The number of distressed home sales in Benton, Washington and Sebastian counties continues to rise as these properties trickle back into the marketplace at discounted prices.
California-based RealtyTrac reports bank-owned properties comprised 15% of the sales in Northwest Arkansas last month, rising about 6% from the September 2012 period. In Sebastian County, roughly 3% of the total home sales were bank-owned properties.
Short sales accounted for 20% of the residential real estate transactions in Benton County last month. Washington and Sebastian counties had no short sale transactions in September, according to the RealtyTrac report. Short sales are transactions completed for distressed home owners struggling to make payments on properties that are worth less than the mortgage owed.
“Markets with the biggest increases in short sales tend to be those where either foreclosure starts or scheduled foreclosure auctions have rebounded in the last 18 months — translating into more motivated short sellers — or those with a still-high percentage of underwater homeowners with negative equity,” said Daren Blomquist, vice president at RealtyTrac.
He adds that distressed sales overall remain persistently high across the nation with more than 5.67 million properties changing hands in September, up 14% from the same months in 2012.
Agents in the local markets said buyers looking for real estate foreclosures are finding discounted deals over similar size, non-distressed listings. The September median sales price of Benton County’s distressed homes was $101,323, rising 9% from a year ago. Despite the rising price, it was still a 25% discount over the non-distressed median price of $135,000.
Benton County is a larger market than Washington and Sebastian in terms of total households and cumulative sales recorded this year, which is why analysts said the distressed segment is more active.
There were 394 total home sales in September in Benton County, 51 of those were bank-owned, distressed sales. But 79 of the deals were deemed short sales, which also are discounted transactions compared to traditional resales.
In Washington County, buyers of distressed homes last month saw a 37% discount advantage over traditional resale prices. The distressed median price of $96,000 rose 30% from a year ago, but it’s less expensive than the non-distressed median price of $152,000. The distressed home impact in Washington County is more muted given it’s a smaller market with fewer sales overall. There were 194 homes sold last month and 4 of those were bank-owned properties.
Likewise in Sebastian County, the overall impact from distressed home sales has not been severe. There were 105 homes sold last month in the county, three of those were bank-owned properties, according to the RealtyTrac report. Buyers shopping the distressed market in the Fort Smith area saw a 25% discount over traditional resale properties, when comparing the median prices of these two categories.
Sebastian County reported a non-distressed median sales price $132,599, up 16% from a year ago in September. Meanwhile the distressed median price was $89,500.
Blomquist said as median home prices overall continue to rise, it makes sense that the distressed markets would follow suit. RealtyTrac said markets like Arkansas where activity was shut off in recent years still have inventory to work through for several months to come.
That said, the local markets reported in this story have seen less pricing impact from distressed sales than the nation as a whole. ReatlyTrac reports one in four sales in the nation last month were for distressed properties, which came at a 41% discount to the national median sales price of $189,000.
Conni Turner, an agent with the local Coldwell Banker franchise, handles a number of bank-owned properties for Freddie Mac. She said Freddie Mac does a good job getting a property ready to sale – changing out carpet, painting and making other repairs that allows them to list at a better price.
“They try to price with other comparable sales in the area, somewhat protective of the neighborhood values, but they will reduce the price if the home doesn’t sell within 30 days,” Turner said.
She said Fannie Mae and HUD properties are handled a little differently, some priced to sell quickly “as is” with no improvements made. All of the agencies do give a short window of time for individual buyers to bid, before they allow investors in the ring, she added.
Given the tight inventory in Northwest Arkansas in many price categories Turner and other agents said homes that show well, typically sell quickly.