NEW YORK (CNNMoney.com) -- Foreclosed properties are selling at a discount that can only be described as HUGE!
Homes in foreclosure sold for 32% less than homes not in foreclosure during the third quarter, according to a report released Thursday by RealtyTrac. The biggest average discount for any state was in Ohio, where foreclosures went for 45% below non-foreclosure sales.
That was, according to company CEO James Saccacio, the biggest disparity since late 2005.
"With foreclosure sales, you have highly motivated sellers," said Daren Blomquist, a spokesman for RealtyTrac.
The deals were even better for buyers who picked up a home that had been repossessed by the bank (known as REOs in industry lingo). Prices on the nearly 114,000 REOs sold during the quarter were a whopping 41% lower on average than non-foreclosed homes sold.
That means you could get a $200,000 house for $118,000.
Blomquist said less-than-mint conditions of many REOs was a major factor in their lower prices.
That said, it may be telling that the average price of homes sold rose 6.4% from the previous quarter to an average of about $250,000, while distressed property prices fell 2.5% to $170,000.
The foreclosure discount may have ballooned because home sales have dropped since the homebuyer tax credit ended and more foreclosures came on the market during the quarter. That meant buyers had plenty of options so homes not priced to move could sit on the market.
"It's the time value of money," said Duane LeGate of House Buyer Network, which puts together short sellers with homebuyers. "Banks get an REO, they price it and nothing happens. Costs mount up. They get a low-ball offer and they take it."
By taking a low offer instead of sitting with the house for months and paying property taxes, heat, utilities and maintenance, they cut their losses. Whereas as regular home seller can often wait for a better offer.
Even with the bargain prices, the number of REO sales completed during the quarter plunged by about 25%. However, overall home sales also dropped, so the market share of foreclosures stayed about the same.
In Nevada, 54% of all homes sold were REOs or short sales. That was the highest percentage of any state but a slight decline from the second quarter, when 56% of sales were foreclosures.
Arizona (47%), California (40%) and Florida (37%) also had high foreclosure sales. More surprising was that they accounted for 35% of all Massachusetts purchases.
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