Invasion of the Short Sales

June 03, 2012

Short Sale HomeShort sales continue to be a dominating force in the real estate market. Many homes in various states of the foreclosure process are now sold as short sales before they end up being repossessed by banks or sold at an auction.

In the first quarter of 2012, short sales accounted for 26 percent of all residential sales in the United States according to a just released report from RealtyTrac. This is an increase in short sales compared to 22 percent for the last quarter of 2011 and 25 percent from the first quarter of 2011.

“Foreclosure-related sales picked up in the first quarter, particularly pre-foreclosure sales where a distressed homeowner is selling to avoid foreclosure — typically via short sale,” said Brandon Moore, chief executive officer of RealtyTrac. “Those pre-foreclosure sales hit a three-year high in the first quarter even as the average pre-foreclosure sales price dropped to a record low for our report. Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions.”

Let’s look at the stats:

  • A total of 233,299 homes sold in the first quarter were either in some stage of the foreclosure process or had become bank-owned properties before being sold.
  • The average sales price of homes either in the foreclosure process or REO (bank owned) was $161,214 in the first quarter, down 1 percent from the previous quarter and down 2 percent from the first quarter of 2011. The average sales price of these homes were 27 percent below the average sales price of homes not in the foreclosure process.
  • Pre-foreclosure homes, which are often sold via short sale, sold for an average price of $175,461 in the first quarter, down 4 percent from the previous quarter and down 10 percent from the first quarter of 2011.

“Meanwhile the average price of a bank-owned home is stabilizing and even increasing in some areas where a slowdown in REO activity over the past year has resulted in a restricted supply of REO homes available,” Moore explained. “Still, REO sales did increase on a quarterly basis in 21 states, indicating that lenders are still working through a bottleneck of unsold REO inventory in many areas.”

According to the RealtyTrac report, Chicago real estate saw a 13 percent annual increase in REO sales.

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

Leave a Comment