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Distressed Sales Reach Near Decade Low

Foreclosure Four BH

Distressed sales are at a nine-year low according to information released by ATTOM Data Solutions.

ATTOM’s report showed 16.2 percent of single family home and condo sales in 2016 were distressed sales. ATTOM defines “distressed sales” as REO sales, short sales, or foreclosure auctions sold to third-party buyers. Last year’s distressed sales came in at 18.8 percent, making the 2016 levels the lowest since 2007.

Among 193 metropolitan statistical areas with a population of 200,000 or more and at least 100 distressed sales in 2016, those with the highest share of total distressed sales were Atlantic City, New Jersey at 43.8 percent, Hagerstown-Martinsburg, Maryland-West Virginia at 33.2 percent, Rockford, Illinois at 29.2 percent, Montgomery, Alabama at 29.2 percent, and Baltimore, Maryland at 28.0 percent.

REO sales accounted for 8 percent of all sales in 2016, down from 10 percent in 2015 to the lowest level since 2006.

Short sales, accounted for 5.5 percent of all home sales in 2016, down from 6.0 percent in 2015 to the lowest level since 2008.

Foreclosure auction sales selling to third party investors, not including those going back to the foreclosing lender, accounted for 2.8 percent of all home sales in 2016, down from 2.9 percent in 2015 to the lowest level since 2007—a nine-year low.

“The housing market hit several important milestones in 2016, with distressed sales at a nine-year low and home prices at a 10-year high, just barely below the pre-recession peak in 2006,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “This was all good news for home sellers, who realized their biggest average profits since purchase nationwide in 2016. Even distressed property sellers are benefitting from this hot seller’s market, with a record-high share of homes at foreclosure auction being purchased by third-party buyers rather than reverting back to the foreclosing bank.”

For those working in the industry, the shifting marketplace has also impacted how they do business. "There are several main things we have seen develop in the last five years in the world of short sales," said Emerson Swalwell, Chairman and Founder of the Swalwell Group. "First, short sales are harder to do. They take more time and are much more labor intensive. Second, short sales on average take longer. We estimate short sales take on average five to eight months."

However, despite the contracting market, Swalwell says that short sale practitioners like himself are still able to find their niche, and in some ways, the short sale process is easier now that it once was. "Five years ago, we only succeeded on 70 percent of all short sales. Today we succeed on 90 percent. Maybe we are better or maybe the servicers are better or maybe both of us are better at getting short sales to the closing table."

About Author: Phil Banker

Phil Banker began his career in journalism after graduating from the University of North Texas. He has covered a number of communities across Texas and southern Oklahoma, writing news and sports for publications including the Ardmoreite, Ennis Daily News and the Plano Star-Courier. He is currently a contributor to DS News and The MReport.
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