RealtyTrac, a leading online real estate firm specializing in foreclosed properties, reported that homes in some stage of foreclosure made up 25% of real estate purchases in the third quarter of 2010.

The firm reported that almost 189,000 properties in some stage of foreclosure sold in the third quarter, a decrease of 25% from the previous quarter and 31% from the same period of last year.

But the firm pointed out that overall real estate transactions dropped in the fourth quarter so the percentage of transactions that were made up of foreclosed homes remained largely the same. Also, the drop in the sales of foreclosed homes merely reflected some of the same downward pressures faced by the rest of the real estate market.

"The expiration of the homebuyer tax credit in the second quarter created a substantial dip in overall buyer demand in the third quarter," said RealtyTrac CEO James J. Saccacio. "Demand for foreclosures also dipped in the third quarter, but those who did purchase a short sale or REO during the quarter were able to get an average discount of more than 32%--the highest average foreclosure discount we've seen since the fourth quarter of 2005."

Saccacio also estimated that the sales of foreclosed homes will likely slide further.

"The foreclosure-processing controversy, which was brought to light at the very end of the third quarter, could chill demand even further--particularly for foreclosure properties," Saccacio continued.

"A quick but responsible resolution to that issue would be ideal to help the market continue to properly clear out foreclosure inventory and get distressed properties into the hands of qualified buyers and investors who will likely add value to those properties and the neighborhoods they are in."