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The Alliance of Foreclosed Properties and First-Time Homebuyers

There have been a number of articles lately addressing the union of bank owned properties and first-time homebuyers. On Friday, May 18th, RIS Media reports:

Value-conscious, first-time buyers have become key to the housing market’s recovery, and they are snapping up priced-right foreclosures despite the warts-and-all, sold-as-is condition of the properties. Half of the sales made in the year’s first quarter were to first-time buyers and almost half of all these sales were distressed properties, the National Association of Realtors reported. Distressed properties include foreclosures and short sales, which are private transactions in which a homeowner sells the property for less than the amount owed on a mortgage.

While experience shows this true to the most part – first time home buyers are the most active market for the REO’s we manage here in the Sarasota area – there is another trend that is not addressed. That is that the bank and corporate owners’ willingness in many cases to stick less stringently to marketing their properties in distressed condition.  More than half of the REO properties sold by the Michael Saundes & Company REO division have had some lender required repairs made by the bank/corporate owners to facilitate a sale.

Others are being repaired prior to marketing, to present the best condition inventory to the first time buyer who can not afford repairs to a property.  This fact, coupled with “traditional” buyers high interest in purchasing such properties (as opposed to the old model buyer of bank-owned properties, the cash investor), low interest rates and the $8,000 tax credits makes this one of the best times in recent history for first time home buyers to purchase real estate.

In a separate article, RIS Media goes on to report that a majority of U.S. adults would consider the purchase of a foreclosed home:

According to the results of a new survey from Harris Interactive, there is a notable gain in consumers’ willingness to buy foreclosed properties, with 55% of U.S. adults indicating that they are at least somewhat likely to consider purchasing a foreclosed home in the future, compared to the 47% of U.S. adults who indicated the same in November 2008. The tracking survey was conducted on behalf of national real estate search engine, Trulia.com, and RealtyTrac, an online marketplace for foreclosure properties.

These market trends are the biggest positive we see as we evaluate the impact of foreclosures on our communities. Neighborhoods will stabilize as the “bottom of the market” is purchased by owner occupants (many of whom were previously priced out of the market), and the inventory levels begin to normalize. Agents trained in the listing and sale of the bank owned properties, and those well versed in the first time buyer credit and mortgage options, and/or who work closely with mortgage companies offering FHA financing will be those best equipped to assist these emerging buyers.

  • User Gravatar Brian E
    May 21st, 2009

    Fascinating stuff. And great writing!

  • User Gravatar Court C. Hoyle
    May 22nd, 2009

    What a great article! And what en even greater time to be a buyer in the Sarasota real estate market!

  • User Gravatar Kathy Koops
    May 22nd, 2009

    Good information- and it pertains to a lot of markets throughout the country.

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