95 95
INVESTMENT GOVERNMENT PROPERTY PRESERVATION
HOW ONLINE
AUCTIONS
IMPACT REO
HOLDING TIME
Since 2016, foreclosure sales have generated
$1.2 billion in surplus funds for distressed
homeowners—that and related intel is included
in a 2021 Seller Strategy Report from online
auction marketplace Auction.com. According
to Auction, using an analysis of more than
70,000 properties brought to foreclosure auction
in Q1-4 2020, the report 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.
"is will help to achieve better disposition
outcomes—not just for the servicer but also for
the distressed homeowner and the surrounding
neighborhood."
Auction's surplus funds 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.
After paying off junior lien holders, any
excess surplus funds go back to the distressed
homeowner.
More than 40% of all foreclosure sales
in 2019 and 2020 generated surplus funds,
according to data from Auction's platform. at
is more than twice the percentage of sales with
surplus funds between 2012 and 2015. 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% 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.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%.
e report revealed that online auctions
reduce REO holding times by 52% or 139 days.
It showed 71% of third-party foreclosure sales
that are resold are owner-occupied within two
years compared to only 49% of traditional REO
sales.
Journal