Shift in Distressed Sales

According to the October 2013 U.S. Residential & Foreclosure Sales Report from RealtyTrac® (www.realtytrac.com) a shift is occurring in how distressed properties are being purchased.

Daren Blomquist, vice president at RealtyTrac, in referencing the report states that, “After a surge in short sales in late 2011 and early 2012, the favored disposition method for distressed properties is shifting back toward the more traditional foreclosure auction sales and bank-owned sales.”  He adds that, “The combination of rapidly rising home prices, along with strong demand from institutional investors and other cash buyers able to buy at the public foreclosure auction or an as-is REO home, means short sales are becoming less favorable for lenders.”

Data from the report shows that short sales in October represented only 5.3 percent of all sales; this was down from 6.3 percent in the previous month and was down substantially from the 11.2 percent in October of 2012.

Nationally for October, states with the highest percentage of short sales were Nevada (14.2 percent), Florida (13.6 percent), Maryland (8.2 percent), Michigan (6.7 percent) and Illinois (6.2 percent).

A new category included in the report for first time this October deals with ‘auction sales to third parties.’  According to the report 2.5 percent of all sales were auction sales to third parties; this was down from 2.8 percent in September, but was almost twice the 1.3 percent for October 2012.

The report’s market analysis shows that the metro markets with the highest percentage of foreclosure auction sales include both Orlando and Jacksonville Fla. Leading with 8.6 percent, Columbia, S.C. at 8.1 percent, Las Vegas at 6.6 percent, Charlotte at 6.1 percent, Miami at 6.0 percent and Tampa with 5.7 percent.

Real Estate Owned (REO) sales in October accounted for 9.6 percent of all sales; this compares with 8.9 percent of all sales the previous month and 9.4 percent during October of 2012.

REO statistics from the report shows that the markets with highest percentage of REO sales included Stockton, Calif., (24.4 percent), Las Vegas (23.8 percent), Cleveland (22.3 percent), Riverside-San Bernardino, Calif., (20.1 percent), Detroit (18.8 percent) and Phoenix (18.0 percent).

Kevin Hartmann