For months now all we hear is how many foreclosures are happening “all around us.” RealtyTrac.com for example has made a huge amount of money focusing on nothing but foreclosures. Six out of their last nine press releases have dealt with foreclosure activity in and around the United States. You hit the “Why Join?” tab and it takes you to a 7-day free trial where it is indicated that you would be provided with unsurpassed foreclosure data including access to make an offer directly to the lender.
My question has been, while foreclosures are prevalent, are we buying them? I mean all the property “virgin” shows on HGTV lately have shown young first-time home buyers offering “full price or better” on foreclosures in order to get a deal on that home being sold “as-is.” We Americans must be buying these homes in mass, right?
According to the NAR’s Profile of Buyers and Sellers for 2008, no we’re not. According to the study it showed that only 6% of homebuyers bought a property in foreclosure in 2008. Of first-time homebuyers it was a tad higher at 7%, but on the whole the study showed that 56% of homebuyers did not even consider a foreclosure in their home buying plans.
Of the 38% that did consider buying a foreclosure, 21% could not find the right home, 12% each found the process too difficult or the home was in poor condition. Poor financing options accounting for another reason that the foreclosure sale did not happen or the home was in an undesirable neighborhood.
What I really find humorous was that 5% of buyers found the “price was too high” on the foreclosed property for resale! You would think that in buying a foreclosure you are getting a “deal,” but not always. I had a situation like this in our area where a buyer client wanted to consider a foreclosure, but there were two offers on the table and the bank was treating it as basically an auction where Realtors were asked to fax offers to a central number where they bank would take the best offer. The price needless to say got bid up so high my client found a beautiful home he ended up buying from a seller who had this home on the market for over a year, was in great shape, and he even got a home warranty out of it.
In the end, you hear conflicting information from the national media. I just don’t think the numbers stack up in their favor. I still find that a buyer would rather deal with a seller who is not a cold, “only care about the numbers,” bank.
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