More Favorable Pricing at Auction
FORECLOSURE AUCTION DISCOUNT
FORECLOSURE AUCTION DISCOUNT
25%
22%
11%
9%
SOURCE: AUCTION.COM. DISCOUNT IS AVERAGE WINNING BID AT AUCTION COMPARED TO ESTIMATED “AS-IS” VALUE OF PROPERTY AT THE TIME OF AUCTION.
selling for an average of 22% below estimated as-is value in February 2023, up from 15% a year ago. Pricing has dropped even further for live foreclosure auctions, typically conducted in person at the county courthouse. Foreclosure auctions are conducted online in two states—Ohio and Florida—and are available for remote bidding via the Auction.com mobile app in 15 states. The average ratio of credit bid to estimated as-is market value dropped 12 percentage points between February 2022 and February 2023. The credit bid is the minimum amount the servicer will accept to sell the property at foreclosure auction, and it is capped at the amount of total debt owed to the servicer. The price drop combined with less frenzied bidding at the foreclosure
auctions has resulted in properties selling for an average of 15% below estimated as-is value in February 2023, up from just 9% a year ago. That’s good news for foreclosure auction buyers like Francois Delille, who has been purchasing foreclosure auction properties in the Houston area since 2016. “I’ve seen a lot of my competitors just stop buying,” said Delille, who owns a real estate investing company called Cozyhomes that employs about 10 people. “I have an ongoing business, so I keep buying, but I am buying less.”
health of the market, especially in the more affordable price points that he targets for his rentals. “As far as the long-term trends, I think they are still there, especially in the entry-level price point, which is our price point for rentals,” said Delille, who both holds properties as rentals and resells to owner-occupant buyers. “The demand is there, but it’s harder to make the numbers work.” Lizell agreed, adding that he is expecting at least a short-term boost in the 2023 housing market as mortgage rates stabilize and even drift lower. “We’re going to have what I think is a nice temporary boom in real estate as interest rates get into the fives, a magical number
AFFORDABLE HOUSING SAFE HAVEN
Even though Dellile is buying less, he’s still confident in the longer term
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