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Regular homebuyers may be flipping the script on Wall Street-backed
institutional investors in one surprising corner of the housing market.
Buyers at foreclosure or bank-owned auction are more likely to be owner-
occupants than institutional investors, according to a 2022 Auction.com
buyer survey.
e survey found that 8% of respondents—all
who purchased at least one property at a distressed
property auction via the Auction.com platform
in the last three years—identified themselves
as owner-occupant buyers, while 5% identified
themselves as institutional investors.
"We bought our current house through
Auction.com," wrote one respondent, echoing a
common theme.
While most auction buyers (84%) identified
themselves as individual investors, that the
percentage of owner-occupant buyers was
higher than institutional investors is somewhat
surprising given the obstacles that owner-
occupants face when purchasing a distressed
property at auction. Cash is required for
most purchases. Most properties need major
renovation. And about half of properties are
occupied by the former homeowners or tenants.
e buyer survey data is supported by
actual sales data from Auction.com, which
accounts for more than 40% of all foreclosure
auction sales nationwide, along with broader
market data.
Buyers purchasing just one property on
the Auction.com platform in the last two years
accounted for 83% of all foreclosure auction
buyers, and those buyers accounted for more
than half of all purchases on the Auction.com
platform in the last two years. Meanwhile,
less than 1% of all foreclosure auction buyers
purchased more than 10 properties over the last
two years.
e median distance between foreclosure
auction buyers and the properties they
purchased was 14 miles in 2020 and 16 miles
in 2021.
e story is nearly identical for buyers
of bank-owned (REO) properties. Buyers
purchasing just one REO property on the
Auction.com platform in the last two years
accounted for 85% of REO auction buyers and
64% of all REO auction sales. Less than 1% of
all REO auction buyers purchased more than
10 properties during the two-year period. e
median distance between REO auction buyers
and the properties they purchased was 14 miles
in 2020 and 20 miles in 2021.
Feature By: Daren Blomquist
WHO IS BIDDING
AT FORECLOSURE
AUCTIONS?
Most foreclosure buyers are local community developers renovating and reselling to owner-occupants.
