More Favorable Pricing in Rural Areas
AVG REO AUCTION SALES PRICE IN 2023
$222K
$164K
$112K
RURAL
CITY
SUBURB
SOURCE: AUCTION.COM
for people,” he said. “We have extraordinarily low inventory, and we have interest rates trending in a better direction, which is why I’m picking up a lot of properties and building my rental portfolio more as well as doing more flips. A lot of other investors are pulling back right now, and they are not buying. I just can’t understand that because I can’t just shut down business.” Volatility in the macro housing market does not generally impact distressed property buyers as much, because they are selling and renting at more affordable price points, where demand is more consistent. That’s especially true for buyers like Austin Kerr, who purchases properties at auction for $50,000 or below and resells typically around $70,000 to owner-occupant buyers.
“We’re at the bottom of the mar- ket. The bottom of the market is kind of a funny area because it doesn’t follow the general market trends. So when you talk about values dipping, that dip is going to be felt the least or sometimes felt the opposite way in the lower-end properties,” said Kerr, senior vice president at Florida-based Equity & Help, whose mission is to “to stabilize families and revitalize neighborhoods while raising consciousness of help in the investment world.” To find those low-priced properties that are less susceptible to the whims and waves of the larger hous- ing market, Kerr is going to rural areas in the Midwest and Northeast, often overlooked by other investors. “Being in a place where you can take foreclosed properties, especially in these rural areas where flippers aren’t going to be breathing
new life into them, and being able to find and connect with homeowners who are going to be putting a lot of time and attention into them—these types of things, they make a difference,” he said. The average sales price for REO properties located in rural areas was $112,195 in 2023, more than 30% below the average sales price for REO properties located in cities and nearly 50% below the average sales price for REO properties located in suburbs, according to Auction.com data. AVOIDING RISKIER MARKETS While Kerr relies on the afford- able value range to protect against the vicissitudes of the market, Delille relies on his deep local knowledge of the Houston market where he lives.
44 | think realty magazine :: may – june 2023
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