by Broderick Perkins
(12/08/2010) If you want to cash in on the bargain-basement foreclosure sector of the American Dream, you'd better make your move real soon.
Foreclosures still come at a big discount and with associated risks, but the supply is starting to dwindle.
Foreclosures sold at an average 32 percent below the average sale price of properties not in the foreclosure process and comprised 25 percent of all home sales in the third quarter this year.
RealtyTrac said the average discount was up from 26 percent in the previous quarter and up from a 29 percent discount a year ago.
A total of 188,748 U.S. properties in some stage of foreclosure -- default, scheduled for auction or bank-owned (REO) -- sold to third parties in the third quarter, but that was a decrease of 25 percent from the previous quarter as well as a decrease of nearly 31 percent from the third quarter of 2009.
"Demand for foreclosures also dipped in the third quarter, but those who did purchase a short sale or REO during the quarter were able to get an average discount of more than 32 percent, the highest average foreclosure discount we've seen since the fourth quarter of 2005," said James J. Saccacio, chief executive officer of RealtyTrac.
The average sales price of properties in some stage of foreclosure was $169,523 in the third quarter this year, down 2.46 percent from the previous quarter and down 0.44 percent from the third quarter a year ago.
The average sales price of properties not in foreclosure was $249,721, up 6.42 percent from the previous quarter and up 4.36 percent from the third quarter of 2009
Saccacio said the expiration of the homebuyer tax credit in the second quarter took a bite out of overall buyer demand for all homes.
Also, questionable foreclosure processing, brought to light at the very end of the third quarter, could chill further demand for foreclosure properties and Blue Light specials in the foreclosure market won't last forever.
"A quick but responsible resolution to that (foreclosure moratoriums due to processing anomalies) issue would be ideal to help the market continue to properly clear out foreclosure inventory and get distressed properties into the hands of qualified buyers and investors who will likely add value to those properties and the neighborhoods they are in," Saccacio said.
The total of 113,933 bank-owned (REO) properties sold to third parties in the third quarter, was down nearly 35 percent from the third quarter of 2009.
REO sales accounted for 15 percent of all sales in the third quarter, slightly below the 16 percent of all sales reported in the third quarter of 2009.
A total of 74,815 pre-foreclosure properties in default or scheduled for auction sold to third parties in the third quarter, down 24 percent from the third quarter of 2009.
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