Short Sales Priced to Sell More Quickly

This is the fourth article in a series spotlighting short sale trends in early 2012, which seem to indicate that short sale volume is on the rise while short sale prices are trending lower β€” a good mix  for prospective buyers and investors. This series is largely based on a short sale reportissued by RealtyTrac for a special live broadcast hosted by the Charfen Institute on April 19. Download the full RealtyTrac report.

It appears that lenders are finally realizing short sales will sell faster if they are priced correctly.

The average price of a pre-foreclosure sale property nationwide was $184,221 in the fourth quarter of 2011, down 3.45 percent from the previous quarter and down 11.26 percent from the fourth quarter. While dropping prices are never a great trend in a housing market, they may be necessary in some markets to attract buyers.

This trend in lower sales prices for short sales continued in January, when the average pre-foreclosure sales price was $174,120, down 4 percent from December and down 10 percent from January 2011.

Not surprisingly, a lower average price for short sales is also resulting in a bigger discount when compared to the average sales prices of non-distressed homes. In January, the average sales price of a pre-foreclosure home was 21 percent below the average price of a home not in foreclosure, compared to an average discount of 20 percent in December and an average discount of 17 percent in January 2011.

In states where the pre-foreclosure sales discount is above the national average of 21 percent, lenders may be more aggressively approving short sales.

The more aggressive pricing on pre-foreclosure sales is not only allowing lenders to sell more short sales, it’s also allowing those short sales to happen more quickly.

The average number of days it takes a pre-foreclosure property to sell has slowly started to turn the corner for the last two quarters after hitting a peak of 318 days in the third quarter of 2011. Please note, this is the average number of days from the time a property starts the foreclosure process to when it sells as a pre-foreclosure.

Meanwhile, the average time to sell a bank-owned property has remained relatively consistent during that same time period, even trending down slightly from 186 days in Q1 2007 to 178 days in Q1 2012.

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Other Articles in Series
Will Short Sales Finally Save the Housing Market?
A Shift Toward Short Sales in 2012
A Short Sale Tsunami Possible in 2012

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