Foreclosure Sales are Down, Average Discount 34%

January 26, 2012

In the third quarter of 2011, homes that were in foreclosure accounted for 20 percent of all residential sales in the country, according to RealtyTrac in its latest Foreclosure Sales Report. 

While a high number of foreclosures still persist, the bulk of foreclosed home sales is shrinking. In the second quarter of 2011, foreclosures accounted for 22 percent of all sales and 30 percent of all sales in the third quarter of 2010. For comparison, in 2005 and 2006, foreclosure sales accounted for less than 5 percent of all sales.

Foreclosures continue to sell at big discounts compared to non-foreclosures. Foreclosures in the third quarter sold for about a 34 percent discount compared to the average home not in foreclosure, according to RealtyTrac. The average sales price of a home in foreclosure was $165,322, which is up 1 percent from the second quarter, yet down by 3 percent from the third quarter of 2010. 

“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,” Brandon Moore, chief executive officer of RealtyTrac, said in a statement. “That 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 ... the sooner the market can more efficiently dispose of these distressed properties.”

States With Highest Foreclosure Sales

The states with the highest percentage of foreclosure sales in the third quarter were: 

  • Nevada: Nearly 57% of all residential sales were from foreclosure-related sales
  • California: Nearly 44% of all residential sales
  • Arizona: 43% of all residential sales
  • Georgia: 34% of all residential sales
  • Colorado: 26% of all residential sales
  • Michigan: 23% of all residential sales

Pre-Foreclosure Sales Surge in These States

Meanwhile, pre-foreclosure sales — which are often sold via short sale — were on the rise in several states. The average sales price of a pre-foreclosure sale was $191,119 in the third quarter, a discount of 24 percent compared to a home not in foreclosure, according to RealtyTrac data. 

Pre-foreclosure sales jumped the most in the following states during the third quarter: 

  • Michigan: Up 68%
  • North Carolina: 44%
  • Ohio: 43%
  • Georgia: 35%

Source: “Foreclosures Account for 20% of Residential Sales in Q3,” RISMedia (Jan. 25, 2012)

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