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Foreclosures Accounted for 26% of First Quarter U.S. Home Sales

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Foreclosures still an impact on home sales?

Foreclosure home sales remain popular with buyers as shown by the latest sales report. Approximately one in four homes that were sold in the first quarter of 2012 were at some stage of foreclosure. They were in default, had an auction date set or were already owned by the bank.

This is an increase from both the previous quarter and the previous year, according to Realty Trac. These homes did sell for 27% less, on average, than a home that was not in the foreclosure process. Short sales were very popular during this time, Brandon Moore of Realty Trac states.

Short sales, or pre-foreclosure sales, were at a three year high during this quarter which may be due in part to the fact that the sale price of these homes dropped to record lows. These sales were up 25% from the same period one year earlier. Out of all homes sold in the first quarter of the year, 12% were short sales.

When this is the case, the person selling the home owes more than the home is worth. He or she works with the bank to allow the seller to take a price lower than what is owed and the bank takes the loss. The average price of a short sale home is currently $175,461. This is the lowest it has been since Realty Trac started tracking distressed properties in 2005.

Why would a bank agree to this? When a home is sold through a short sale rather than a foreclosure the bank averages 20% more. This type of sale takes less time and the bank does not have to pay insurance or property taxes on the home also. For this reason, lenders are willing to take less money for a short sale.

During the same period, sales of properties owned by banks fell. The amount of sales of this type fell by 15% when looked at year-over-year. Only 123,778 homes of this type sold and this accounted for 14% of all home sales for the first quarter of the year.

The amount of sales did vary by state. Nevada saw the most distressed property sales. Georgia and California were not far behind.


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