Everyone wants a good deal but the home purchasing process is filled with emotion. Buyers will often speak of “falling in love” with their home or the home “speaking to them”. Some buyers refuse to consider homes that are in the foreclosure process or already bank owned because they stereotype them as run down or beat up. But is it really possible to see through the cloud of emotions and avoid poor purchase decisions?
RealtyTrac suggests looking at the data. They released a study Thursday for the first time ever profiling what single family homes sell at the deepest discounts and what single family homes sell at the highest premiums. The report looked at 24 different property profiles, measured by four variables, against a control group of all properties not in foreclosure sold during the previous 12 months ending in March, 2014.
They wanted to determine how those variables, foreclosure status, equity, occupancy and year built, really effected purchase price. Some of the results made a lot of sense. Some were quite surprising.
Perhaps predictably, the property profile providing the biggest average discount in the study was that of an older home scheduled for foreclosure auction with negative equity, and vacant. These Properties matching this profile sold at an average discount of 28.2 percent below market value when compared with the control group.
“One notable exception to the negative equity marker was homes in default with positive equity, which sold at the second biggest discount nationwide. The top five property profiles with the biggest discounts nationwide all sold at average discounts of 25 percent or more,” said Daren Blomquist, vice president at RealtyTrac.
Four of the 24 property profiles analyzed sold at an average premium above market value when compared to the control group.
“On the other end of the spectrum, it may surprise many to see that nationwide and in several states some profiles of bank-owned homes actually sold at a premium,” Blomquist continued. “Overall bank-owned properties nationwide sold at a 2.5 percent premium, and bank-owned properties built before 1950 sold at a 6.7 percent premium.”
The big winner, the profile with the biggest premium, was that of a home not in foreclosure but with negative equity, with no filters for equity, occupancy or year built. Properties matching this profile sold at a premium of 19.2 percent above market value.