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Builders highlighting risks of foreclosed properties

March 10, 2011 - Homebuyers have been seeking out low-priced foreclosures and short sales when moving to a new home, a problem many homebuilders are now tackling through new promotional strategies.

The Associated Press reported homebuilders are being proactive and looking to point out the pitfalls and risks of buying a distressed property in order to point consumers toward their newer homes. Savvy buyers are taking advantage of the nation's surplus of foreclosed properties by buying them up with gusto, providing stiff competition for builders promoting newer but more expensive properties. At the same time, builders say they can convince buyers to consider moving to their homes if they make them aware of the work that can go into a distressed property.

Since distressed properties often come in poor shape, fixing them up can cost buyers significant amounts of cash. Additionally, they're often competing for foreclosures with seasoned real estate investors, who can offer more cash. On the other hand, new homes can come with many of the energy-saving features and top-of-the-line amenities buyers clamor for, builders told the source.

Even so, demand for new homes remains weak. According to the Commerce Department, new home sales in January declined 12.6 percent from the previous month and 18.6 percent year-over-year.
 

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