The Real Estate Bloggers

Posted: 16 Dec 2010 06:40 AM PST

Stressed Bargain hunters of the world must love seeing this.

Home sellers that know this fact must be squirming in their seats in abject fear.

Foreclosures are selling at a 32 percent discount on homes compared to those in the resale market according to RealtyTrac.

If that does not grab you, lets rephrase it and put it into real numbers. Say you are looking to sell your $200,000 house. If you live in an area where there are lots of foreclosures, say the United States of America, you probably have some competition with foreclosures selling at the same time. The average price of the foreclosed homes competing against you is $136,000. So a buyer will have to decide to buy your 200,000 home over the foreclosure.

But wait, it gets worse. The foreclosure guy who is trying to sell his house before he loses it has competition. The bank that owns 30 homes in the community that they have already foreclosed upon are trying to get rid of their inventory and they are ready to deal. The average discount off of a retail home is 41%.

So let’s recap:

You are trying to sell your home for $200,000.
The guy getting foreclosed upon is trying to sell the same home for $136,000.
The bank trying to get rid of their model of your home they have already foreclosed upon is selling for $118,000.

And that is not all of the fun. The buyers then must decide on the risk they will absorb. Your home has to be in pristine condition to sell at your asking price. They know the foreclosure has some defects due to no money for maintenance. The buyers also know that the bank owned property has been empty and that deteriorates a home so they will be facing some issues.

So now the buyers who typically just want to buy a home to live in have to make some tough choices which slows down their buying process.

Fun times to sell a house, isn’t it… It is amazing there are any real estate agents that have their sanity left.

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The Foreclosure Discount is 32 Percent