Banked-owned sales no longer a bargain | Ocala Real Estate Talk

Banked-owned sales no longer a bargain

SEATTLE ? Nov. 9, 2012 ? While ?foreclosure? remains a buzzword for bargain seekers, a study finds that the actual discount off a ?normal? price is far less than it used to be.

According to a study by Zillow, the national average discount of a real estate owned (REO) property compared to a non-REO was only 7.7 percent in September ? a sizable change from the 23.7 percent average discount that peaked nationally in August 2009 and less than the average 9.1 percent discount one year earlier.

In some areas of Florida, REOs aren?t a bargain at all. Zillow included three Florida metro areas in its analysis and claims an average REO savings of only 2.9 percent in the Miami-Fort Lauderdale market ? a significant drop from the peak of 22.7 percent in August 2008 and a notable decline year-to-year; in September 2011, a South Florida REO sold for 6.8 percent less.

In Tampa, a REO in September 2012 sold for 9 percent less than a non-REO sale, down slightly from the 9.6 percent discount one year earlier, but significantly lower than the peak 29.1 percent discount recorded in November 2008.

In Orlando, the REO discount of 4.6 percent rose slightly year-to-year; in September 2011, it was 2 percent. However, both numbers are down from the peak 24.4 percent discount for a REO recorded in January 2010.

In two cities ? Phoenix and Las Vegas ? REOs no longer come with a discount, with sale prices roughly equal to other home sales.

?The smallest foreclosure discount is found in places where competition for homes? is high, says Zillow Chief Economist Dr. Stan Humphries. ?People are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability.?

Year-over-year foreclosure discounts fell in roughly three-quarters (76.9 percent) of metro areas analyzed, and all metros are down from their peak. Nationwide, foreclosure discounts reached their height in 2008 and 2009, and in some areas peaked at more than 30 percent.

? 2012 Florida Realtors?

I?ve thought for a long time that people looking at foreclosures too easily over look condition issues and the fact that foreclosures come with a Special Warranty Deed. Prices of traditional sales have come down a lot and in many cases aren?t that much more than a foreclosure.

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