Foreclosure Buying & Mortgage Walk Aways More Acceptable, Says New Poll

A new poll from RealtyTrac and Trulia.com shows that a growing number of home buyers are considering the purchase of a foreclosed home — and are willing to talk away from the one they’ve got.

At this time 78 percent of U.S. adults believe there are downsides to buying foreclosed properties compared to 85 percent in May 2009. Among those who think there are negative aspects to purchasing a foreclosed home, the top concerns about purchasing a foreclosed property between May 2010 and May 2009 include:

“Although fewer consumers expressed interest in buying a foreclosed home than a year ago, the actual sales of bank-owned properties (REOs), along with sales of properties in the foreclosure process, continue to increase — accounting for more than 30 percent of total sales in the first quarter of 2010 according to our data,” said Rick Sharga, senior vice president for RealtyTrac. “We anticipate that there will be an increased number of both REO purchases and short sales throughout the rest of the year as the most active buying segments — first time home buyers and investors –continue to look for bargains.”

“It appears that potential homebuyers are taking a more realistic view of foreclosure purchasing,” Sharga continued. “Buying a foreclosure property still provides an opportunity for dramatic savings on a home, but the time and effort involved in executing a short sale, bidding against other buyers for an REO, or the need to do renovations may be issues for buyers not as focused on getting the best price.”

Walkaways

The study also found that 41 percent of all mortgage borrowers would walk from their homes if their financing was underwater — even if they could pay the mortgage.

“Only 1 percent of homeowners with a mortgage say walking away from their home would be their first choice if they were unable to pay their mortgage,” according to the companies. “If their mortgage were to go “underwater,” 41 percent would at least consider walking away, while 59 percent would not consider walking away no matter how much their mortgage was underwater.”

“For every borrower who avoided foreclosure through HAMP last year, another 10 families lost their homes. It now seems clear that government programs will not reach the overwhelming majority of homeowners in trouble,” said Trulia’s co-founder and CEO Pete Flint. “Combined with decreased consumer interest around purchasing a foreclosure it may take even longer than anticipated to see true health return to the real estate market.”

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