A $2.5 Billion loss could very likely occur in 2008 due to mortgage fraud according to the Tower Group which studies the mortgage lending industry. While the report talks about “the industry”, we want to bring it down to the level of a buyer or seller. These numbers affect you too! Since mortgage fraud is continuing, there will be fallout from recent-year lending policies and lenders still make bad loans from time-to-time due to appraisal values being over inflated in the first place by an appraisal. They try to avoid these situations, but thieves are very clever when trying to defraud a lender. That eventually leads to a foreclosure and more homes on the market.

This means that homes will come back on the market with a lender as the seller. It also means that as these foreclosures rise, there will be more supply (an excess numbers of homes on the market than is normal) and less demand, even with the same number of average buyers in the market at any time. If there are fewer buyers demand is even less and that pushes prices down.

Your best defense as a buyer is to be sure you’re in the correct price range and that you understand local area risks, meaning foreclosure activity, property flipping and other types of market risk conditions.

As a seller, price your home properly to invite as many qualified buyers into your home as possible. The days when you could price your home 10% above market and let the market catch you in a few months are gone…for now. Do your research on risk factors and looks at www.homesmartreports.com to help you.