Real Estate Market

Fence-sitting buyers worry about the hard sell

by Broderick Perkins

(3/16/2011) Foreclosures are down, leaving fewer distressed properties to clog the pipeline, but potential home buyers remain on the fence, afraid selling a home remains too difficult.

The vast majority of Americans, 86 percent, believe real estate is a good investment and that they can get a good price (89 percent) in today's market, but balk because of uncertainty about selling (77 percent) and due to concerns about getting a fair price (67 percent), according to a survey by Prudential Real Estate and Relocation Services, Inc.

"A key take away from the survey is although consumers recognize that it is a good time to buy, they are concerned about their ability to sell their homes. This is one of the reasons the market is still struggling to recover," said James Mallozzi, Prudential's chief executive officer.

The concern comes even as fewer foreclosures are hitting the market, giving sellers more room to dicker.

RealtyTrac recently reported foreclosure filings -- default notices, scheduled auctions and bank repossessions -- were reported on 225,101 U.S. properties in February, a 14 percent decrease from the previous month and a 27 percent decrease from February 2010 -- the biggest year-over-year decrease since RealtyTrac began issuing its report in 2005.

"Foreclosure activity dropped to a 36-month low in February as allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets," said James J. Saccacio, chief executive officer of RealtyTrac.

"While a small part of February's decrease can be attributed to it being a short month and bad weather, the bottom line is that the industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures," said Saccacio.

Saccacio expects the numbers to bounce back somewhat, but probably not back to the peak in March 2010 when more than 367,000 properties received foreclosure filings.

Foreclosures have played a large part in pushing down home prices.

Prudential said for those who sold homes in the past year, despite the down market, 78 percent report that they were satisfied with the sale, but of these only 32 percent were very satisfied with the final price of their home and 46 percent were grateful they were even able to sell given market conditions.

Another 22 percent indicated that they were disappointed or resentful about the price they received for their home.

The Prudential Real Estate Outlook Survey of 1,253 Americans between the ages of 25-64 in the market for buying a home was conducted Jan. 20 to Jan. 27 this year.

The survey also found:

• In setting the right price, sellers were split -- with 53 percent wanting to price right at or slightly below market to attract more bids and 47 percent wanting to price slightly higher than market and hoping to find a buyer willing to pay more.

• In trading up, of the 45 percent looking to trade up, 64 percent wanted more space or property, 49 percent a nicer house and 41 percent a better neighborhood. Only 21 percent surveyed said they were looking to scale down, and 34 percent said that they wanted a similar home.

• About home values, 68 percent of potential home buyers and sellers believe that the real estate market and property values will recover in the next year or two, up from the 47 percent in a similar survey Prudential conducted a year ago.

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