REOs and Short Sales Over 40% of All Home Sales in 2012

[Corey Dutton]

As reported by RealtyTrac, foreclosures (also called REOs) and short sales, accounted for 43% of all home sales in 2012. “Distressed sales are still a disproportionately high portion of the overall housing market,” as reported by the V.P. of RealtyTrac, Daren Blomquist.

Another finding from the RealtyTrac report, is that increases in the prices on distressed properties are narrowing the margins that real estate investors can make on distressed purchases. “And while distressed properties are still selling at a significant discount, average distressed property prices are increasing in many markets thanks to strong demand and limited inventory,” said Blomquist.

A good deal of the demand has been pushed by hedge funds with the intent to convert the single-family homes into rental properties. Not to mention the flood of foreign buyers like Canadians that have shrunk inventory and pushed up prices paid for distressed properties. This has been very frustrating for U.S. real estate investors that are looking to make a buck on the spread between what they can buy a distressed property for and then resell later once repaired.

Because many borrowers are unable to qualify for bank loans against distressed, vacant investment properties, a private money loan is a good alternative to a bank loan for real estate investors.