You’d think now would be a great time to buy a foreclosed property, but a majority of Americans don’t think so. A new survey from real estate search site Trulia.com and foreclosure sale site RealtyTrac.com finds that only 47 percent of those surveyed would consider buying a foreclosed property, that’s down from 54 percent last spring.
It seems that negative sentiment surrounding foreclosures is turning buyers off of what should be some of the best real estate investment opportunities in decades. The survey says 80 percent of adults are concerned with negative aspects, such as hidden costs, a potentially risky purchase process, home price depreciation and personal connection with foreclosure (not sure exactly what that last one means, just maybe that there is a social stigma attached to a foreclosed home I guess).
Now I have to take this report with a grain of salt because I’m a stat gal, and I happen to know that foreclosure sales are not only abundant, but they’re on the rise. In Las Vegas, which boasts 30,000 foreclosures in 2008, two out of three home sales are foreclosed properties. In California, foreclosure sales are pushing up total existing home sales like never before. I’ve also been to several foreclosure auctions and there are plenty of bidders on hand.
You then have to pose the question: Who’s buying foreclosed properties? Is it the average American that would have been included in this survey or is it largely investors and investment companies?
The survey also says that 75 percent of respondents expect a discount “of at least 25 percent on a foreclosure purchase,” while 30 percent expect “a major discount of at least 50 percent” compared to a comparable home not in foreclosure.
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I’m a bit surprised that so many folks only expect a 25 percent discount. The bulk of foreclosed properties are in states with the largest price declines. If I were buying a foreclosed property, I’d be in at least the 50 percent discount window.