Retail Homeownership Rate Ten Points Higher for Auctions than Retail Sales
by Daren Blomquist
Auction.com, the nation’s leading distressed real estate marketplace, released its 2025 Disposition Strategy Report, which shows that distressed property disposition strategies that favor earlier sales at auction have increased their advantage over traditional retail market dispositions in the last two years as the retail housing market has become mired down with rising inventory and slowing home price appreciation.
Based on an analysis of more than 390,000 distressed property dispositions between January 2018 and September 2025 using proprietary data from Auction.com and public record data, the report shows that estimated net proceeds for auction sale dispositions, both foreclosure auctions and bank-owned (REO) auctions, were 43 percentage points higher than traditional REO sale dispositions in 2025 through the third quarter. That was the biggest net proceeds advantage for auction dispositions on record for the scope of the report’s data.
“The time value of money principle — that a dollar today is worth more than a dollar in the future — is key to understanding why earlier dispositions perform better, coming into even sharper focus in a slowing market,” said Jason Allnutt, Auction.com CEO.
Ballooning Days in REO Inventory
Average days in mortgage servicers’ real estate owned (REO) inventory for traditional REO sales rose to 897 through the third quarter of 2025, up by 77 days from 2024 and up by about six months (179 days) from 2023.
By comparison, average days in inventory for REO auction sales decreased to 320 in 2025, down by 16 days from 2024 and down by 3 days from 2023. By definition, foreclosure auction sales result in zero days in REO inventory because the property is sold to a third-party buyer rather than reverting back to the mortgage servicer.
Fewer days in inventory not only means lower holding costs that impact net proceeds, it also often results in a higher gross price execution due to buyer psychology around days on market, particularly in local markets with slowing or negative home price appreciation.
“In this market your first offer is usually going to be your best offer,” said Pensacola, Florida, real estate broker Tavia Dowden, who helped a local homeowner facing foreclosure to sell pre-foreclosure via Auction.com’s new SmartSale offering for private sellers.
$2.8 Billion in Market Surplus
More than half (52%) of all foreclosure auction sales through the third quarter of 2025 generated surplus funds above the total debt owed to the foreclosing entity. That compares to just 3% of REO auctions and 16% of traditional REO sales — and even that surplus is unrealized for junior lien holders and distressed homeowners given that most junior liens do not survive a foreclosure auction and that distressed homeowners lose any right to recover surplus after the foreclosure auction is completed.
Foreclosure auction sales generated an average surplus of nearly $57,000 per sale so far in 2025, and that surplus is available to junior lien holders and then to distressed homeowners after any junior liens are paid. Foreclosure auction sales have generated a total of $2.8 billion in surplus funds since 2018 on the Auction.com platform alone.
Higher Retail Homeownership Rate
More than half of all homes purchased at distressed property auctions (including both foreclosure and REO auctions) since 2018 have been resold, and 77% of those resales were owner-occupied as of the third quarter of 2025.
That 77% retail homeownership rate for auction dispositions is 10 percentage points higher than the retail homeownership rate for traditional REO dispositions, and that 10-point gap is consistent in underserved neighborhoods and Opportunity Zones.
Faster Return to Retail, More Value Added
Auction sales that resold within a year (indicating the buyer is not employing a buy-and-hold strategy) were resold in the retail market an average of 189 days after the foreclosure auction. That was 247 days (more than eight months) faster than the average 436 days between the foreclosure auction and retail sale for traditional REO dispositions.
During the average 189-day renovation period for distressed properties purchased at auction, an average of 36 percentage points in property value is added. That is nearly five times as much as the 8 points in property value added during the average 436 days between foreclosure auction and traditional REO sale.
Affordable Housing Supply
Despite the disparity in value-add between auction dispositions and traditional REO dispositions, resales of properties purchased at auction are still affordable for local buyers, many of whom are owner-occupants.
Resales of distressed properties purchased at auction (both foreclosure and REO) since 2018 had an average resale price of about $289,000, 23% below the average sale price of about $375,000 for all retail home sales during that period, according to public record data.
The estimated average monthly payment for the renovated properties purchased at auction — including principal, interest, taxes and insurance — would require 27.6% of the median family income in the surrounding Census tract. Distressed property resales are slightly less affordable in underserved neighborhoods at 32.4% of the local family income to buy but slightly more affordable in Opportunity Zones at 27.0%.
Key Takeaways
» Net proceeds advantage for auctions over retail dispositions widens to record 43 points
» Days in real estate owned (REO) inventory jumps to 897 days for retail dispositions
» Foreclosure auctions also maximize surplus for junior lien holders, homeowners
» Retail homeownership rate 10 points higher for auctions than retail sales
