Short sales pick up steam, outnumber foreclosures

More lenders and homeowners are viewing short sales as a better alternative than foreclosure.

Reversing a trend in the third quarter, pre-foreclosure sales are now outnumbering sales of bank-owned properties.

For example, seven of the 23 properities under contract on Bainbridge Island at the end of November were short sales while one was a bank foreclosure, according to Mark Wilson of Windermere Real Estate.

Pre-foreclosure sales nationally mirrored the local market and accounted for about 22 percent of all residential sales in the third quarter, according to the latest data from RealtyTrac. Distressed sales, in general, accounted for about 41 percent of the market share in the third quarter – still a significant make up of the real estate market.

“The shift toward earlier disposition of distressed properties continued in the third quarter as both lenders and at-risk home owners are realizing that short sales are often a better alternative than foreclosure,” said Daren Blomquist, vice president of RealtyTrac.

Short sales increased 15 percent in the third quarter over the previous quarter, according to RealtyTrac.

Pre-foreclosure properties sold for, on average, $191,025 in the third quarter – a 3 percent drop from the second quarter.

The discounts are still big for potential buyers: In the third quarter, the average sales price of a pre-foreclosure property was 27 percent below the average sales price of a non-foreclosure residential property, RealtyTrac reported.