RealtyTrac®, a leading online marketplace for foreclosure properties, recently released its Q4 and Year-End 2011 U.S. Foreclosure Sales Report™, which shows that sales of homes that were in some stage of foreclosure or bank owned accounted for 24 percent of all U.S. residential sales during the fourth quarter—up from 20 percent of all sales in the previous quarter, but down from 26 percent of all sales in the fourth quarter of 2010.
Third parties purchased a total of 204,080 residential properties in some stage of pre-foreclosure (NOD, LIS, NTS, NFS) or bank-owned (REO) during the fourth quarter, down 8 percent from a revised third quarter total and down 2 percent from the fourth quarter of 2010. That brought total foreclosure-related sales in 2011 to 907,138, down 2 percent from 2010 and accounting for 23 percent of all sales during the year.
The average sales price of homes in foreclosure or bank owned was $164,944 in the fourth quarter, nearly identical to the average foreclosure-related sales price in the previous quarter and down 5 percent from the fourth quarter of 2010. The average price of a foreclosure-related sale was 29 percent below the average price of a non-foreclosure sale during the quarter, down from a 34 percent foreclosure discount in the third quarter and down from a 35 percent foreclosure discount in the fourth quarter of 2010.
“Sales of foreclosures in the fourth quarter continued to be slowed by questions surrounding proper foreclosure paperwork and procedures,” says Brandon Moore, chief executive officer of RealtyTrac. “Even so, foreclosures accounted for nearly one in every four sales during the quarter and for the entire year. 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.
“We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter,” Moore continued. “Nationally, pre-foreclosure sales increased 15 percent from a year ago while REO sales decreased 12 percent. 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. That 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.”
Pre-foreclosure sales increase 15 percent from year ago
Third parties purchased a total of 88,303 pre-foreclosure homes—in default or scheduled for auction—during the fourth quarter, a decrease of 5 percent from the previous quarter but up 15 percent from the fourth quarter of 2010. Pre-foreclosure sales accounted for 10 percent of all sales during the fourth quarter and 9 percent of all sales for all of 2011.
Pre-foreclosure sales increased more than 20 percent on a year-over-year basis in several states, including Michigan (103 percent), Georgia (59 percent), Arizona (48 percent), Washington (36 percent), Nevada (29 percent), Oregon (27 percent), Illinois (26 percent), Ohio (25 percent), California (23 percent) and Texas (22 percent).
Pre-foreclosures, which are often sold via short sale, sold for an average of $184,221 in the fourth quarter, down 3 percent from the previous quarter and down 11 percent from the fourth quarter of 2010. The average sales price of a pre-foreclosure home in the fourth quarter was 21 percent below the average sales price of a non-foreclosure home, similar to the discount of 22 percent on pre-foreclosure purchases for the entire year.
Pre-foreclosure homes that sold in the fourth quarter took an average of 308 days to sell after starting the foreclosure process, down from an average of 318 days in the third quarter but still up from an average of 237 days in the fourth quarter of 2010.
REO sales decrease 12 percent from year ago
Third parties purchased a total of 115,777 bank-owned (REO) homes in the fourth quarter, down 10 percent from the previous quarter and down 12 percent from the fourth quarter of 2010. REO sales accounted for 13 percent of all sales during the fourth quarter and 14 percent of all sales for all of 2011.
Despite the nationwide decrease, REO sales increased 20 percent or more on a year-over-year basis in several states, including Minnesota (65 percent), Wisconsin (23 percent), Washington (21 percent) and Illinois (20 percent).
REOs sold for an average of $149,686 in the fourth quarter, up 2 percent from the previous quarter but down 2 percent from the fourth quarter of 2010. The average sales price of a bank-owned home in the fourth quarter was 36 percent below the average sales price of a non-foreclosure home, while the discount on bank-owned homes for the entire year was 40 percent.
REOs that sold in the fourth quarter took an average of 175 days to sell after completing the foreclosure process, down from 193 days in the third quarter but still up from 171 days in the fourth quarter of 2010.
Nevada, California, Georgia post highest percentage of foreclosure sales
Foreclosure sales accounted for 56 percent of all residential sales in Nevada in the fourth quarter, the highest percentage of any state. Third parties purchased a total of 52,086 homes in foreclosure or bank-owned in Nevada during all of 2011, representing 54 percent of all sales and up 17 percent from 2010.
California foreclosure-related sales accounted for 43 percent of the state’s total residential property sales in the fourth quarter, the second highest percentage among the states. Third parties purchased a total of 246,780 homes in foreclosure or bank-owned in California during all of 2011, the most of any state and up 2 percent from 2010.
Foreclosure sales accounted for 39 percent of all residential sales in Georgia in the fourth quarter, the third highest percentage of any state. Third parties purchased a total of 44,631 homes in foreclosure or bank-owned in Georgia during all of 2011, representing 36 percent of all sales and up 18 percent from 2010.
Other states where foreclosure-related sales accounted for 20 percent or more of all sales in the fourth quarter were Arizona (38 percent), Michigan (33 percent), Colorado (26 percent), Illinois (26 percent), Minnesota (23 percent), Washington (21 percent), and Florida (20 percent).
Top metros to buy bank-owned
Among metro areas with at least 500 REO sales during the fourth quarter and where REO sales increased at least 5 percent from a year ago, the following posted the biggest discounts on sales of bank-owned properties.
Top metros to buy pre-foreclosure (short sales)
Among metro areas with at least 500 pre-foreclosure (short) sales during the fourth quarter and where pre-foreclosure sales increased at least 5 percent from a year ago, the following posted the biggest discounts on sales of pre-foreclosure properties. A few metro areas (Chicago, Atlanta and Seattle) are on both lists, demonstrating that buyers are finding substantial discounts on both short sales and bank-owned homes in these markets.
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