Foreclosures Make Up Nearly Third of Q1 Sales

Irvine, CA, June 30, 2010--Foreclosures accounted for a third of all home sales, and they sold at a nearly 30% discount in the first quarter this year, according to foreclosure tracking firm RealtyTrac.

The company said that 31% of all sales were foreclosures. And homebuyers purchasing those properties paid 27% less, on average, compared to sales of non-distressed homes.

The foreclosure sales include properties sold in short sales or after a bank repossession, known as REOs in industry terms. It does not include transfers from borrowers to banks, as in a sheriff's auction.

REOs, those homes already taken back from borrowers, drew lower prices than short sales and other pre-foreclosures. The average REO sold for 34% less than conventional sales while pre-foreclosures averaged only 15% less.

Part of the reason for the bigger price cut for REOs is that many of them come to the market in poor condition, their previous owners either unable to or unwilling to maintain them.

During 2009, more than 1.2 million property sales involved foreclosures. That grew 25% compared with the year before, and 2,500% from 2005.

"That number boggled my mind," said Rick Sharga of RealtyTrac. "A 2,500% increase over a four-year period surprised even us."