Despite lingering challenges real estate agents and lenders currently face when selling foreclosed and bank owned properties, these homes continue to make up a high percentage of all sales nationwide through the third quarter of 2011 even though it's lower than the previous quarter.
Homes that were in some stage of foreclosure or were bank owned properties accounted for 20% of all residential sales throughout the country in the third quarter last year, according to RealtyTrac. This figure is down from 22% seen in the prior quarter and home sales for these properties declined from 30% during the same time period in 2010.
Brandon Moore, CEO of the Irvine, Calif.-based real estate information provider, said the housing industry has changed dramatically as foreclosure and REO sales currently represent a “historically high percentage of sales.” In 2005 and 2006 before the housing crisis began, these sales comprised less than 5% of the overall market.
“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,” Moore said. “This trend is not too surprising given the continued ambiguity surrounding proper foreclosure procedures—and the ripple effect that has on sales of foreclosed properties that might have been improperly foreclosed. 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.”
There were 221,536 foreclosed or REO residential properties purchased in the third quarter, 11% lower than the second quarter and 5% below Q3 2010. The average sale price in the third quarter for a foreclosed or REO home was $165,322. RealtyTrac said homes that were in foreclosure sold for 34% lower than properties not in foreclosure.
Pre-foreclosure sales—in default or scheduled for auction—remained flat from a year ago with third parties acquiring 92,824 homes, accounting for nearly 9% of all sales in the quarter. Homes classified as pre-foreclosure, which are often sold via short sale, had an average sales price throughout the country of $191,119, 24% less than a property not in foreclosure.
In the third quarter, a total of 128,712 REO homes were sold to third parties, accounting for 12% of all home sales. This is down from the previous quarter and year-over-year, 13% and 8%, respectively. Nationally, REOs had an average sales price of $146,437 in the third quarter, a discount of nearly 42% below the average sales price of homes not in foreclosure.
Nevada, California and Arizona posted the highest percentage of residential foreclosure sales for this time period, at 57%, 44% and 43%, respectively. Other states where foreclosure-related sales accounted for at least 20% of all sales included Georgia (34%), Colorado (26%) and Michigan (23%).
