When purchasing distressed properties across the country, buyers continue to be more interested in acquiring pre-foreclosed homes rather than bank-owned assets, according to the latest figures from RealtyTrac.
In the fourth quarter of 2011, homes that were in some stage of foreclosure -- or bank-owned – accounted for 24% of all residential sales, compared to 20% in 3Q. In 4Q 2010 distressed sales accounted for 26% of transactions.
“We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter,” said Brandon Moore, CEO of RealtyTrac.
Nationally, pre-foreclosure sales increased 15% from a year ago while REO sales decreased 12% the analytics firm said.
Pre-foreclosure sales outnumbered REO sales in several bellwether markets, including Los Angeles, Miami and Phoenix, where REO sales had outnumbered pre-foreclosure sales a year ago.
Moore noted that the trend will likely show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans.
Overall, buyers purchased 204,080 distressed residential properties in 4Q: 88,303 through pre-foreclosure deals, and 115,777 REO units. For the full year, 907,000 distressed units changed hands.
Moore cautioned, however, that sales continued to be delayed by questions surrounding proper foreclosure paperwork and procedures. “We expect to see foreclosure-related sales increase in 2012, particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months,” he said.
Pre-foreclosure sales increased more than 20% on a year-over-year basis in several states, including Michigan (up 103%), Georgia (59%), Arizona (48%), Washington (36%), Nevada (29%), Oregon (27%), Illinois (26%), Ohio (25%), California (23%) and Texas (22%).
Pre-foreclosures (mostly short sales) sold for an average of $184,221 in the fourth quarter.
RealtyTrac said it took an average of 308 days to sell these homes after starting the foreclosure process, down from 318 days in the third quarter but still drastically up from 237 days last year.
Despite the national decrease, there were several states that saw its REO sales increase by more than 20% on a year-over-year basis, including Minnesota (65%), Wisconsin (23%), Washington (21%) and Illinois (20%).
REOs sold for an average of $149,686 in the fourth quarter, which is 36% below the average sales price of a non-foreclosure home. Bank-owned homes that sold during this time period took an average of 175 days to sell after completing the foreclosure process, which is an improvement from 193 days in the third quarter but still worse than the 171 days it took in the fourth quarter of 2010.
States that had the highest percentage of foreclosure sales in the fourth quarter include Nevada, California and Georgia at 56%, 43% and 39%, respectively. Other states where foreclosure-related sales accounted for at least 20% of all residential sales include Arizona, Michigan, Colorado, Illinois, Minnesota, Washington and Florida.
Moore said pre-foreclosure transactions outnumbered REO sales in several bellwether markets, such as Los Angeles, Miami and Phoenix. Just a year ago, the reverse tendency was happening in these Metropolitan Statistical Areas.
