Profiling homes that sell at a deep discount or at a premium

by Joe Zekas on 7/10/14

RealtyTrac released an analysis today profiling which single family homes sell at the deepest discounts and which sell at the highest premiums based on four variables: foreclosure status, equity, occupancy and year built.

According to RealtyTrac, the Chicago metro area had 4,365 properties matching the 5 profiles that resulted in the deepest discounts.

The property profile providing the biggest average discount was that of a home scheduled for foreclosure auction with negative equity (outstanding amount of loans secured by the property was more than the estimated market value of the property), vacant, and built between 1950 and 1990. Properties matching this profile sold at an average discount of 28.2 percent below market value when compared with the control group of all properties not in foreclosure that sold during the 12 months ending in March 2014.

The property profile with the second biggest average discount was that of a home in default (where the bank had initiated the foreclosure process but not yet scheduled a foreclosure auction) with positive equity. For this profile, the occupancy status included both vacant and occupied properties and all years built. Properties matching this profile sold at an average discount of 26.0 percent below market value, and this profile by far had the most available properties matching it nationwide: 87,882, representing 11 percent of all properties in some stage of foreclosure.

Other property profiles among the top five with the biggest discounts were homes in default with negative equity, vacant and built before 1950 (25.8 percent average discount below market value); homes scheduled for foreclosure auction with negative equity, vacant and no filter for year built (24.7 percent average discount below market value); and homes scheduled for foreclosure auction that were vacant with no filter for equity status or year built (24.6 percent average discount below market value).

The profile with the biggest premium was that of a home not in foreclosure but with negative equity, with no filters for equity, occupancy or year built. Properties matching this profile sold at a premium of 19.2 percent above market value when compared to the control group of all properties not in foreclosure that sold in the 12 months ending March 2014.

Other property profiles selling at a premium were bank-owned homes built before 1950 with no filter for equity or occupancy status (6.7 percent premium); bank-owned properties with no filter for equity, occupancy or year built (2.5 percent premium); and homes in default with negative equity, vacant and built after 1990 (1.7 percent premium).

The full report is available at RealtyTrac.

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