A new report released by RealtyTrac Inc. revealed that foreclosures made up one-third of all home sales in the second quarter of 2011. Despite the fact that this share of sales is far larger than what’s expected in a healthy market, experts say foreclosure sales could have been much higher if faulty paperwork hadn’t held up repossessions.
Foreclosure Sales Too High for Healthy Market
According to the RealtyTrac data, foreclosure sales, which include homes purchases after they received a notice of default or were repossessed by lenders, made up 31 percent of all sales in the April-June quarter.
The 265,087 homes sold represent a smaller share of all sales than the previous quarter but are still six times the percentage of foreclosure sales found in a healthy housing market.
Even more, the share of this type of sale would have been even larger this spring had it not been for paperwork holdups. Currently, both state and federal lawmakers are investigating mortgage robo-signing issues that continue to plague the market.
With lawmakers and regulators fearing that homeowners could be foreclosed illegally, some lenders have not been allowed to complete the foreclosure process.
Bank-Owned Homes Sold at 40 Percent Discount
The RealtyTrac data also revealed that bank-owned homes this spring sold for 40 percent less than the average price of other homes. That’s a 10-percent increase from last year when homes were averaging a 30-percent discount.
There is no doubt that prospective homeowners are in the midst of a buyer’s market. With prices remaining low and even expected to drop further–and mortgage rates reaching near-record lows over the past several months–those who are looking to purchase a foreclosed home are likely to catch a good deal.
According to RealtyTrac data, the best states to take advantage of these deals are Nevada, Arizona and California where foreclosure sales accounted for 65 percent, 57 percent and 51 percent of all sales, respectively.
Other states that accounted for at least one-third of all sales include Colorado, Florida, Illinois, Michigan and Oregon.
