1 in 5 homes sold in first quarter was in foreclosure

COLUMBIA -- One in five homes sold in South Carolina in the first three months of 2010 was a foreclosure, and buyers got an average discount of 21 percent on them, according to a report released today.

That's still well below the national average, in which one in three homes sold was in foreclosure, according to the RealtyTrac report, and buyers got an average discount of 27 percent compared with properties that sold that were not in foreclosure.

Richland and Lexington counties mimicked the statewide trend, with roughly 20 percent of homes sold in the quarter in foreclosure. But Midlands buyers got much bigger discounts: 42 percent in Lexington County and 38 percent in Richland.

Horry, Charleston and Greenville counties also hovered in the 20 percent range, with discounts ranging from 20 percent to 36 percent.

"A lot of these homes would avoid foreclosure and be sold on the normal market if the banks would be more cooperative," said Larry Jordan, owner of Professional Investors of West Columbia, which negotiates with lenders to buy homes at a discount from troubled homeowners.

Jordan said lenders likely are overwhelmed with the large number of homes in or heading toward foreclosure as homeowners struggle with job and income loss following a brutal two-year recession.

South Carolina typically is in the middle of the pack among other states in foreclosure rankings and recently has had a slowdown in mortgage delinquencies, according to statistics from the Mortgage Bankers Association.

The state had 9.45 percent of mortgage holders who had missed at least one payment during the first quarter but were not yet in foreclosure. That's down from 10.5 percent in the last quarter of 2009. The number of homeowners in foreclosure during the quarter also fell slightly.

But foreclosures will continue to be a problem in South Carolina until the state's near-record-high unemployment problem is addressed, said William Harrison, real estate professor at USC Moore School of Business. And that won't happen until the economy shows real improvement, he said.

"There's a lot of false optimism out there," he said. "We've got more pain to go."

But there is some good news, particularly for home-owners in high foreclosure areas who want to see property values remain stable.

Banks have started sprucing up foreclosed properties, which often are left in disrepair because cash-strapped owners do not have the money to maintain them, said Karen Yip, a broker with Re/Max Real Estate Services in Columbia.

Banks are spending $1,500 to $2,000 to put in new carpet and a fresh coat of paint, hoping to reap a greater sales price, she said. "They're being a little more bullish with their negotiations."