Buyers at Sheriff Auctions Not the Only Ones Affected by Credit Rules

Foreclosed properties sold at sheriff auctions are available at very low prices. However, some buyers are still finding it difficult to purchase these properties, unless they have the means to pay in cash. According to housing market analysts, difficulties in securing financing are the main culprits, and the problem is even more evident in the market for second homes.

The problem is common in almost all parts of the U.S., analysts have said. A number of potential buyers at home auctions in Seattle have also reported that tighter lending standards are hindering their abilities to close purchase agreements. Sellers of vacation homes and second dwelling have reported that demand is not the issue. They stated that a lot of seniors and retirees want to purchase a second home, but are finding it difficult to do so because of strict lending rules.

Even sellers at Washington foreclosure auctions are having difficulties selling off their low-priced properties. They revealed that only a handful of investors, mostly with cash outlays, are able to purchase properties right now. Meanwhile, vacation home sellers reported that guidelines for second home mortgages are even tighter. In most cases, a down payment of 35% of the actual price of the house is required as a minimum. Sellers and realtors have claimed that this can put off a lot of buyers, even those with the means to pay up.

Housing industry analysts have also revealed that tighter lending conditions are being aggravated by the huge percentage of underwater mortgages. They stated that buyers of properties at sheriff auctions and people who wish to get a second dwelling mostly cannot use their first home to secure financing for the second.

They explained that a homeowner whose property was worth around $300,000, but now has a market value of near $200,000, will not be able to draw equity from that property to finance even a low-priced house being sold at a foreclosed home auction. They stated that negative equity and tight lending standards are hitting the second-home industry. This trend, they further added, mostly affects baby boomers and retirees, who are the primary consumers of the second home sector.

Real estate experts have stated that buyers at sheriff auctions and second home markets are facing these problems in almost all parts of the country. They further added that in any given housing market situation, it is always the cash buyer that has the edge. They stated that cash buyers are almost always insulated from troubles in the housing market.

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