Foreclosed Home Pricing- A Big Discount?

The Certified Distressed Property Expert (CDPE) designation prepares real estate agents to deal with short sales in an attempt to avoid foreclosure. The short sale is an important tool to help distressed homeowners avoid some of the credit issues that might arise with a foreclosure on their credit reports.

In Palm Beach County, Florida there have been 208,552 foreclosures year-to-date as of April 2010 with 48,384 in the month of April 2010 alone. During the first three months of 2010, foreclosures accounted for almost 30% of total sales in the country.

During 2009, more than 1.2 million property sales involved foreclosures; that is 25% above 2008 and 2,500% higher than 2005. With so much distressed property activity, especially in "bubble" areas, such as Florida, lenders are attempting to manage the inventory as not to flood the market with foreclosed properties. The reason behind this is an attempt to stablize prices.


What is the discount to market?

With such a large number of home sales being foreclosures, clients that are looking to buy have been asking me-- what is the percent discount to the market? The total savings in Palm Beach County and the nation as a whole is about 25%-30% less when compared with non-distressed homes; this includes both short sales and after bank possession foreclosures (REO).

Nationwide, the REO homes have sold for 34% less than non-distressed homes and short sales or pre-foreclosures have come in about at only a 15% discount. Why such a big difference between REOs and short sales-- the main reason is condition of the home. Foreclosures have more instances where the previous owner could not or did not want to maintain the home any longer.

What does this all mean?

Buyers looking for a good deal or savvy investors seeking good returns, there are opportunties to be had in the south Florida market. If you are looking to buy in the south Florida area, please feel free to contact me.

Distressed homeowners might want to consider a short sale. There is a chance to have the bank foregive mortgage debt and you will not have to deal with going through the foreclosure process. Distressed south Florida homeowners, please feel free to contact me in regards to short sale information and listings.


Michael Friedman
Realtor, Certified Distressed Property Expert (CDPE)
Lang Realty
561-989-2100