Ohio Sees One of the Largest Drops in Prices for Foreclosures

If you are thinking of buying a foreclosure in Ohio, you may be in for a big discount. RealtyTrac, a market researcher for the real estate industry, reports that Ohio and Illinois tied for one of the largest discounts on these homes, averaging a 41 percent discount between the price of a foreclosed home and the price of a home selling at market value. Kentucky was not far behind with a 39 percent reduction.

What is the reason for this? One reason may be the fact that the high discount states have fewer foreclosures on the market. This means that the foreclosures themselves do not pull down the price of the non-foreclosure homes, so the discount appears larger.

In some states, as in Ohio, the sale of foreclosures centers in lower-income neighborhoods, so the gap is even greater. The higher-priced homes have fewer foreclosures and are holding their value well, making the discount on the foreclosures seem even greater.

The discounts will be the greatest when the home reverts to the lender. Many banks and lenders are anxious to get the properties off their books and price the homes accordingly. But when the bank and lender agree to pursue a short sale, where the bank accepts less than the property is worth in satisfaction of the mortgage, the discount is much less. RealtyTrac notes that homes in short sales average a 9 percent discount.

Interestingly, RealtyTrac also reported than 31 percent of the sales of homes in the second quarter of 2011 were in foreclosure. This is higher than the 24 percent at the same time last year, and also higher than the 28 percent first-quarter U.S. sales. Overall, prices for homes in Ohio are down 5 percent from a year ago.

Other states with foreclosure discounts higher than 35 percent include Delaware, Kentucky, Louisiana, Oklahoma, Pennsylvania, Tennessee, and Wisconsin.

Foreclosure is a common occurrence in Ohio and throughout the country. There are, however, ways to protect the family home and stop foreclosure. For those who are experiencing financial troubles, it is best to speak with a bankruptcy attorney to determine which path is best for them.