Deeper Discounts on Foreclosures

Distressed properties are selling these days at a larger discount than ever before. Due to the increase of homes in some stage of the foreclosure process and bank-owned homes on the market, as compared to 2010, lenders are expediting short sales as a way to avoid the costly expense of adding bank-owned properties to their inventory.  

The average sales price of a bank-owned home was about 40% below the average sales price of a non-bank-owned home.  The average sales price of a pre-foreclosure home, often sold as a short-sale, was 21% below the average sales price of a non-foreclosure home.  In addition, bank-owned homes accounted for 19% of all home sales and pre-foreclosures amounted to 12% of all home sales.   

What does this mean for buyers looking to land a great deal in today’s market?  According to James Saccacio, RealtyTrac CEO, "The jump in pre-foreclosure sales volume, coupled with bigger discounts on pre-foreclosures and a shorter average time to sell pre-foreclosures, all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales.”

What does this mean for sellers who are facing the possibility of losing their home?  A short sale is an option for homeowners who are not able to qualify for a loan modification or refinancing, or not attracted to the loan modification options provided by their lenders.  Simply put, this means that sellers have a better probability of completing a short sale as a way to avoid foreclosure.