Wednesday, July 7, 2010

Foreclosed Homes Sell at 27% Discount; More Foreclosures on the Way

Homes in the foreclosure process sold at an average 27 percent discount in Q1, according to RealtyTrac Inc. Almost a third of all U.S. transactions involved properties in some stage of mortgage distress.

A total of 232,959 homes sold in the period had received a default or auction notice or were seized by banks, RealtyTrac said in a report.

That’s down 14 percent from the fourth quarter and 33 percent from the peak a year earlier. The average price of a distressed property, according to RealtyTrac, was $171,971.

“The discount will probably stay between 25 percent and 30 percent as lenders carefully manage the number of new foreclosure actions in order to avoid flooding the market,” Rick Sharga, RealtyTrac’s senior vice president for marketing, said in an interview with Bloomberg.

“We’re clearly creating more properties that will be sold at distressed prices than the market is absorbing,” Sharga said. There were more than 250,000 new bank seizures in the first quarter.

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