Foreclosure homes sold for 34 percent less than the average price of a non-distressed home during the third quarter of 2011, according to new data released by RealtyTrac Thursday.
The average sales price of homes in the process of foreclosure or bank-owned was $165,322 over the July-to-September period last year.
RealtyTrac says third parties purchased a total of 221,536 residential properties classified as foreclosures or REO during the third quarter of 2011, representing just 20 percent of all residential sales during that timeframe.
The third-quarter share of distressed sales activity is down from 22 percent in the second quarter and down from 30 percent of all sales in the third quarter of 2010. At that time, a year earlier, the discount on a home in foreclosure or REO was averaging 37 percent.
“While foreclosures continue to represent an excellent bargain-buying opportunity for many buyers and investors, foreclosure sales accounted for a smaller share of the total market in the third quarter,” commented Brandon Moore, RealtyTrac’s CEO.
Moore says he’s not too surprised by the numbers, given the ambiguity surrounding foreclosure procedures — and
the ripple effect that has on sales of foreclosed properties that might have been improperly processed.
“The sooner the market gets more clarity about accepted foreclosure procedures, primarily through the long-promised settlement between multiple states attorneys general and major lenders, the sooner the market can more efficiently dispose of these distressed properties,” according to Moore.
Even with the hurdles to selling foreclosures, distressed sales continue to represent a historically high percentage of all sales, Moore explained. He points to 2005 and 2006, when foreclosure sales accounted for less than 5 percent of all sales nationwide.
According to RealtyTrac’s analysis, a total of 92,824 pre-foreclosure homes – typically short sales – sold to third parties in the third quarter of last year.
Pre-foreclosures had an average sales price nationwide of $191,119, a discount of 24 percent below the average sales price of homes not in foreclosure. These properties took an average of 318 days to sell after receiving an initial foreclosure notice.
Pre-foreclosure sales increased sharply on an annual basis in Michigan (up 68 percent), North Carolina (up 44 percent), Ohio (up 43 percent) and Georgia (up 35 percent). RealtyTrac reports that pre-foreclosure sales outnumbered REO sales in several states in the third quarter, including Colorado, Florida, New Jersey, and New York.
A total of 128,712 bank-owned REOs sold to third parties in the third quarter, according to RealtyTrac’s report. They carried an average sales price of $146,437 – 42 percent below non-foreclosure prices – and had an average time-on-market of 193 days after being foreclosed.
Nevada, California, and Arizona posted the nation’s highest percentage of foreclosure sales during the third quarter.
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