According to a recent report from RealtyTrac, the sale of foreclosures accounted for a smaller share of all home sale transactions during the third quarter of 2011.

According to the real estate data firm's Foreclosure Sales Report, foreclosures and real estate-owned properties accounted for a 20 percent share of all home sales during the 3 month period.

However, despite brokers and lenders continuing to originate a large number of loans for the purchase of distressed properties, the share is notably less than the previous quarter when 22 percent of all sales were foreclosures and the third quarter of 2010 when it was 30 percent of all sales.  

"While foreclosures continue to represent an excellent bargain-buying opportunity for many buyers and investors, foreclosure sales accounted for a smaller share of the total market in the third quarter," said RealtyTrac chief executive officer Brandon Moore. "That trend is not too surprising given the continued ambiguity surrounding proper foreclosure procedures - and the ripple effect that has on sales of foreclosed properties that might have been improperly foreclosed."

Meanwhile, the average sale price of a foreclosure or bank-owned property was 34 percent cheaper than the price of a non-distressed property. The report indicated that the average price was $165,322 allowing prospective homebuyers to find more affordable closing solutions to homeownership.

Regionally, Nevada, California and Arizona continued to lead the nation with the highest shares of foreclosure sales. In Nevada alone, foreclosure sales accounted for 57 percent of all home sale transactions as 13,992 distressed homes were sold during the quarter.

Additionally, California had a foreclosure sales rate of 44 percent, selling 62,583 units, while Arizona had a rate of 43 percent, after selling 21,619 foreclosed and REO houses. Both states recorded a lower rate of distressed property sales on a quarterly basis.   

"Even with the hurdles to selling foreclosures, foreclosure sales continue to represent a historically high percentage of all sales," Moore added. "In 2005 and 2006, foreclosure sales consistently accounted for less than 5 percent of all sales nationwide."

Other states that reported a large proportion of foreclosure sales during the third quarter were Georgia, Colorado and Michigan, where foreclosure sales accounted for 34, 26 and 23 percent of activity, respectively.