Will Short Sale and REO Laguna Beach Homes for Sale keep pace with National Numbers?
In their first U.S. Foreclosure Sales Report, RealtyTrac reported that 31% of all residential home sales in the first quarter of 2010 were in some phase of the foreclosure process. These include homes for sale in default, where an NOD had been filed by the lender, or those that were already taken back by the bank and labeled “REO” or Real Estate Owned.
In comparison, the percentage of homes sold in the first quarter of 2009 that were in the foreclosure process sat at 37%. More than 1.2 million U.S. properties that sold in 2009 were in some stage of the foreclosure process.
On average, buyers who purchased a home for sale in a foreclosed status paid 27% below the average sale price of properties that were not in a distressed status.
The report noted that “Discounts on REOs are larger than discounts on pre-foreclosures, although discounts on pre-foreclosures appear to be trending higher as short sales become more common.”
There are a couple of points to keep in mind as you look at these numbers:
- The statistics reflect a large area: the entire country or an entire state. They are not broken down by County or City.
- In California, for example, the number of distressed properties in the Inland Empire where there was a large amount of investment owned properties, was higher than in some of the coastal areas such as Laguna Beach.
- In areas where there was a high percentage of vacant, REO homes and those in foreclosure, the banks may have been more motivated to close the sale on the property so that their exposure in the area was lessened.
- It may have been more financially beneficial to use the government TARP money to make deals in these higher-risk areas.
- The number of REOs may decrease in future reports. Lenders have indicated that they are more inclined to work with a short-sale home for sale situation than to take on all the added costs involved in an REO, such as attorney fees.
- Sellers of non-distressed properties are becoming more educated about their need to price their homes according to where the market is today, not what it was a couple of years ago. Many realize that they are competing with distressed properties for buyer’s money. So, keep your eyes on both “regular” and distressed properties. After all, a good price is a good price, no matter what the situation of the seller!
In another, related report, the top 50 cities were listed that had the greatest price reductions…Orange County Homes and Laguna Beach Real Estate were not on that list! On average the top 50 areas included saw average reductions from 7%-26%. The city with the most drastic reductions, which is really no surprise, was Detroit. No ocean view there!
One note to keep in mind as you look at price reductions. There are always 2 reasons for the price reductions. 1) Economically, the market has determined that the home is worth less than what seller has priced it at and 2) The seller decided to initially price the home at a higher rate than what the current market deemed appropriate – this is more a case of seller denial of current market conditions rather than an indication of overall market conditions.
It’s a very slight difference in perception, so just be sure that you don’t simply get caught up in the statistics and numbers. They can be used as a guide, but in the end, what you determine to be the perfect home and the perfect price is up to you.
As always, I invite you to allow me help you with any questions that you have. Those that have worked with me know that I’m a no B.S. straight shooter. If a home that you are interested in is overpriced – I will tell you. Similarly, if a great deal is out there I will enthusiastically share it with you!
Just Contact Me!
Until next time…
