Short Sale Transactions Soar 2nd Quarter 2011 RealtyTrac

The second quarter of 2011 U.S. Foreclosure Sales Report was released from Realty Trac. The sales of homes that were in some stage of foreclosure or bank owned accounted for 31 percent of all U.S. residential sales. Nationally is down from 36% in the first quarter of the year, but up 24% from the 2nd quarter of 2010.

With average prices on distressed real estate trending down and average discounts trending up, this report is clearly good news for well-positioned buyers and investors looking for bargain real estate that will build them wealth in the long term and often cash flow as rental real estate in the short term, said James Saccacio chief executive officer of RealtyTrac. Maybe less evident, however, is the good news in this report for distressed homeowners looking to sell, and even lenders saddled with large portfolios of delinquent loans.

The jump in pre-foreclosure sales volume coupled with bigger discounts on pre-foreclosures and a shorter average time to sell pre-foreclosures all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales at least in some areas, Saccacio continued. This gives distressed homeowners who do not qualify for loan modification or refinancing  or who are not interested in those options and want to sell  a better chance of completing a short sale to avoid foreclosure. Streamlined short sales also give lenders the opportunity to more pre-emptively purge non-performing loans from their portfolios and avoid the long, costly and increasingly messy process of foreclosure and the subsequent sale of an REO  which may end up selling for a lower price than it would have as a pre-foreclosure short sale and in the meantime further stresses already overloaded REO departments.

Third parties purchased a total of 69,897 homes in foreclosure or bank owned in California during the second quarter, 51 percent of all sales in the state. Foreclosure-related sales in California increased 12 percent from the first quarter but were virtually unchanged from the second quarter of 2010.