE LOWEST PRICE DETACHED SINGLE FAMILY RESIDENCES IN LAKE FOREST. .. . 1500 PLUS SQUARE FEET. Situated on private cul-de-sac. .. .Make this your own home. .. Large second story master with bath and walk in closet. Two bedrooms down plus one bath. Private front courtyard. Familyroom with fireplace. This is not a short sale. .. .make an offer the bank cant refuse. ..

Pricing history via ZipRealty:
Price Reduced: 09/20/07 -- $609,900 to $588,900
Price Reduced: 10/13/07 -- $588,900 to $574,900
Price Reduced: 10/24/07 -- $574,900 to $569,900
Price Reduced: 11/15/07 -- $569,900 to $559,900
Price Reduced: 11/17/07 -- $559,900 to $474,900

Pure speculation, but I wouldn't be too surprised if the bank would not have considered an offer of $474,900 one it "cant (sic) refuse" when the price tag was $609,900 back in September. But now, the asking price has come down by $135,000 in almost three months. Who's to say the bank won't keep lowering it until someone bites?

Assuming a sale at this price, the property would have been marked down 37% from the peak price of $750,000 in late '06 (not factoring in any sales costs). One sale does not make a trend, nor does it solely set new comps for the neighborhood. But something like this can't be completely ignored, particularly when nearby properties with the same amount of bedrooms are asking at least about $50,000 more.