As Foreclosure Volume Shrinks, Homes Sell At 20% Discounts

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Foreclosure rates are falling.

40% Of Existing Home Sales

According to foreclosure-tracking firm RealtyTrac, monthly foreclosure filings fell 2 percent in May to just under 215,000 filings nationwide.

On an annual basis, foreclosure counts have now dropped over 16 consecutive months, dating back to January 2010.

A foreclosure filing is defined as any one of the following: a default notice, a scheduled auction, or a bank repossession.

Total bank repossessions fell last month, too. These are "foreclosed homes" that first-time and move-up buyers, and investors look to purchase from banks.

Distressed properties such as these accounted for close to 40% of home resales in April. Many sell at steep discounts, too.

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Foreclosure Activity Unbalanced By State

Foreclosure filings may be fading, but that's a national trend. Locally, it's different.

In Virginia, for example, foreclosure filings rose 20% from April. The same is true for Maryland -- a 20% increase.  And, in Washington DC -- the area between Virginia and Maryland -- filings rose 36 percent.

Yet, several states continue to dominate the national foreclosure landscape.

Just 6 states were home to more than half of the nation foreclosure filings in May.  Together, those six states -- California, Michigan, Arizona, Florida, Georgia and Texas -- represent one-third of the U.S. population.

The distribution is disproportionate.

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Buy A Foreclosure, Get A 20 Percent Discount?

As a home buyer, foreclosures matter. Distressed properties a large, growing part of the housing market and often sell at steep discounts; in some markets, as much as 20 percent less than a comparable, non-distressed home.

Foreclosed homes can be a great "deal", therefore, but only if you've done your homework. It's different to buy a bank-owned home than to buy from "a person". The contracts and negotiation processes are different, and the homes are sometimes sold with defects.

If you plan to buy a foreclosure, therefore, speak to a real estate pro first. With foreclosures, there's a lot you can learn online, but when it's time to submit an actual bid for the place, you'll want an experienced agent on your side.

(Post adapted from Bring the Blog)