Distressed sales are increasing as foreclosures and repossessions mount, accounting for 50% or more of all sales in Nevada, California and Arizona. The selling price for distressed properties averages 27 percent below other real estate, with the deepest discounts in Ohio, Kentucky and Illinois. See the following article from Property Wire for more on this.
Distressed property in the foreclosure process in the US is selling at an average of 27% lower than other real estate with almost a third of all transactions involving those in some stage of mortgage distress, the latest data shows. The discount is likely to stay around 25 to 30% as it is expected that lenders will carefully manage the number of properties coming onto the market to avoid flooding the sector which could bring slowly recovering prices crashing down, according to RealtyTrac.
Nevada had the highest proportion of distressed sales of any US state, with 64% of all transactions involving properties in mortgage distress. California was second, with such sales accounting for 51% of all sales and Arizona at 50%.
Discounts on distressed homes were highest in Ohio, Kentucky and Illinois, where they sold for an average of at least 39% less than non foreclosures.
Its latest quarterly figures show that overall a total of 232,959 homes sold in the period had received a default or auction notice or were seized by banks, down 14% from the fourth quarter of 2009 and 33% from the peak a year earlier.
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The average price of a distressed property was $171,971, according to the data seller.
‘The discount will probably stay between 25 and 30% as lenders carefully manage the number of new foreclosure actions in order to avoid flooding the market,’ said senior vice president for marketing Rick Sharga.
‘We’re clearly creating more properties that will be sold at distressed prices than the market is absorbing. There were more than 250,000 new bank seizures in the first quarter,’ he added.
Home foreclosures set a record for the second straight month in May, with increases in every state, as lenders stepped up property seizures. Bank repossessions climbed 44% from a year earlier and will probably set a record in the second quarter, the company said.
An examination of the figures shows that the real estate market is far from normal. Distressed sales totaled more than 1.2 million last year, a 25% increase from 2008 and a more than four fold rise from 2007. They made up 29% of all sales last year, up from 23% in 2008 and 6% in 2007. The average foreclosure discount was 25% in 2009, 22% in 2008 and 26% in 2007. ‘A normal market would show foreclosures accounting for less than 2% of sales,’ Sharga said.
Bank owned properties sold for an average 34% discount in the first quarter of 2010, up from 32% both in the previous quarter and a year earlier. Such properties accounted for 19% of all US home sales, up from almost 16% in the fourth quarter of 2009 and down from 21% in the first quarter of 2009, the figures also show.
Properties in default or scheduled for auction sold for an average discount of almost 15%, up from almost 14% in the previous quarter and down from 16% a year earlier. These homes are often sold in short sales, where lenders accept less than the outstanding loan amount for the property, RealtyTrac said. Sales of properties either in default or headed for auction accounted for 12% of all sales.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.