subject: Are Foreclosure Sales Going To Increase In 2012 [print this page] In 2011, the sale of foreclosed properties was significant. 1 in 4 homes that were sold in 2011 were foreclosed homes. According to Realty Trac, this is a trend that will continue way more in 2012 than it did in 2011. About 907,000 foreclosed homes were sold to third parties according to Realty Trac. Furthermore, there is likely to be more action in the pre foreclosure stage as lenders want to aggressively dispose of properties, especially as the robo signing scandal has broken out.
Fannie Mae and Freddie Mac the biggest mortgage lenders had started a pilot program whereby they want to sell off the 2500 foreclosed properties that they have on their books. This has got more than enough attention from investors that are willing to buy the properties in bulk. For many investors this is a great opportunity to get some of the best properties at a rate that is quite low or lower in comparison to the market rates. In fact there have been reports of realty wars been fought by the realtors for getting a share in the pie of the foreclosed properties especially in states such as California and Nevada that have been hit the hardest by the foreclosures.
Moreover the supply of the foreclosed properties has reduced and this isnt just about the bank owned properties or the REO. There is more emphasis on the sales that are being conducted during the pre-foreclosure stage or short sales as they are more popularly known as. In 2011, the pre foreclosure sales have increased by 15% over the previous year. In comparison the REO sales have actually decreased 12% over the previous year. Some of the big realty markets such as Miami and Los Angeles see a definitive trend towards the short sales or the pre foreclosure stage.
Moreover there are many government initiatives to cut down the cost for short sales that are taking place. In comparison foreclosures are more expensive. Banks and lenders are therefore keen to continue with the pre foreclosure sales as this is cost effective for them as well. States such as Michigan have seen more than a 100% jump in the short sales in 2011 as compared to last year.
The average cost of the properties that were sold in the pre foreclosure stage was 21% lower than that of non-foreclosed homes. This means that buying a home in short sale would cost the buyer 21% less than if they would have bought another home with same specifications. Even a REO property was retailing at an average of 36% discount. The only problem with a short sale as compared to fore closures is the fact that it takes longer for short sale to be completed. On an average, the short sale takes approximately 320 days to complete. A foreclosure can be done in half of that time period.
Currently banks have a lot on their platter and have to work through 4 million delinquent loans. This will definitely increase the sales of foreclosed homes through 2012.
