More than a quarter of all national residential sales in the first quarter were either a short sale or bank-owned property, according to RealtyTrac.

Foreclosure-related sales made up 26% of all home sales through the first three months of 2012, up from 22% in the last quarter of 2011 and 25% seen a year ago.

Third parties purchased 233,299 residential properties that were either in default, scheduled for foreclosure auction or REO during the first quarter. This is an 8% increase from the prior quarter.

The average sales price for a home in foreclosure or bank-owned was $161,214 in the first quarter, 27% below the median price for a nonforeclosed property.

Short sales hit a three-year high in 1Q 2012 even as the average preforeclosure sales price dropped to a record low. A total of 109,521 short sales occurred in the first quarter of 2012, 25% more than the same time period last year.

Short sales accounted for 12% of all sales in the first quarter, with the average property selling for $175,461. The median sales price of a short sale home was 21% below a nonforeclosure home.

"Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions," said Brandon Moore, CEO of RealtyTrac.

Preforeclosure sales, which took about 306 days to complete after starting the foreclosure process, increased on an annual basis in 27 states, including Wisconsin, Michigan, Georgia, Texas and Illinois.

Among the nation's 20 largest metropolitan statistical areas, the biggest annual increases in short sales were Atlanta (78%), Detroit (75%), San Antonio (74%), Sacramento (70%) and Dallas (69%).

Meanwhile, REO sales increased 2% from the previous quarter but decreased 15% year-over-year with only 123,778 bank-owned homes sold in the first quarter. REO sales comprised 14% of all residential sales from January to March 2012.

The median value that bank-owned homes sold for was $147,995, which is 33% less than what a nonforeclosed property sells for.

REO sales increased quarter-over-quarter in 21 states, including Oregon, North Carolina, Ohio, Florida and Wisconsin. It took approximately 178 days for a lender to sell an REO home during the first quarter, three more days than the fourth quarter of 2011.

Cities that experienced the largest annual increases in REO sales were Minneapolis (33%), Boston (30%), Philadelphia (22%), Atlanta (15%) and Chicago (13%).

"The average price of a bank-owned home is stabilizing and even increasing in some areas where a slowdown in REO activity over the past year has resulted in a restricted supply of REO homes available," Moore added. "Still, REO sales did increase on a quarterly basis in 21 states, indicating that lenders are still working through a bottleneck of unsold REO inventory in many areas."

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