One Quarter of Homebuyers Want Foreclosures
Low prices and foreclosure bargains motivate buyers to purchase a home more than any other reason, according to a survey from Move.com. Of consumers wanting to buy a home, 25.3% of them want to purchase a foreclosure. Roughly 12% of homebuyers, or one out of eight, today plan to purchase a home as an investment property, up from 5.6% seven months ago. The buyers split roughly down the middle on investing and residing in their real estate owned (REO) purchase. While 57.6% plan to live in the foreclosed home themselves, 42% of the buyers regard their acquisition as an investment, according to the survey. Roughly 13% of them plan to convert the foreclosure into a rental property, 11.3% of the buyers will fix them up for re-sale and 17.4% said that they would house a family member in the purchased REO until it can be sold for a profit. Steve Bancroft, of the Detroit Office of Foreclosure, recently spoke at Safeguard’s National Property Preservation Conference in Washington, D.C. He addressed the consumer demand of foreclosed property – if occupied. Brokers selling a real estate owned (REO) property could expect to get $8,000 for an empty foreclosed home in Detroit. If it’s owner-occupied, the brokers can expect $80,000 for a foreclosed property. He suggestes that brokers keep the family in the home while trying to sell it, even rent it out if possible. The practice could increase the property value by 10 times. The Move.com survey showed that, on the sell side, 73% of the buyers believe their properties will appreciate 10% or more in five years, while 28% expect a 20% appreciation during the same amount of time. According to the survey, 23.6% of all prospective homebuyers and investors believe that prices are as low as they can go, and 18.7% want to take advantage of foreclosure bargains. Also, 21.2% want to take advantage of the great selection of homes for sale in their community, while 14.2% are concerned that interest rates are on the rise. “This latest Homeownership Survey validates what many had hoped to see in the housing markets – affordable prices and ample inventories are restoring the appeal of real estate to investors while providing opportunities for first time home buyers to enter the market,” said Errol Samuelson, the CEO of Move. “In today’s environment, regardless of whether you’re an investor or interested in purchasing a home to live in yourself, residential real estate is a more attractive investment today for many than it has been in recent years.” Write to Jon Prior.