First and foremost I wish to thank those potential buyers who call and ask for my assistance in buying a Hawaii foreclosure property (an REO). Many call after reading articles that continue to be published on the large volume of foreclosures and the deals to be had. Unfortunately a bank foreclosure and a foreclosure available for sale are 2 different things. In my market areas, Kauai & Maui, distressed properties listed for sale (short sales & REOs) are a small market segment with REOs being especially scarce. The following charts illustrate the issue these buyers face.
Kauai Real Estate Market
(Kauai has 3 active REO listings at the current time)
Maui Real Estate Market
(Maui has 18 active REO listings at the current time)
It's interesting to note that the composition of short sales & REOs are "upside down" from conventional sales. While the number of pending sales is significantly less than active listings for conventional listings, the reverse is true for short sales and REOs. That would suggest that distressed properties are indeed viewed as a bargain when they can be found.
I continue to welcome these calls but please be aware that selection of REO properties is extremely limited and one must be flexible and ready to pounce when a new one is released. A better option is to include short sales in the search criteria provided the buyer has an HFT (high frustration tolerance). In my experience, a short sale can be just as good a "bargain" as an REO and there are more of them to choose from. Even better, focus on value rather than on whether the property is in distress (thanks for that observation Charlie).