Like all things in real estate, foreclosures are a local phenomenon.  The top 10 foreclosure states accounted for more than 70 percent of all foreclosures nationwide last quarter.

Foreclosures Are Concentrated, But "Spreading Out"

One year ago, this blog took foreclosure data from RealtyTrac and ran Pareto Principle graphs on it. The Pareto Principle is also known as the 80/20 Rule.

It states that 80 percent of the effects come from 20 percent of the causes.

The Pareto Principle held true because, at the time, the national REO system was getting pumped full of new property at a furious pace by the likes of California, Florida and Arizona.

Today, however, the 80/20 Rule no longer holds.

In Q2 2010, the 10 most foreclosure-heavy states now account for just 70 percent of foreclosures.  That's a big drop for a 12-month period and based on RealtyTrac data, foreclosures haven't been this un-concentrated since 2007.

Foreclosure Volume Is Falling -- Especially In Ohio

The "spreading out" of foreclosures nationwide is a signal that REO volume is cresting. The assertion is supported by RealtyTrac's raw numbers, too.  Although foreclosure-related filings topped 300,000 for the 16th straight month, the sum is down 3 percent from May and 7 percent from last June.

Foreclosure filings have remained mostly flat since late last year with some states showing improvement. Ohio is one of them.  Foreclosures in Ohio are down 8% from Q1 2010, and down 2 percent from Q2 2009

Also interesting is the trend among "foreclosure hotspots" toward lesser overall activity.  Quarterly foreclosure rates are down in California, Nevada, Arizona and Florida -- 4 concentrated areas of activity through 2008-2009.

Finding A Foreclosure Deal Online

The National Association of Realtors® says there's a "distressed home discount" of roughly 15 percent.  That can mean excellent savings if you find REO in decent condition. Unfortunately, though, not every REO is in decent condition (and sometimes you find out too late).

Buying foreclosed homes is different from buying a home resale, or new construction.

For one, distressed properties are often sold as-is and may have defects that render them "un-lendable".  Bad roofing or faulty plumbing comes to mind.  In addition, when you're buying a home in foreclosure, there's no such thing as a "quick closing".

Navigating bank REO departments can be a real nightmare for the unexperienced.

When you're buying a home in foreclosure, you should either (1) really know what you're doing, (2) have a terrific real estate agent, or, mo' better, both. You should also know where to find "the deals".

DIY-types may like these 3 sites. Each offers free, 7-day memberships. After 7 days, pay to extend your membership, or you quit and pay nothing.

1. RealtyTrac offers free access to foreclosure listings
2. Foreclosure.com offers free access to foreclosure listings
3. HUDForeclosed.com offers free access to foreclosure listings

7 days should be enough time to get a feel for the REO market in your area.

Get A Bank-Owned REO Pre-Approval Letter

Do your foreclosure research and see what you like. Then, get your bank-owned REO pre-approval letter, call me and I'll take care of it for you.  I'm experienced with short sales and REOs and my bank closes loans quickly.

Plus,I can finance homes for investors with more than 4 mortgages.

It's not your imagination -- there's been a surge in bank-owned homes this year.

According to foreclosure-tracking firm RealtyTrac.com, the number of bank repossessions climbed to a record level for the second straight month in May.  More than 93,000 were repossessed nationwide.

Foreclosures Plunge In Ohio, Illinois

Even as repossessions surge, the total number of foreclosure-related activities -- a sum of REO, default notices, and foreclosure auctions -- appears to be cresting.  After falling for the first time in recorded history in April, activity rose by a meager 1 one percent in May.

The top-side of the Foreclosure Funnel isn't filling so fast these days.

That said, total activity still topped 300,000 for the 15th straight month and distressed homes accounted for 33 percent of April's home resales.

There's other noteworthy statistics in the RealtyTrac report:

• Ohio foreclosures are down 13% from April 2010, and down 8 percent May 2009
• Illinois foreclosures are down 20% from April 2010, and up 38% from May 2009
• Foreclosure rates are down in California, Nevada, Arizona and Florida -- 4 concentrated areas of activity through 2008-2009

In fact, there's even a trend among "foreclosure hotspots" toward lesser overall activity.  Of the Top 10 metropolitan areas for foreclosure-related activity, only one showed an increase last month.

Areas like Las Vegas, Cape Coral-Fort Myers, Phoenix and Reno all posted declines.

Looking For Foreclosure Deals Online

The National Association of Realtors® says the typical "distressed home discount" ranges near 15 percent.  That's excellent value if you can find REO in decent condition.

It's also reason for caution. Buying bank-owned REO in Cincinnati is different from buying a "regular" home.

First, distressed properties tend to be sold as-is and may feature defects that render them "un-lendable".  Things like a bad roof, or faulty plumbing.  Second, when you're buying a home from a bank's REO department, getting a "quick closing" is next-to-impossible.

You have to either (1) know what you're doing, (2) have a terrific real estate agent, or, most likely, both.

Furthermore, you have to know where to find "the deals".

If you're the DIY-type, each of these sites offer free, 7-day memberships to their respective foreclosure databases. After 7 days, you can choose to pay to extend your membership, or you can quit and pay nothing.

1. RealtyTrac offers free access to foreclosure listings
2. Foreclosure.com offers free access to foreclosure listings
3. HUDForeclosed.com offers free access to foreclosure listings

7 days can be more than enough time to find for what you're looking. Then, you can start the negotiation process.

Get A Pre-Approval Letter For A Foreclosure

Do your foreclosure research and see you like. Then, when you need your pre-approval letter, call me and I'll take care of it for you.  I'm experienced with short sales and REOs and my bank can close loans quickly.

Plus, my bank offers financing for investors with more than 4 mortgages.

There's 11 days left to claim the government's home buyer tax credit and if you're among the thousands of buyers with their sights on foreclosures, the timing may be perfect.

257,000 New Bank REOs Since January

Through the first 3 months of the year, banks have reclaimed more than 257,000 homes -- an all-time quarterly record, according to RealtyTrac. However, your ability to find a foreclosed home in your area depends on where "your area" is.

Foreclosures are disproportionately distributed.

On a per household basis, Nevada leads the nation by far. Its foreclosure concentration is more than 4 times the national average and two times as high as the next two states on the list -- California and Arizona. Florida is only a hair behind.

Clearly, buying REO in these states will give you more product from which to choose, but there's ample supply in Ohio and Illinois, too.  Both are pacing just short of the 1-per-352 households national average.

Buying REO Ain't All Sunshine And Flowers

Regardless of where you’re buying, foreclosures and REO are making a profound impact on pricing and product. There’s excellent value if you know where to look, but you also need to know how to look.

A few pointers on foreclosures:

1. Buying bank-owned homes can take 120 days to close or more. This could preclude your ability to claim the tax credit.
2. Foreclosures aren’t always listed for sale publicly. Some inventory is privately-held and requires "knowing a guy".
3. Bank-owned homes are often sold "as is". There may be defects that render the homes mortgage-ineligible.

The REO market is slightly different from the “existing home” resale market. If you have an interest in buying REO, I recommend working with an experienced real estate agent when you're ready to make your bid.

Finding REO Without A Real Estate Agent

Maybe you want to search for foreclosures without the help of a real estate agent.  If you do, my clients have told me that there 3 websites, in particular, that are helpful. Each site offers a free, 7-day pass -- usually enough to help you scout the market.

1. RealtyTrac offers free access to foreclosure listings
2. Foreclosure.com offers free access to foreclosure listings
3. HUDForeclosed.com offers free access to foreclosure listings

And, when you see something you like, then you can talk to your real estate agent about it. Negotiating for a bank-owned home is different from negotiating for a "regular" home.  You're going to want somebody experienced on your side.

Get A Pre-Approval Letter For A Foreclosure

High numbers of REO have created terrific opportunities for buyers. Do your own research search and see you like. Then, when you're in need of a pre-approval letter, call me and I'll take care of you.  I'm experienced with short sales and REOs and would be happy arrange for your mortgage.

My rates are very good and my bank can close loans quickly.

Foreclosure-related filings topped 300,000 last month, according to foreclosure-tracking firm RealtyTrac.

Nationwide, 1 in every 418 households was served some form of foreclosure notice but -- as always -- foreclosures are more common in some areas than others.

Many Foreclosures, Few States

In February 2010, 4 states accounted for more than half of the country's foreclosure-related activity:

• California : 22.2 percent
• Florida : 17.5 percent
• Michigan : 6.5 percent
• Illinois : 5.6 percent

Combined, these four states represent 56% of foreclosures but just 25% of the population. Clearly, foreclosures are a local phenomenon.

They're also the spring season's biggest story.

Foreclosures Are A Growing Percentage Of Total Sales

Because foreclosures and other "distressed" homes tend to sell at a discount, they now account for 38 of all home resales.  This is up from 33 percent in the month prior.

For first-time homebuyers, move-up homebuyers, and even for investors with more than 4 properties, buying foreclosures in Cincinnati and Chicago has never been easier.

Foreclosures are big business and new listings are available 24/7.

Where To Find Foreclosures Online For Free

My clients have told me that there 3 websites, in particular, are a good place to start for foreclosures, if that's what interests you. Each site offers a free, 7-day pass and that's usually enough to help you scout the market for something worth buying.

1. RealtyTrac offers free access to foreclosure listings
2. Foreclosure.com offers free access to foreclosure listings
3. HUDForeclosed.com offers free access to foreclosure listings

Then, when you see something you like, talk to your real estate agent about it, or to a skilled foreclosure-specializing agent. Negotiating for a bank-owned home is different from negotiating for a "regular" home.

You're going to want somebody experienced on your side.

How To Get Pre-Approved For A Foreclosure

High foreclosure levels have led to interesting buying opportunities. Do your search and see what comes up for you locally. Then, when you're ready for your pre-approval letter, call me and I'll take care of you.  I'm experienced with short sales and REOs and would be happy arrange for your mortgage.

My rates are very good and my bank can close loans quickly.