Foreclosures made up 26% of U.S. home sales in first quarter

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NEW YORK (CNNMoney) -- Homes in some stage of foreclosure accounted for more than one in four home sales during the first three months of the year, according to a report released Thursday.

Distressed properties that were either in default, scheduled for auction or bank-owned accounted for 26% of all residential sales during the first quarter, up from 22% in the previous quarter and 25% a year earlier, RealtyTrac said.
foreclosure fiasco
Foreclosure Fiasco

Foreclosures made up 26% of U.S. home sales in first quarter
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Altogether, 233,299 distressed properties were purchased during the quarter, an 8% increase from the previous quarter. Those homes sold for an average of $161,214, 27% below the average price of a home not in foreclosure.

"Foreclosure-related sales picked up in the first quarter, particularly pre-foreclosure sales where a distressed homeowner is selling to avoid foreclosure -- typically via a short sale," Brandon Moore, chief executive of RealtyTrac said in a statement.

Pre-foreclosure sales, which are often sold as short sales, hit a three-year high during the quarter "even as the average pre-foreclosure sales price dropped to a record low," Moore said.

There were nearly 110,000 short sales in the quarter, up 25% from a year earlier and comprising 12% of all homes sold during the first quarter, according to RealtyTrac.

In short sales, borrowers who owe more on their mortgages than their homes are worth, agree with their bank to sell their homes at the lower market value. In return, the bank agrees to absorb the loss.

During the quarter, homes sold in short sales went for an average price of $175,461, the lowest level since RealtyTrac began tracking foreclosures in 2005.
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Short sales are becoming the preferred method for banks to unload properties in default.

Banks typically get about 20% more for a short sale than they would for a foreclosed home. In addition, short sale deals get done much more quickly than foreclosures, which can take years to unload, during which expenses, like property taxes and insurance, mount up.

During the first quarter, it took an average of 306 days to complete a short sale, compared to 370 days for a foreclosure.

"Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions," Moore said.

Meanwhile, sales of properties repossessed by the banks, called REOs, fell 15% year-over-year to 123,778, comprising 14% of all sales during the quarter.

Foreclosures made up 26% of all home sales in 1Q - May. 31, 2012

 

[ODOYLE RULES]

rich getting richer.

 

[Robbie3000]

shyt is real brehs. I have a homie who earns a living buying foreclosures in the hood, fixing them up and renting to Section 8. He is buying houses in the ATL for 13-18K. If gentrification ever hits parts of Atlanta, this nikka is going to be eating good.

But it's not just in the hood, some highrise condos in Atlanta are selling at a fraction of what they were going for in 2006-2007. And Atlanta is not some depressed city. I can only imagine what's going on in places like Detroit.

 

[Rekkapryde]

shyt is real brehs. I have a homie who earns a living buying foreclosures in the hood, fixing them up and renting to Section 8. He is buying houses in the ATL for 13-18K. If gentrification ever hits parts of Atlanta, this nikka is going to be eating good.

But it's not just in the hood, some highrise condos in Atlanta are selling at a fraction of what they were going for in 2006-2007. And Atlanta is not some depressed city. I can only imagine what's going on in places like Detroit.

I came up on my crib in Fayette off a foreclosure. When I used to drive by the neighborhood like 5/6 years ago, I figured I'd never be able to get in that kind of spot.

 

[Schmoove]

I always said I wouldn't buy a foreclosure. Here's why:

You're buying something that someone else didn't want to give up. I didnt want that karma laying on my shoulders....

But I see the location and prices

 

[alpo]

I always said I wouldn't buy a foreclosure. Here's why:

You're buying something that someone else didn't want to give up. I didnt want that karma laying on my shoulders....

But I see the location and prices

 

[Marvel]

I bought my home last year. I tried to buy a couple of nice foreclosure spots during my search but companies scooped and turned them for serious profit before I could close the deal. I was blessed though because my place is in one of the best neighborhoods in the Houston area and I got a great deal. Foreclosures are where its at though. You make a lot of money if you get it in the right area and you resell down the road.