(Mark Your Calendars: RealShare REAL ESTATE 2012, March 22nd in Los Angeles).
IRVINE, CA-Sales of foreclosed and, most notably, pre-foreclosed homes are increasing as lenders become more aggressive in their push to dispose of distressed assets more quickly, says Brandon Moore, CEO of RealtyTrac, which this week released its Q4 and Year End 2011 US Foreclosure Sales Report. The report found that sales of foreclosed homes rose 4% between third- and fourth-quarter 2011 as a segment of total residential sales for the quarters.
A growing trend in major markets is lenders selling homes in pre-foreclosure, rather than waiting until the foreclosure process is complete and the property becomes bank-owned. “In the three markets we called out—Los Angeles, Phoenix and Miami—there were more pre-foreclosure sales than bank-owned sales in the [fourth] quarter,” Daren Blomquist, VP of RealtyTrac, tells GlobeSt.com. “This is more than we’ve seen in the past. The fact that we’ve seen more of them indicates that lenders are more willing to sell before a short sale.”
Lenders are demonstrating aggressive sales methods by pricing distressed assets low in attempt to attract more buyers and by proactively approving that price so that interested buyers can be confident that they’re not getting involved in a bait-and-switch situation, Blomquist continues. “Typically, the listing agent for a short sale can set a listing price that looks really attractive and low, but then buyers come in and submit offers and the bank hasn’t approved that listing price. The buyers then have to go through a round of approvals, which is the frustrating thing about buying short sales.”
More than 8,000 foreclosed properties nationwide on RealtyTrac’s website are listed for under $50,000, and Blomquist tells GlobeSt.com he foresees an increasing trend throughout the country toward more pre-foreclosure sales than REO sales in 2012.
Another factor pushing the percentage of foreclosure sales higher is that lenders have become more experienced and adept at dealing with short sales over the last couple of years and have learned how to complete these sales more effectively, Blomquist continues.
In addition, some major lenders have instituted a pilot program that offers distressed homeowners up to $20,000 cash incentive if they agree to do a short sale. “This shows that the lenders are at least in some situations very highly motivated to get the process sold as a pre-foreclosure sale rather than going through the whole foreclosure process,” Blomquist concludes.
For more information on foreclosure activity, see GlobeSt.com’s recent story titled: Foreclosure Activity Increases 3% in January.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
