Buyers Seem To Have Lost Their Appetite for Foreclosed Houses

Foreclosures continue unabated. But it is bad news for the market that buyers seem to have lost their appetite for these. Harris Interactive took a survey. It showed 47% of the adults in the country would think about purchasing a foreclosed house. But only about seven months ago 54% had been eager to snap up a foreclosed deal. Perhaps this is because the buyers are becoming wiser to the negative side of purchasing foreclosed houses. The most common one is short sale in which the lender agrees to accept less than what the borrower owes and forgives the balance. Some of the buyers say there are exorbitant hidden costs, difficulties in getting loans and the poor condition of the foreclosed properties that have put them off.

Rick Sharga of RealtyTrac said, “It’s a little more complicated buying a foreclosure or short sale. The banks are overwhelmed with properties, so in many cases it becomes a waiting game, which isn’t any fun if you want to buy a home.”

There is however still a good number of customers who hunt for foreclosed houses or short sale ones. About one out of three houses on the Multiple Listing Service of real estate brokers come from the foreclosure category known as the distressed category.

One of the worst foreclosure hit areas in the entire country is South Florida. During the housing boom the people over stretched themselves to buy houses with ARM’s. These later reset to high rates and people defaulted into foreclosures. In November 6,801 people were battling foreclosure. The number was a decrease from October 2008 but an increase from 4,157 in October 2007. Palm Beach Count noted 2,622 householders in foreclosure in November this year showing a decrease from October 2008 but an increase from 1,906 noted in October 2007.

There is hurry and scurry about modifications and moratoriums till the end of the holidays but experts are gloomy apprehending a second wave to hit the following year as unemployment numbers and interest rates increase. There seems to be no one silver bullet to cure the malaise.

In the surve,y 75% of the respondents hoped that they would be compensated with 25% discount for the risks involved in a foreclosure deal. Three out of ten said that they were hunting for 50% discount in the foreclosed market. Realtor Pamela Orr summed it up by saying that one has to face reality. The prices actually depend on what the selling rate is in the area.