Banks hoping to increase sales with foreclosure improvements
Many banks are beginning to make changes to the appearance of their foreclosed homes in an attempt to boost sales. Making aesthetic improvements to a home has been a selling strategy for real estate agents for decades. Now banks are beginning to heed that advice in order to sell their record numbers of foreclosed properties.
Real estate agents say that foreclosure sales were once few and far between. However, the number of foreclosures has greatly increased during the past 10 years, making the foreclosure market much more competitive.
Now, banks in Georgia and throughout the country say that they are spending an average of $3,000 per home in order to entice consumers to purchase their foreclosures. Common fixes include replacing windows, refinishing floors, repairing or replacing roofs, painting the walls and installing new carpeting.
Some believe that banks’ foreclosure improvement strategies are beneficial to homebuyers as well as the overall real estate market. Potential homeowners may have an easier time receiving loans for the improved properties than they would for a home that had been deemed inhabitable. Although foreclosures still sell for less than privately owned properties, they will bring more money to the real estate market if they have been slightly improved.
However, the increased competition in the market could make it more difficult for traditional home sellers to receive an offer. Homeowners may have to further adjust selling prices in order to remain competitive with updated foreclosures.
Regardless, economists and housing market analysts are optimistic about the shift, stating that banks’ foreclosure updates will increase sales and move the influx of foreclosed homes that is currently clogging the real estate market.
Source: Chicago Tribune, “Banks sprucing up foreclosures to boost sales“, Mary Ellen Podmolik, 13 March 2011
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