Foreclosed properties are selling at a discount that can only be described as huge!
Homes in foreclosure sold for 32% less than homes not in foreclosure during the 3rd quarter, according to a report released by Realty Trac. The biggest average discount for any state was in Ohio, where foreclosures went for 45% below non-foreclosure sales.
The deals were even better for buyers who picked up a home that had been repossessed by the bank (REOs). Prices on the nearly 114,000 REOs sold during the quarter were a whopping 41% lower on average than non-foreclosed homes sold.
That means you could get a $200,000 house for $118,000. That said, it may be telling that the average price of homes sold rose 6.4% from the previous quarter to an average of about $250,000 while distressed property prices fell 2.5% to $170,000.
The foreclosure discount may have ballooned because home sales have dropped since the home buyer tax credit ended and more foreclosures came on the market during the quarter. That meant buyers had plenty of options so homes not priced to move could sit on the market.
By taking a low offer instead of sitting with the house for months and paying property taxes, heat, utilities and maintenance, they cut their losses. Whereas a regular home seller can often wait for a better offer.
Even with bargain prices, the number of REO sales completed during the quarter plunged by about 25%. However, overall home sales also dropped, so the market share of foreclosures stayed about the same. In Nevada, 54% of all homes sold were REOs or short sales. That was the highest percentage of any state but a slight decline from the 2nd quarter, when 56% of sales were foreclosures.
references: cnnmoney.com, les christie, donald horne (p)