Surprise! Bank-Owned Properties Actually Sell For More!
Jann Swanson | Mortgage News Daily | Jun 26 2014 | link
RealtyTrac recently analyzed residential sales over the year that ended in March to determine what drives discounts in the market value or premiums in the sales price for distressed properties. They looked at four factors, foreclosure status, occupancy, equity, and property age, using them to construct 24 different distressed property profiles. Each profile was compared to a control group of properties not in foreclosure that sold in the same time frame.
As might be expected, the properties that sold at the largest discounts, an average of 28 percent, were vacant, had negative equity, and were older (but not the oldest), built between 1950 and 1990. What is surprising is that some property profiles sold at a premium.
Bank-owned properties overall went for an average of 3 percent above market value while bank-owned properties that were built prior to 1950 brought 6 percent more than the control group. The largest premium was paid for properties that had negative equity but were neither in foreclosure or foreclosed. Those properties sold at a 19 percent premium. (Note: in the chart below, negative numbers indicate above-market-value sales prices).