Fewer Foreclosures May Bring Bigger Deals

Banks may be showing greater motivation to price at a discount some foreclosed homes they’ve had on their books for a long time, unlocking potential bigger discounts for investors, says Daren Blomquist, vice president at RealtyTrac.

As foreclosure timelines swell, some banks are taking possession of homes that have stood vacant for three years or even more, in some cases.

“Many of the properties that are in foreclosure in 2015 have been in the [foreclosure] process for years and many are likely to be in poor condition … Investors may be able to get a bigger discount because banks may be more highly motivated to sell,” Blomquist says.  

The average price of a distressed or foreclosed property in May was 40 percent below the average price of a non-distressed property, Blomquist says, noting that is the largest price disparity that RealtyTrac has ever noted in its surveys.

Many of the homes have sat vacant for years. Foreclosures completed in the second quarter of 2015, on average, were in foreclosure a record amount of 629 days. That marks the longest average time to foreclose since RealtyTrac began tracking in the first quarter of 2007.

The states with the longest foreclosure timelines in May were:

1. New Jersey: 1,206 days
2. Hawaii: 1,060 days
3. Montana: 1,028 days
4. New York: 1,000 days
5. Florida: 989 days

Source: “Why Fewer Foreclosures Means Better Foreclosure Deals,” RealtyTrac (July 15, 2015)