Foreclosure scene is changing
Today, a new Harris Interactive poll shows the percentage of buyers at least “somewhat likely” to consider buying a foreclosed property fell from 55% in May to 43% in November. Is this a sign that the buyer pool is shrinking for foreclosure properties?
On top of the news of an overall waning willingness to purchase foreclosures, buyers’ expectations are changing. 65% of those surveyed expect at least a 30% discount when purchasing a foreclosure home.
“That’s actually a realistic expectation, according to the latest foreclosure sales data analyzed by RealtyTrac, which shows that in the third quarter foreclosure properties sold for an average of 33 percent below non-foreclosure properties,” said RealtyTrac spokesperson Daren Blomquist. Interestingly enough, the survey showed that residents expect higher price cuts in states like Florida and Nevada who expect a 50% discount.
The last survey, completed in May, showed that 85% of saw negative aspects of buying a foreclosure, but this month’s data reveals a 4% drop meaning only 81% see negative aspects to the purchase. The buyer pool makeup is changing also, with 92% of move-up or second home buyers saying they’ll at least somewhat likely to buy a foreclosed property, despite the sentiment overall against foreclosures.
REOs and Short Sales are growing specialties in the real estate profession and we will likely see more agents jump on board as perception and actions change over time as the stigma of foreclosure properties shifts.
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Consumerism, Geo-mapping columnist
Marketing columnist
you have to know the agent of the foreclosed property so that you can be sure that you are investing on a real property.
Here in Northern Virginia, we have the buyer pool to absorb the REO’s. Most of the REO’s I list, (and it’s down to a trickle currently) get many offers. I have an investor team that is looking for physically distressed properties to fix and flip, but the inventory isn’t there. The few that exist get 10 or more cash offers. I think FHA and VA buyers are turned off to the REO’s because they are tired of getting turned down, due to the Conventional and Cash buyers squeezing them out. If there is a “shadow inventory”, the banks need to get them listed. Current Loudoun County inventory is 1/3 of what it was in November 2007.
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I’m not convinced the buyer pool for foreclosures is shrinking. Foreclosed properties still tend to be the market in most of my region but maybe it has to do more with price range. Often the only homes many first time homebuyers can afford are foreclosures. Move up buyers may have more choices but if the foreclosed home is discounted enough is still selling more quickly than non distressed homes.
Indianapolis IN Real Estate market seems showing exactly the opposite trend. During the last 10 months the number of foreclosed homes has shrunk. Buyers are looking for bargains and agents are not meeting their expectations because not been able to find good deals. If a foreclosed property priced below market value comes on the market, within a week there are multiple offers submitted, often higher then an asking price. I am curious to see if the phenomena is happening in any other major metropolitan areas.