First-Time Buyers Have Smaller Budget, Interest in Foreclosures
By: Esther Cho
First-time homebuyers tend to work with smaller budgets compared to repeat buyers, which increases the incentive to buy a foreclosure, according to blog from Doorsteps.com, a website that provides information to help potential homebuyers.
Citing a survey from the National Association of Realtors (NAR), the website noted 65 percent of first-time buyers are open to the idea of purchasing a foreclosure despite all of the uncertainties surrounding distressed properties.
In addition, first-time buyers are also more likely to buy a foreclosure compared to a repeat buyer, according to the website.
Doorsteps.com provided three main reasons to explain this. For one, first-time buyers might have more of a reason to seek out discounted properties since they have a smaller budget. According to Doorsteps.com, first-time homebuyers spend an average of $154,100 on a home, which is $65,900 less that repeat buyers, who spend an average of $220,000.
According to the NAR, foreclosures sales offered an average discount of 15 percent compared to non-distressed sales in May.
First-time homebuyers might also have less of a reason to fear the unknown since it is likely they do not know as much about the buying process. In addition, with the abundance of foreclosures, first-time buyers might also view such properties as a “reasonable risk,” the website explained.
Data from Lender Processing Services showed there are a total of 4.56 million properties that are past due (includes delinquencies and foreclosure), of which 1.52 million are in foreclosure inventory as of May.
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