Homebuyers tend to avoid foreclosed properties, often due to the perceived risks involved. These risks could include hidden costs, poor maintenance, or a decrease in value due to other foreclosures in the neighborhood. However, a recent survey shows that consumers may be warming up to the idea of buying foreclosed properties. To learn more continue reading this article by Kelly Curran from HousingWire.
Foreclosed homes may become an increasingly hot-ticket item in real estate, according to joint data from Trulia.com and RealtyTrac, which shows a notable gain in consumers’ willingness to buy such properties.
55% of survey participants indicate they are at least somewhat likely to consider purchasing a foreclosed home in the near future, compared to the 47% who said the same in November 2008.
In the current market, potential buyers view foreclosed homes as an even greater bargain than they did last year, as 40% expect to pay at least 50% less for a foreclosed property. Only 31% expected a 50% discount in November.
And with foreclosure activity up 32% from last year, bargain hunters will have plenty of choices. One in every 374 US housing units received a foreclosure filing in April, the highest rate seen by RealtyTrac, which has tracked activity since January ‘05.
New home builders are already bracing for the stiff competition created by high volumes of deeply discounted properties associated with foreclosures. A report released today by DataQuick shows foreclosure resales accounted for 53% of all sales in southern California during April.
But while overall consumer interest in buying foreclosed homes has increased, the current study also found higher levels of negative sentiment around purchasing such properties. A significant 85% of respondents feel there are negative aspects to purchasing a foreclosed home, compared to 80% in November.
Within the 85%: 71% cite hidden costs as their top concern, 46% believe the process is risky and 31% are concerned that the home will lose value.
“Although consumers are aware that there may be some challenges involved in purchasing a foreclosed home, they are very interested in the bargain opportunities available in the foreclosure market,” says Rick Sharga, senior vice president of RealtyTrac. “People want the best deals they can find and they are willing to go outside of their comfort zones…”
This article has been reposted from HousingWire. View the article on HousingWire's mortgage finance news website here.
