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60 A survey of Auction.com buyers in April found that only 12% of buyers selected the MLS as their preferred property acquisition method compared to 61% who selected online REO auctions as their preferred property acquisition method. Furthermore, the few cash buyers who are mining the MLS for deals are accustomed to getting a discount when they acquire properties through that channel. is is evident from an analysis of public record sales data from ATTOM Data Solutions, which shows all- cash homebuyers in 2019 purchased for 10% below estimated market value on average while homebuyers using financing purchased for 3% above market value on average. e analysis excluded cash buyers purchasing at foreclosure sale. On the other hand, if a distressed property is renovated into financeable condition before it is resold, the seller (rather than a cash-buying real estate investor) takes on the risk of holding and renovating the property—betting that the renovations will ultimately help the property sell at a higher price point. It's clear from the price-to-credit bid ratios that this additional risk and renovation cost do little to improve price execution and can even harm price execution. HIGHER OWNER-OCCUPANCY RATES Many mortgage servicers are admirably committed to promoting neighborhood stabilization through their distressed disposition strategy. Renovating and reselling to retail buyers— who are more likely to be owner-occupants than the cash-buying real estate investors—may seem like the best disposition strategy for promoting neighborhood stabilization. But it turns out that is often not the case. An Auction.com analysis of more than 165,000 properties brought to foreclosure auction in 2018 and 2019 found that REO properties resold on the MLS were less likely to be owner-occupied a year after the foreclosure auction than properties that sold to third-party buyers at the foreclosure auction. According to the analysis, 69% of properties sold to third-party buyers at the foreclosure auction (typically cash-buying investors) were owner-occupied within a year, compared to a 46% owner-occupancy rate for properties that reverted to REO at the foreclosure auction and then were subsequently resold on the MLS. is analysis implies that cash-buying real estate investors are better than mortgage servicers at efficiently getting formerly distressed homes into the hands of owner- occupants. Feature By: Daren Blomquist REO properties resold on the MLS were less likely to be owner- occupied a year after the foreclosure auction than properties that sold to third-party buyers at the foreclosure auction.

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