A quarter of all Q3 sales were foreclosures

The latest report on foreclosures showed that demand for foreclosed properties appeared to dip in the third quarter, though moving into distressed homes was still popular among buyers looking for significant discounts.

RealtyTrac reported that there were 188,748 distressed properties in the third quarter that were sold to third parties, down 25 percent from the previous quarter and 31 percent from a year earlier. At the same time, those who were moving into those properties enjoyed average discounts greater than 32 percent compared to non-foreclosure homes, up from 26 percent the previous quarter and 29 percent a year earlier. Overall, 25 percent of home sales during the third quarter came on distressed properties.

The 32 percent figure was the highest average discount RealtyTrac has reported since the fourth quarter of 2005. Still, concerns over the integrity of foreclosure sales may have deterred many buyers in light of the recent documentation scandal, said analysts.

"The foreclosure-processing controversy, which was brought to light at the very end of the third quarter, could chill demand even further - particularly for foreclosure properties," said RealtyTrac CEO James Saccacio, calling for a "quick but responsible resolution to that issue."

Other data has shown reduced demand for foreclosed properties. Campbell Surveys said recently 14 percent of buyers in October wouldn't even look at a distressed property when shopping for a home.
 

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