RealtyTrac reports that the nature of distressed property sales is evolving. In its most recent report on market and distressed sales, the company noted that changing economics are increasing the reliance on more traditional third party purchases at foreclosure auctions rather than the lender/borrower negotiated sale at less than the outstanding loan balance.
RealtyTrac has adopted a new methodology for accounting for short sales with the distressed and market rate sales report released Monday. The company now applies a calculation to take into account the true loan balance secured by a home at the time of the sale, and additionally separating out of the short sale classification properties that sell at a public foreclosure auction short of the loan balance. It is also including a new category of distressed sale in the report: third-party foreclosure auction sales, which represent sales at the public foreclosure auction to third parties other than the foreclosing lender.
Sales in the new category of auction sales to a third party represented 2.5 percent of sales compared to 2.8 percent in September and nearly twice the 1.3 percent share a year earlier. Significant numbers of these auction sales occurred in Orlando and Jacksonville, Florida, each at 8.6 percent and Columbia, South Carolina at 8.1 percent.