Real Estate Report: Real Estate Rebound Buyers

There is a contingency of buyers referred to as "rebound buyers" or "boomerang buyers"--these are the people who lost homes in foreclosures or short sales during the housing bust who are striving to be homeowners again.

It is estimated that more than 4.7 million homeowners lost their homes to foreclosures or short sales since 2007 nationwide. Locally in the tri-county area of Worcester, Wicomico and Somerset counties, we have had 1,647 foreclosures and 624 short sales since 2007.

This amount of buyers re-entering our market could add up to real numbers in the years to come, and may even help to offset any lessening of investor demand as home prices start to increase.

Those who have experienced a foreclosure on their record can rebuild their credit and be able to purchase again in three to seven years. The Federal Housing Administration (FHA) offers programs for buyers on the rebound from a foreclosure or short sale where the wait is just three years. And, if the foreclosure of the borrower's main residence was the result of extenuating circumstances, an exception may be granted if they have since established good credit. This does not include the inability to sell a home when transferring from one area to another.

Regardless of the circumstances surrounding a foreclosure or short sale, any buyer will have to show at least a 12-month good history of payments and increasing credit scores. However, FHA does offer buyers somewhat less stringent requirements than conventional loans. For example, in January 2013, the average FHA credit score was 717 vs. the conventional loan average score of 767, according to data from Lender Processing Services (LPS).

And, since interest rates remain so low and home prices have dipped considerably since the market downturn, "boomerang buyers" have a good chance of obtaining a home more that is more affordable than their last.

Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.