Cape Gazette
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REO, Short Sales Were 43 Percent Of 2012 Market Call MIKE KOGLER Team (302) 236-7648

By Mike Kogler Team | Mar 03, 2013
MIKE KOGLER Team (302) 236-7648

Nearly one million properties that were either bank-owned(REO), or in some stage of foreclosure sold to new owners in 2012 according to RealtyTrac's year-end report. The short sale portion of distressed sales continued to increase while REO sales declined.

There were 498,122 REO residential properties sold to third parties in 2012, a 15 percent decrease from 2011 and down 19 percent from 2010. These sales accounted for 11 percent of the residential market compared to 13 percent and 16 percent of the two prior years. Third parties bought 449,873 houses that were in pre-foreclosure status (primarily short sales in which the lender took less to release its lien than the balance of the six percent increase from 2011 and nearly equaling the record number of 454,111 pre-foreclosure sales in 2010. The combined total of 947,995 distressed properties (6 percent fewer than the prior year) that sold in 2012 constituted 21 percent of the residential sales market compared to 23 percent in 2011 and 28 percent in 2010.

In addition RealtyTrac said that 22 percent of residential sales during the year were of properties that sold as short sales but were not in foreclosure. The company did not explain how they arrived at this number but said that this brought the market share of distressed properties to 43 percent and that these sales increased by 4 percent year-over-year.

Pre-foreclosure sales in 2012 increased from the previous year in 28 states while, despite declining nationwide, REO sales increased from the previous year in 26 states. Pre-foreclosures outnumbered REO sales in 12 states. The third category, non-foreclosure short sales, accelerated throughout the year, increasing each quarter non-foreclosure short sales increased 2 percent from the third quarter and were up 17 percent from the fourth quarter of 2011, reaching a seven-quarter high. These sales in 2012 sold short of the loan amount by an average of $81,621, down from an average of $87,809 in 2011.

In the fourth quarter of 2012, residential properties in foreclosure or bank-owned sold for an average price of $171,704, an increase of 2 percent from the third quarter and an increase of 4 percent from the fourth quarter of 2011. Pre-foreclosure sales were at an average price of $190,031, 23 percent below the average price of a non-distressed property compared to a 26 percent discount the previous quarter and 17 percent one year earlier. Properties in the foreclosure process that sold as short sales in 2012 were $129,817 "short" of the loan amount. REO properties sold for an average price of $151,998, up 1 percent from the previous quarter and 3 percent from the fourth quarter of 2011. This was an average discount of 39 percent from the market price compared to 34 percent in the fourth quarter of 2011.

In the fourth quarter there were 219,084 properties sold on a pre-foreclosure basis or from bank inventories, a decrease of 10 percent from the third quarter and 1 percent from the fourth quarter of 2011. Although foreclosure-related sales represent a shrinking share of total sales, primarily because of fewer bank-owned purchases, distressed sales are still a disproportionately high portion of the overall housing market," said Daren Blomquist, vice president of RealtyTrac. "And while distressed properties - whether bank-owned, pre-foreclosure or short sales not in foreclosure - are still selling at a significant discount compared to non-distressed properties, average distressed property prices are increasing in many markets thanks to strong demand and limited inventory. "Homes sold pre-foreclosure in the fourth quarter took an average of 336 days to sell after starting the foreclosure process, down from an average of 359 days in the previous quarter but still up from an average of 308 days in the fourth quarter of 2011. REO sales required an average of 178 days to sell after foreclosure compared to 186 days in the third quarter and 175 days a year earlier.

Some of the states with the biggest increases in non-foreclosure short sales were Nevada (86 percent increase), Wisconsin (45 percent increase), Washington (28 percent increase), and North Carolina (24 percent increase). Non-foreclosure short sales increased substantially in Michigan (33 percent), Florida (33 percent), and Nevada (33 percent). Foreclosure related sales accounted for nearly 38 percent of all sales in California, Georgia, and Nevada and for 34 percent in Arizona, and 31 percent in Michigan. They were more than one-fifth of the market in Illinois, Florida, Colorado, Wisconsin, and New Hampshire. In the foreclosure plagued metropolitan area incorporating Riverside, San Bernardino, and Ontario, California foreclosure-related sales accounted for 46 percent of all residential sales in 2012.

By: Jann Swanson

Call the Mike Kogler Team direct: (302) 236-7648 for more information on REO or Short Sale investments.

Email the Mike Kogler Team for additional information on Real Estate Investment Opportunities:  michael.kogler@LNF.com

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