Sales of properties in the foreclosure process but not yet foreclosed — typically short sales — hit a record high nationwide in the first quarter of 2012, according to the RealtyTrac U.S. Foreclosure Sales Report released today.
A total of 109,521 of these pre-foreclosure sales closed in the first quarter nationwide, a 16 percent increase from the previous quarter and a 25 percent increase from the first quarter of 2011. It was the highest quarterly total since the first quarter of 2009, when RealtyTrac shows 128,220 pre-foreclosure sales nationwide.
The increase in pre-foreclosure sales shows that lenders are becoming more willing and able to execute short sales. More willing because the foreclosure process has become increasingly lengthy and littered with potential minefields for lenders. More able because after a few years of dabbling in short sales, lenders finally have systems and procedures in place to more efficiently process those short sales.
Short Sale Surge Predicted
This is the verification of a trend we first noticed in the January short sale numbers. It was such a stark trend that we issued a special report back in April titled A Building Wave of Short Sales where we dug into the pre-foreclosure sales numbers by state, metro area and even lender.
According to the first quarter report, states with the biggest year-over-year increase in pre-foreclosure sales included Wisconsin (94 percent), Michigan (81 percent), Georgia (80 percent), Texas (46 percent), and Illinois (46 percent).
Among the nation’s 20 largest metropolitan statistical areas, those with the biggest annual increases in pre-foreclosure sales were Atlanta (78 percent), Detroit (75 percent), San Antonio (74 percent), Sacramento (70 percent), and Dallas (69 percent).
In 12 states, pre-foreclosure sales actually outnumbered sales of bank-owned properties (REOs), a reversal of the pattern in previous quarters and years. Nationwide, REO sales were down 15 percent annually. If the twin trends of decreasing REO sales and increasing pre-foreclosure sales continues, pre-foreclosure sales will outnumber REO sales nationwide in the second quarter of 2012.
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