Foreclosure-Related Sales in 2011 = 907,138

By: Carrie Bay 02/29/2012

Pre-foreclosure short sales and sales of foreclosed REOs totaled 907,138 for the 2011 calendar year, RealtyTrac reported Thursday. These foreclosure-related transactions made up 23 percent of all residential sales in the U.S. last year, with short sales accounting for 9 percent and REOs accounting for 14 percent of 2011 home sales.

During the last three months of the year, third parties purchased a total of 88,303 pre-foreclosure homes that were in default or scheduled for auction, according to RealtyTrac. That tally represents a decrease of 5 percent from the previous quarter but is up 15 percent compared to the fourth quarter of 2010.

Pre-foreclosure sales increased more than 20 percent on a year-over-year basis in several states, including Michigan (103 percent), Georgia (59 percent), Arizona (48 percent), Washington (36 percent), Nevada (29 percent), Oregon (27 percent), Illinois (26 percent), Ohio (25 percent), California (23 percent), and Texas (22 percent).

RealtyTrac says pre-foreclosure short sales went for an average of $184,221 in the fourth quarter. The average sales price of a pre-foreclosure home in the fourth quarter was 21 percent below the average sales price of a non-foreclosure home, similar to the discount of 22 percent on pre-foreclosure purchases for the entire year.

Pre-foreclosure homes that sold in the fourth quarter of 2011 took an average of 308 days to sell after starting the foreclosure process.

Third parties purchased a total of 115,777 bank-owned REO homes in the fourth quarter, down 10 percent from the previous quarter and down 12 percent from the fourth quarter of 2010.

Despite the nationwide decrease, RealtyTrac says REO sales increased 20 percent or more on a year-over-year

basis in several states, including Minnesota (65 percent), Wisconsin (23 percent), Washington (21 percent), and Illinois (20 percent).

REOs sold for an average of $149,686 in the fourth quarter, 36 percent below the average sales price of a non-foreclosure home, while the average discount on bank-owned homes for the entire year was 40 percent.

REOs that sold in the fourth quarter took an average of 175 days to sell after completing the foreclosure process.

“Sales of foreclosures in the fourth quarter continued to be slowed by questions surrounding proper foreclosure paperwork and procedures,” said Brandon Moore, RealtyTrac’s CEO. “Even so, foreclosures accounted for nearly one in every four sales during the quarter and for the entire year.”

Moore says his firm expects to see foreclosure-related sales increase in 2012, particularly pre-foreclosure short sales, as lenders start to more aggressively dispose of distressed assets.

“We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter,” Moore said. “Nationally, pre-foreclosure sales increased 15 percent from a year ago while REO sales decreased 12 percent.”

Moore says short sales outnumbered REO sales in several bellwether markets, including Los Angeles, Miami, and Phoenix – all metros where REO sales had outnumbered pre-foreclosure sales a year ago.

“That trend will likely show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans,” according to Moore.

Among metro areas with at least 500 short sales during the fourth quarter and where short sales increased at least 5 percent from a year ago, the San Francisco-Oakland-Fremont metro in California posted the biggest short sale discount at 41 percent.

Among metro areas with at least 500 REO sales during Q4 and where REO sales rose by at least 5 percent from the year-ago period, Wisconsin’s Milwaukee-Waukesha-West Allis metro saw the biggest discount. There, bank-owned properties sold for 58 percent less than non-foreclosure homes.

Combined, short sales and REOs accounted for 56 percent of all residential sales in Nevada in the fourth quarter, the highest percentage of any state.