·       Report also shows online auctions reduce REO holding times 52 percent

·       71 percent owner-occupancy for resales of third-party foreclosure sales

Irvine, Calif. — March 31, 2021 — Auction.com, the nation’s leading distressed real estate marketplace, today released its 2021 Seller Strategy Report, which identifies distressed disposition strategies that yield better outcomes for mortgage servicers, distressed homeowners, and underserved neighborhoods.

“We want mortgage servicers to be equipped with the tools they need to most effectively and compassionately work with distressed homeowners, particularly those who have been impacted by the pandemic,” said Jason Allnutt, Auction.com CEO. “This will help to achieve better disposition outcomes — not just for the servicer but also for the distressed homeowner and the surrounding neighborhood.”

The report is based on an analysis of more than 70,000 properties brought to foreclosure auction on the Auction.com platform in the four quarters ending in Q1 2020, using public record and multiple listing service (MLS) data to track the final disposition status for those properties as of Q1 2021: sold to third-party buyers at the foreclosure auction; reverted to real estate owned (REO) and subsequently resold via online auction; or reverted to REO and sold on the multiple listing service (MLS).

Price Execution by Disposition Type

Surplus Funds Analysis

The analysis found that third-party foreclosure auction sales not only yield the highest price execution relative to foreclosure credit bid — 17 percentage points higher than price execution for traditional REO sales — but also are increasingly generating surplus funds above total debt owed to the foreclosing lender. Those surplus funds first go to pay off junior lien holders, with any excess going back to the distressed homeowner.

More than 40 percent of all foreclosure sales in 2019 and 2020 generated surplus funds, more than double the percentage with surplus funds between 2012 and 2015, according to data from the Auction.com platform. More than $1.2 billion in surplus funds have been generated by third-party foreclosure sales on the Auction.com platform in the last five years.

“Even among properties with no perceived equity — those with a specified credit bid at foreclosure — 16 percent ended up becoming full payoffs, demonstrating the power of a transparent auction marketplace to uncover hidden equity for distressed homeowners,” said Ali Haralson, Auction.com President.

Link to interactive heat map here.

Other Report Findings

·        Online auctions reduce REO holding times by 52 percent, or 139 days

·        71 percent of third-party foreclosure sales that are resold are owner-occupied within two years compared to only 49 percent of traditional REO sales

·        Online auction offers for short sales and other pre-foreclosure sales outperform MLS offers more than half the time, by an average of more than $30,000, or 18 percent.