Although many real estate data services are reporting that homebuyers are feeling skittish about foreclosures, the sale of foreclosure homes still accounts for a quarter of all U.S. residential sales in the third quarter of 2010, meaning that people who did purchase an REO or short sale home were able to get an average discount of more than 32 percent[1]. “This is the highest average foreclosure discount we’ve seen since the fourth quarter of 2005,” commented RealtyTrac’s chief executive officer James J. Saccio, noting that the average price of properties not in foreclosure rose 6.42 percent.
Thanks to concerns about “robo-signers” and general unease about the foreclosure moratorium, the number of REO properties sold in the third quarter did decrease substantially – about 25 percent over the quarter before. However, the sales volume of all homes decreased, even though the price on non-foreclosure homes did climb. Non-foreclosure sales volumes fell about 29 percent from the previous quarter.
Ohio posted the highest average discounts on foreclosures, with those properties selling at nearly 45 percent below value. Preforeclosures in that state sold for 21 percent below value, and Ohio’s REO properties are selling for less than 50 cents on the dollar. Other states with average discounts also over 40 percent included Kentucky, Tennessee, Illinois, New Jersey, Michigan, Pennsylvania and Georgia. Saccio recommends dealing with the issue of high numbers and low prices on foreclosure properties by getting them “quickly” into the “hands of qualified buyers and investors who will likely add value to these properties and the neighborhoods they are in.”
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[1]http://nationalmortgageprofessional.com/news22228/reos-comprise-15-percent-all-q3-home-sales?
