WASHINGTON (MNI) – The following is the text of the RealtyTrac
third quarter report on U.S. foreclosure sales report published
Thursday:

RealtyTrac (www.realtytrac.com), the leading online marketplace for
foreclosure properties, today released its Q3 2012 U.S. Foreclosure &
Short Sales Report, which shows a total of 193,059 U.S. properties in
some stage of foreclosure or bank-owned (REO) were sold during the third
quarter, an increase of 21 percent from the previous quarter, but still
down 3 percent from the third quarter of 2011.

The report also shows that foreclosure-related sales accounted for
19 percent of all U.S. residential sales during the third quarter – down
from 20 percent in the previous quarter but the same level as in the
third quarter of 2011.

Counter to the trend in recent years, sales of properties in some
stage of foreclosure (pre-foreclosure sales) outnumbered sales of
foreclosed, bank-owned properties in the third quarter. A total of
98,125 pre-foreclosure sales occurred during the quarter compared to a
total of 94,934 REO sales.

Other high-level findings from the report:

– Pre-foreclosure sales increased 22 percent from the previous
quarter and were also up 22 percent from the third quarter of 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 the foreclosure process
increased 15 percent from the previous quarter and were up 17 percent
from the third quarter of 2011. These non-foreclosure short sales
accounted for an estimated 22 percent of all residential sales, bringing
the total distressed sale share to an estimated 41 percent for the
quarter.

– Non-foreclosure 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 non-foreclosure and
in-foreclosure properties, the sales price was short of combined loan
amounts by average of $94,896 per short sale.

“The shift toward earlier disposition of distressed properties
continued in the third quarter as both lenders and at-risk homeowners
are realizing that short sales are often a better alternative than
foreclosure,” said Daren Blomquist, vice president of RealtyTrac.
“However, the scheduled expiration of the Mortgage Forgiveness Debt
Relief Act at the end of this year could stifle this trend toward short
sales. If that 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.

“The prospect of being taxed on potentially tens or hundreds of
thousands of dollars in additional income may motivate more distressed
homeowners to forgo a short sale and allow the home to be foreclosed,”
continued Blomquist. “Additionally, if the mortgage interest deduction
is eliminated due to the fiscal cliff quagmire, it would give many
underwater and otherwise distressed homeowners one less reason to hang
on to their homes.”

Pre-foreclosure sales increase from previous quarter and a year ago

Third parties purchased a total of 98,125 pre-foreclosure
residential properties – in default or scheduled for auction – during
the third quarter, an increase of 22 percent from the previous quarter
and also an increase of 22 percent from the third quarter of 2011.
Pre-foreclosure sales accounted for 10 percent of all sales during the
quarter, the same as the previous quarter but up from 8 percent of all
sales in the third quarter of 2011.

Pre-foreclosure properties sold for an average price of $191,025 in
the third quarter, down 3 percent from the second quarter and down 5
percent from the third quarter of 2011. The average sales price of a
pre-foreclosure residential property in the third quarter was 27 percent
below the average sales price of a non-foreclosure residential property,
up from a 25 percent discount in the previous quarter and a 19 percent
discount in the third quarter of 2011.

Pre-foreclosure homes that sold in the third quarter took an
average of 359 days to sell after starting the foreclosure process, up
from an average of 319 days in the previous quarter and up from an
average of 318 days in the third quarter of 2011.

REO sales spike from previous quarter, still down from a year ago

Third parties purchased a total of 94,934 bank-owned (REO)
residential properties in the third quarter, an increase of 19 percent
from the previous quarter but down 20 percent from the third quarter of
2011. REO sales accounted for 10 percent of all residential sales during
the quarter, the same as in the second quarter but down from 11 percent
of sales in the third quarter of 2011.

REOs sold for an average price of $161,954 in the third quarter,
down 7 percent from the second quarter but up 7 percent from the third
quarter of 2011. The average sales price of a bank-owned home in the
third quarter was 38 percent below the average price of a
non-foreclosure home, up from a 33 percent discount in the second
quarter but down from a 39 percent discount in the third quarter of
2011.

REOs that sold in the third quarter took an average of 186 days to
sell after being foreclosed, down from 195 days in the second quarter
and 193 days in the third quarter of 2011.

Non-foreclosure short sales increase from previous quarter and a
year ago

Short sales (where the sales price was below the estimated amount
of all outstanding loans for a given property) of properties not in
foreclosure increased 15 percent from the previous quarter and were up
17 percent from the third quarter of 2011.

These non-foreclosure short sales accounted for an estimated 22
percent of all residential sales during the third quarter. When combined
with the foreclosure sales share of 19 percent, that brought the total
distressed sales share for the quarter to an estimated 41 percent of all
residential sales.

On average, these non-foreclosure short sales had a final sales
price that was $82,312 below the combined amount of outstanding loans
for the property being sold. For all short sales, including both
non-foreclosure and in-foreclosure, the final sales price was on average
$94,896 short of the loan amount.

Georgia, California, Arizona post highest percentage of foreclosure
sales

Foreclosure sales accounted for 38 percent of all residential sales
in Georgia, the highest percentage of any state during the third quarter
but down from 41 percent of all sales in the second quarter.
Pre-foreclosure sales in Georgia increased 40 percent on a
year-over-year basis and REO sales increased 4 percent. Non-foreclosure
short sales in Georgia increased 32 percent on a year-over-year basis
and accounted for an estimated 18 percent of all residential sales in
the third quarter.

California foreclosure-related sales decreased 12 percent on a
year-over-year basis, but those sales still accounted for 36 percent of
all residential sales, the second highest percentage of any state.
California pre-foreclosure sales increased 17 percent on a
year-over-year basis while REO sales were down 37 percent.
Non-foreclosure short sales in California increased 20 percent on a
year-over-year basis and accounted for an estimated 14 percent of all
residential sales in the third quarter.

Foreclosure-related sales accounted for 34 percent of all
residential sales in Arizona, the third highest percentage of any state
despite a 28 percent year-over-year decrease. Pre-foreclosure sales were
still up 6 percent on a year-over-year basis in Arizona, but REO sales
decreased 49 percent from a year ago. Non-foreclosure short sales in
Arizona increased 12 percent on a year-over-year basis and accounted for
an estimated 16 percent of all residential sales during the third
quarter.

Other states where foreclosure-related sales accounted for at least
20 percent of all sales were Nevada (31 percent), Florida (26 percent),
Illinois (24 percent), Michigan (24 percent), and Colorado (20 percent).

** MNI Washington Bureau: 202-371-2121 **

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