Wednesday, January 25th, 2012, 11:01 pm

Foreclosure sales fell 5% in the third quarter 2011 from a year earlier, a decline linked mostly to deals involving limitations with real estate owned properties, according to a study by RealtyTrac.

Home sales in some stage of foreclosure dropped 11% from the second quarter to about 221,500. Distressed sales also made up 20% of all home sales in the third quarter, down from 22% a quarter earlier and 30% year-over-year.

RealtyTrac CEO Brandon Moore said issues in the foreclosure process, particularly whether a lender improperly foreclosed on a home, limited these sales. The proposed settlement between banks and the state attorneys general, he said, would help move along foreclosure sales.

“The sooner the market gets clarity about accepted foreclosure procedures,” Moore said in the report Thursday, “the sooner the market can more efficiently dispose of these distressed properties.”

The average sales price of foreclosed homes ticked up 1% to $165,322 from a quarter earlier and declined 3% from third quarter 2010. Buyers saw an average discount on these homes of 34% below the price of non-distressed sales.

Pre-foreclosure sales, often short sales, fell 9% to 92,800 from the second quarter and remained flat from the prior year. REO sales, however, dipped 12% and 9%, respectively, to 128,700.

Nevada saw the highest percentage of foreclosure sales for all transactions at 57%, followed by California at 44% and Arizona at 43%.

Florida, which saw the second-most distressed sales at 25,657, saw its rate of all sales decline to 19% from 39% a year ago.

Write to Andrew Scoggin.

Follow him on Twitter @AScoggin.