Home Prices

Discounts on Distressed Homes Deepen

Posted on Monday, December 13, 2010

Homes in foreclosure sold at a 32 percent discount compared to non-distressed properties in the third quarter, up from 29 percent a year ago, says RealtyTrac.

Foreclosure sales fell 31 percent due to expiration of the home buyer tax credits, but RealtyTrac CEO James Saccacio says the foreclosure-processing controversy involving "robo signing" also could put a damper on demand.

The discount on bank-owned properties rose to 41 percent from 35 percent over the same period, while the discount on defaulted homes or properties slated for the auction block rose to 19 percent from 18 percent.

RealtyTrac says home seizures declined 9 percent in October from September.

Meanwhile, real estate professionals say lenders increasingly are willing to negotiate prices on foreclosed properties; and Fannie Mae now offers 3.5 percent of the sales price to cover closing fees on seized homes, among other incentives.

Source: Bloomberg, John Gittelsohn (
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