Foreclosure discount hits 57% in parts of L.A.

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I just put together a gallery of 21 bank-owned listings in greater Los Angeles. These galleries are always interesting, and I’ll leave it up to you to decide whether they are newsworthy.

That said, the asking prices for this batch of listings is showing larger discounts from peak sales prices than previous collections of bank-owned listings did. Six of the 21 listings are discounted 50% or more from their previous peak sales price. The house pictured, 2117 W. Avenue 33 in Los Angeles, is now priced 57.8% below its peak sales price (it sold in 2007 for $510,000, and is now listed for $214,900).

For what it’s worth, here are links to the previous collections of listings, with the range of discounts from peak sales price in each collection, and the median discount. (I know, this is not a statistically valid sample, but I like to keep track.)

Feb. 25: Discounts ranged from 14.8% to 41.0%; Median discount: 19.0%
March 6: Discounts ranged from 6.7% to 38.0%; Median discount: 23.9%
April 17: Discounts ranged from 13.5% to 45.1%; Median discount: 28.8%
May 9: Discounts ranged from 7.1% to 44.3%; Median discount: 32.9%
July 9: Discounts ranged from 10.8% to 51.0%; Median discount: 30.9%
August 25: Discounts ranged from 3.2% to 57.8%; Median discount: 46.9%

Analysis: Does this mean that banks are offering deeper discounts on bank-owned listings? Not necessarily. Another possible explanation is that relatively attractive foreclosed homes sell quickly, without huge discounts, and thus don’t linger on the market long enough to be included in collections of listings. In other words, these random collections of listings could have a bias toward properties that are sitting on the market, which are the properties that will ultimately require deeper discounts to find a buyer.

--Peter Viles

Your thoughts? Comments? What are you seeing in your neighborhood? If you’re a listing agent and would like your bank-owned listings included in future coverage, e-mail Peter Viles.
Photo Credit: Leo Nordine Realtors