RealtyTrac’s latest report shows a decline in the number of short sales in October as a method of selling distressed property to real estate investors as banks move back to using foreclosure auction sales and bank-owned sales.
Short sales represented only 5.3% of all sales down from 6.3% the previous month and down from 11.2% in October of 2012.
Rising home prices in many markets are the reason.
“After a surge in short sales in late 2011 and early 2012, the favored disposition method for distressed
properties is shifting back toward the more traditional foreclosure auction sales and bank-owned sales,” said Daren Blomquist,vice president at RealtyTrac. “The combination of rapidly rising home prices — along with strong demand from institutional investors and other cash buyers able to buy at the public foreclosure auction or an as-is REO home — means short sales are becoming less favorable for lenders.”
Cash sales represented 44.2% of all residential sales in October, down from 45% in September.