First-Time Homebuyers and Foreclosures...a good fit? | HomesMSP

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Both foreclosure and first-time homebuyer sales are up…both good signs for the market and a sign that many first-time homebuyers are buying foreclosed homes. According to a recent survey for Trulia Inc. and Realty Trac Inc. renters, parents of children under 18 and adults age 18-44 were the most willing to consider foreclosure properties…all of which are also most likely to be first-time homebuyers.

Nationwide, half of the sales in the first quarter (58.8% in our market) were distressed properties and about half of those sales were to first-time homebuyers. Not sure of that percentage in our market, but I would guess at least half of those sales are to first-time homebuyers responding to the spike in housing affordability.

So…it appears first-time homebuyers and foreclosures are a good fit. The price certainly fits. And owner-occupants help re-build neighborhoods so it's a good neighborhood fit.

The piece that doesn't always fit is the amount of work that needs to be done on many foreclosure properties. First-time homebuyers may have the funds to buy but not fix up, which is why many cities are offering rehab loans with great terms for foreclosed properties.

Many foreclosure properties aren't in great shape, but some are pretty good and many have potential. Searching for that 'diamond-in-the-rough' can require stamina…but can pay off. If you are one of those lookers, be sure to take into account how much work, time and money will be required to bring a property to the condition you need to feel comfortable living there. It's different for everyone. And don't forget to ask yourself the question, "If I fix it up, will I like it then?"

I showed a foreclosed property this week that was priced low…for a reason…the interior was gutted to the stud walls!! It was obviously a good fit for someone because it sold in less than a week, but it wasn't right for this buyer…she ended up making an offer on a traditional home in good condition.

Just because a property is priced low doesn't necessarily mean it's a good deal for you. Just as with location, amenities and style it's important that condition fits you as well. How much work are you willing and able to do…factoring in time and money?

Sharlene Hensrud, RE/MAX Results – First-Time Homebuyer Realtor