31% of all residential sales are due to foreclosures.

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RealtyTrac, based in Denver released its first U.S. Foreclosure Sales Report, which shows that foreclosure (home in some stage of foreclosure) accounted for 31% of all residential sales in the first quarter of 2010, and that the average sales price of properties that sold while in some stage of foreclosure was nearly 27% below the average sales price of properties not in foreclosure.

“First-time home buyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts,” said James J. Saccacio, chief executive officer of RealtyTrac.

More than 1.2 million U.S. properties in some stage of foreclosure sold in 2009, an increase of 25% from 2008 and an increase of nearly 327% from 2007. Total foreclosures in 2009 were up more than 1,100% from 2006 and up more than 2,500% from 2005. Foreclosures accounted for 29% of all sales in 2009, up from 23% in 2008 and up from 6% in 2007.

Nevada, California and Arizona had the highest percentage of foreclosure sales in the first quarter of 2010. Foreclosures accounted for 64% of all sales in Nevada in the first quarter, the highest percentage of any state.

California posted the second highest percentage, with foreclosures accounting for 51% of all sales there in the first quarter. Arizona had the third highest percentage in the first quarter, with foreclosures accounting for half of all sales. Other states where foreclosures accounted for at least 1/3 of all sales were Florida, Georgia, Idaho, Illinois, Massachusetts, Michigan, Oregon, and Rhode Island.

Kentucky, Illinois and Ohio have the best foreclosure deals. The average sales price of properties that sold while in some stage of foreclosure in the first quarter was 39% below the average sales price of properties not in foreclosure in Kentucky, Illinois and Ohio. The average overall foreclosure discount was at least 35% in California, DC, New Jersey, and Pennsylvania.

The biggest discount on bank-owned properties was in New York, where the average sales price for REOs was 52% below the average sales price for properties not in foreclosure. The biggest discount on pre-foreclosure properties was in Rhode Island, where the average sales price for properties in default or scheduled for auction was 33% below the average sales price for properties not in foreclosure.

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The mistaken belief that “as is” sales do not require a home inspection would explain the drop, since most of these sales fall under this category.

How about a “Nick Gromicko and Rob London” article widely published that warns home buyers of the peculiar and important need for home inspections for “as is” properties that previous owners were forced to defer maintenance long before they stopped making mortgage payments?

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Agreed JB.

Although I’m able to convert some of their thinking, I think they (the buyers) are being told on the other side of the “fence”, that the “Banks aren’t going to fix anything anyway AND the home is a GOOD PRICE so don’t waste our time with an inspection”. I hear this on a weekly basis.

I generally respond that in regards to obtaining an AS-IS property “This is all the MORE REASON to have an inspection” and “If there is a serious or expensive issue or issues (we’ve all seen 'em) that you discover AFTER obtaining the property, you and you alone are going to deal with any discovered issues”

Funny thing is, that much of the paperwork being given to the buyers is indicative of a couple items: They are receiving NO Transfer disclosure / They are being recommended in writing to obtain a Home Inspection.

So, how does a Buyer who is being told: The Bank (who is the possessor of the property) is not giving them any disclosure on the property and they are being given written notices of this fact along with a recommendation to obtain a Home Inspection.

So… I wonder :roll::roll: how does the buyer suddenly decide NOT to obtain a home inspection on these properties?

Unfortunately in this RE market, not all buyers are being given information that is of their best interest.

A well written article to be displayed on our websites is not a bad idea at all.

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Well said Tim.

I also try to explain to the buyer, when I find out they’re buying a foreclosure, that its all the more important to go over this property with a fine tooth comb.

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I second that!
Or is it I fourth that?

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The last foreclosure I did was inspected by another inspector recommended by the buyer’s Realtor. This inspector was only there for an hour, according to the buyer. The buyer held off on paying the inspector and ask me to perform an inspection. I did not know that another inspector already inspected the property. By the look on the face of her Realtor, he was surprised there was some many major issues with the house. A couple weeks ago, my client told me she told her agent at the time since the first inspector was obviously working for you, you need to pay him. I am not. Sad but true.

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Here is an article that Nick wrote. Mortgage applications are up 12%, but home sales are at a 13 year low. The figures you hear about in the news are pretty much based on re-fi’s, and are just fake. The “current government” does not want you to know about what is really happening. The stock market is slow to react, but started yesterday. I predict that this fall will be rough.

http://www.msnbc.msn.com/id/38014920/ns/business-real_estate/

It is sad that lenders are not requiring re-fi inspections, and banks are selling homes as is, and not requiring inspections. Agents are telling home buyers that most all homes are selling as is, so why spend $300 to $400 for a home inspection? Besides, they can get a contractor to do any home check for free, and, of course, for a reason.

Our industry has changed dramatically, and will continue to do so. It is all about cost, so if you charge $99 or do it for free, you are probably doing inspections. Otherwise, drive a school bus this fall.

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We also need to educate the Realtors who are selling these ticking differed-maintenance timebombs as there are real people out there making big mistakes by having these home inspected after they have negotiated with the bank.

Recently I had two potential buyers walk away from deals after first negotiating with the bank then having an inspection. In both cases there was major systems impaired and needing to be replaced and in both cases the buyers did not have the funds to both purchase and make the repairs. Needless to say that everyone from the bank to the buyers were disappointed they had wasted time and energy on these homes.

NACHI should put together a video educating Realtors in how the inspection process could support their business and help their clients by having homes inspected properly before offering to purchase.

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Freddie Mac CEO Ed Haldeman said yesterday that the company has seen the number of its short sales increase 600% from 2008.

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Yes, Nick, but how do we get to the home buyer? It is tough to know where to advertise and educate the person who is looking for a home to buy. Perhaps InterNACHI should do some advertising in bank trade magazines, or on Realtor One. We need some help out here.

Joesph is right. But, how do you educate the home buyer, when you do not know who he/she is?

Short sales are not getting inspected, because I have heard that negotiation periods are running from only 3 to 5 days, including weekends. Here in KC, these periods are supposed to be 10 days, to allow for inspections, termite, and radon testing. Not now. This is how agents and banks are keeping us out of their way, so they can sell homes to unsuspecting buyers. Nick, you need to be on CBS news or O’Reilly.

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#1 Problem - EVEN if the house is being sold at a DEEP discount, and going AS IS or the UTILITIES are OFF / The buyer still needs an Inspection.

#2 Problem - MANY realestators, lenders, etc are telling them they got such a deal, so a home inspection is a waste of time / money / etc.

#3 Problem - HOW to bypass the middle men and get our message to the END USERS in a manner that WON’T drive us into bankruptcy.

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Foreclosures are already getting more inspections per sale than traditional sales. Even our own members report inspecting the same foreclosure more than once.

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I have inspected nonforeclosed homes more than once also.

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Here is what is going on here in KC. Check out the numbers and the average price of home sales. Nationwide figures are also qouted.

http://www.bizjournals.com/kansascity/stories/2010/06/28/daily29.html?ana=e_du_pap

There may be an issue where investers are buying up these properties to sit on them until the market goes up. These people are so called “experts” and are not getting home inspections. I have heard banks themselves are selling to other banks to show increases in sales for the fed and their lender buddies. This whole situation is hurting our industry, and pockets.

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Most investors get inspections (if not for the information, then for the negotiating power of the inspection report) and when they put the homes up for sale the homes get inspected again.

If I could wave a magic wand and have every buyer be an investor or flipper, I’d do it. It would double the number of inspections.

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Nick…in spite of what some NACHI members may have told you…the majority of repos are NOT being inspected. If they make up 31% of the home sales, we are missing a lot of inspections here.

A polished article explaining the benefits would be helpful.

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The really only way that you are going to get investers, lenders, banks, home buyers, and agents recommend home inspections is to mandate them. That will never happen.

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What investor or home buyer doesn’t get an inspection? What agent doesn’t recommend inspections? What planet am I living on?

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Dorthy & Toto - Land of Oz & over in Disney World

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Dan, aren’t you in Kansas? I believe Kansas agents use an inspection rider within each residential sales agreement… no?