Study finds consumers less willing to buy foreclosed properties (alt title: potential buyers aren't idiots)

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A study released Tuesday by real estate listings firm Trulia.com and foreclosure listing specialist RealtyTrac ... found what was described as “notable decreases” in consumers’ willingness to buy a foreclosed property. Those that do have an interest in buying overwhelmingly expect REO inventory to be priced 25 percent below the rest of the market, the firms said in a joint press event. Three in ten U.S. adults said they expect a 50 percent discount, even.

In the previous survey conducted seven months ago, 54 percent of all U.S. adults surveyed said they would consider purchasing a foreclosed home, whereas now 47 percent of U.S. adults would consider purchasing a foreclosure — a drop of seven percentage points in only seven months, likely reflecting overall hesitation towards housing, but also suggesting that much of the rah-rah talk around foreclosure investing might be overblown by those with an interest in profiting from it.

During the last seven months, negative sentiment around buying a foreclosure rose, as well, the study found. In April 2008, 69 percent of U.S. adults originally felt that there were negative aspects to purchasing a foreclosed home; that number is now up to 80 percent, with respondents citing hidden costs, risky process, home losing value and personal connection with foreclosure as the core concerns detracting from a possible purchase.

To compensate for perceived risks, consumers expect hefty discounts on foreclosed homes, the study found.

“What’s significant about our findings is that just as the market is being flooded with more foreclosures, homebuyers are more hesitant to buy them.

http://www.housingwire.com/2008/12/17/cons...closures-study/