Foreclosures no longer a deal?

The screaming deals on foreclosures are drying up in much of the country, according to the latest data from Zillow.com.

The average discount on a foreclosure today is 8% below an equivalent non-foreclosure house. The 8% discount isn’t worth it because typically a foreclosure needs a lot of work. So an 8% discount may actually cost you more than buying a non-distressed home.

Of course, all real estate is local, so in some markets, foreclosures are still coming with heavily discounted price tags. For example, the foreclosures in Baltimore, Cleveland, Cincinnati, and Pittsburgh are discounted past 20% on average, according to Zillow.

Meanwhile, on the short sale front, a special “gimme” put in place to encourage short sales is about to go away at the end of the year unless Congress extends it. Basically, under current law, you don’t have to pay tax on the imputed income you receive when your lender agrees to write-off a loss on what your mortgage note.

So you’ll see big push to close short sales before New Year’s Eve to avoid the tax implications of 2013 — unless something changes.