If you are looking for a bargain in real estate, and think that chasing after foreclosures is the answer, take a look at these numbers and then consider if this is your best strategy.

In April 2014, there were 720 active foreclosure listings in Pinellas County.  The previous month there were 764.  In April, 299 foreclosures were sold, in March 323 sold.  The arithmetic says that if there are 720 available foreclosure, 299 sold, then the absorption rate is 41.5%.  The absorption rate means that there is only a 2.4 months inventory of foreclosed property.  The competition for foreclosed property is pretty aggressive.

According to statistics from the Pinellas Realtor Organization, foreclosures are selling at 97% of the list price and are going under contract in an average of 71 days.

So you might think that shifting to short sales is a better strategy.  In April, there were 438 short sales listed and in March there were 448.  In April 113 short sales sold, in March 83 sold.  The absorption rate for short sales is 438 active listings with 113 sales, thus a 25.8% absorption rate.  This works out to an inventory of 3.9 months for short sales in our market.  And, short sales are selling for 98% of the list price.

So far, I'm not sure I am seeing the proverbial "deal" in these distressed properties.

Let's take a quick look at non-distressed, or "traditional" sales.  In April, there were 5,798 properties for sale, March has 5,904.  In April, 1,367 sold vs. March when 1225 sold.  Now we have an absorption rate of 5798 active listings and 1367 sold for an absorption rate of 23.6%.  Meaning that there is a 4.2 months inventory of homes for sale in Pinellas County, and they are selling at an average of 95% of list price.

Of the three groups of property, short sales are going for 98% of list price, foreclosures for 97% of list price, and traditional (non-distressed)properties are selling for 95% of list price.

Part of your strategy should be to consider the cost of repairs, especially for a foreclosure property -   things like a new roof, plumbing repairs, possible mold remediation, etc.  The short sales have somewhat different issues, most notably the length of time from contract to closing, with the uncertainty of the final purchase price.  This uncertainty is caused by increasing real estate prices, which makes the bank often ask for thousands of dollars more after the house has been under contract for months at a lower than "market" value.  The buyer then has to determine if the short sale is worth the additional and unexpected cost, or should he simply move on.

Finally, with a traditional transaction, the price is agreed to, the loan is made and the deal can close in 30-45 days with often no significant repairs.  

So, in the current market for Pinellas County real estate, which transaction presents the best value for the time and money invested in a property?  You tell me.