Georgia passes Nevada for highest percentage of foreclosure sales

Georgia has supplanted Nevada as the state with the highest percentage of foreclosure sales, Irvine, Calif.-based RealtyTrac reported Tuesday.

A total of 193,059 U.S. properties in some stage of foreclosure were sold during the third quarter, a 3 percent decrease from the year-ago period, the online listing service showed. That's up 21 percent from the previous quarter.

The report shows that foreclosure-related sales accounted for 19 percent of all U.S. residential sales during the quarter, about the same level as third quarter 2011.

Foreclosure sales accounted for 38 percent of all residential sales in Georgia, the highest percentage of any state, down from 41 percent in the second quarter.

Nevada was next at 31 percent, followed by Florida (26 percent), Illinois (24 percent), Michigan (24 percent) and Colorado (20 percent).

Nevada led the nation in foreclosure filings per household since 2010, but dropped to No. 5 in August as lenders backed off on notice of default filings after the robo-signing law took effect last year.

Mark Stark, owner-broker of Prudential Americana Group in Las Vegas, said sales were flat this year from a unit standpoint, but the mix of business has changed dramatically. Short sales and traditional "equity" sales increased, while REO sales were lower.

Las Vegas-based housing research firm SalesTraq found bank-owned properties made up 13 percent of all home sales in October, while short sales, or lender-approved sales for less than the principal mortgage, were 35 percent of sales.

Stark sees much of the same for 2013 with continued pressure on real estate agents to find houses for their clients houses because of low inventories.

Counter to the trend in recent years, sales of properties in preforeclosure outnumbered sales of foreclosed, bank-owned properties, according to RealtyTrac. In all, 98,125 preforeclosure sales closed during the quarter, compared with 94,934 real estate-owned sales.

The shift toward earlier disposition of distressed properties continued as both lenders and at-risk homeowners are realizing that short sales are often a better alternative than foreclosure, RealtyTrac Vice President Daren Blomquist said.

Looking at short sales that have not entered foreclosure, Las Vegas showed a 46 percent increase from the second quarter and more than double the number from a year ago.

"That really sticks out," Blomquist said. "There's not many metros with that big of an increase. It really has to do with lenders not even bothering to start foreclosure, but going straight to the short-sale route. Foreclosures are down, but it's not so much that distressed properties went away, they just went into a different bucket."

Expiration of the Mortgage Forgiveness Debt Relief Act at the end of the year could stifle short sales, Blomquist said. If the law expires as scheduled, homeowners who agree to a short sale could see their income tax jump significantly because the portion of the unpaid loan balance not covered by the short sale proceeds will be considered taxable income in many cases.

Other findings from RealtyTrac:

■ Preforeclosure sales increased 22 percent from the previous quarter and were also up 22 percent from third quarter 2011, while the average sales price decreased 3 percent from the previous quarter and was down 5 percent from a year ago.

■ REO sales increased 19 percent from the previous quarter but were still down 20 percent from the third quarter of 2011. The average REO sales price decreased 7 percent from the previous quarter but was still up 7 percent from the third quarter of 2011.

■ Homes in foreclosure or bank-owned sold at an average price that was 32 percent below the average price of a home not in foreclosure, up from a 29 percent discount in the second quarter and a 31 percent discount in the third quarter of 2011.

■ Short sales of properties not in foreclosure increased 15 percent from the previous quarter and were up 17 percent from the third quarter of 2011. They accounted for an estimated 22 percent of all residential sales, bringing the total distressed sale share to an estimated 41 percent for the quarter.

■ Nonforeclosure short sales prices in the third quarter fell short of the total amount of loans outstanding by an average of $82,312 per short sale. For all short sales, including nonforeclosure and in-foreclosure properties, the sales price was short of combined loan amounts by average of $94,896 per short sale.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.