Homebuyers more willing to consider buying foreclosed properties

According to a recent survey reported on in RISMedia, the stigma of foreclosed homes may be starting to wan.

The online survey, conducted on behalf of real estate-search site Trulia.com and RealtyTrac, an online marketplace for foreclosure properties, in early November showed that 88 percent of homeowners looking to trade up are at least somewhat likely to consider buying a foreclosed property. With the $6,500 tax credit available to this market for a short time, sales of foreclosed properties are expected to increase in the coming months.

Overall, 43 percent of adults are somewhat likely to consider a foreclosed property, and 92 percent of real estate investors are at least somewhat likely to do the same.

Of renters looking to buy, 57 percent are willing to consider purchasing a foreclosed home, with more renters between age 18 and 44 likely to consider doing so compared with those 55 and older.

One reason homebuyers are considering purchasing foreclosed homes is the discounted prices: they expect to save 30 percent or more – as much as 50 percent in the Northeast part of the nation.

"Even during the darkest economic times, dreams don’t die. Foreclosures are providing never before seen opportunities for new segments of homebuyers and allowing renters to become first-time buyers, allowing investors to grab great deals and allowing families to trade up to larger homes," RISMedia reported Trulia co-founder and CEO Pete Flint as saying. "Until unemployment levels off and starts to get better, we expect foreclosures to continue to play a big role in the 2010 housing market."

Although they expect to save on the purchase price of a foreclosed home, 95 percent of those who might buy one also expect to invest money in renovations. And 55 percent are willing to spend 20 percent or more of the purchase price on those improvements, according to RISMedia. As more consumers purchase distressed properties, excess housing inventory levels will decrease and additional money will be poured into other industries, helping to stimulate the economy as a whole.

"The most active and qualified buyers in today’s market are highly interested in foreclosures, which is not surprising given the discount that often comes with a foreclosure purchase," said Rick Sharga, senior vice president of RealtyTrac, reported RISMedia. "It is somewhat surprising that consumers cite hidden costs as the biggest negative aspect to buying a foreclosed home because most bank-owned foreclosure sales include the same title protections and other safeguards that are in place for non-foreclosure sales. As myths such as this are put to rest and consumers take more time to educate themselves on the process for purchasing foreclosures, they will be able to take advantage of the great bargains that currently exist in the real estate market."