Foreclosure Buyers Moving Online in Wake of COVID-19 Crisis
COVID-10’s impact on real estate investing
Auction.com’s recently released second quarter 2020 Foreclosure Buyer Insights report focuses on buyer outlook, sentiment and acquisition strategies in light of the COVID-19 pandemic and ensuing market turmoil.
The data in the report comes from two surveys. One was conducted in February before national emergency declarations, and the second in April after the national emergency declarations. The surveys were sent to buyers who had purchased at least one property on the Auction.com marketplace.
Auction.com is the nation’s largest online real estate transaction marketplace focused exclusively on the sale of bank-owned and foreclosure properties.
Survey results for the report were analyzed and summarized by Auction.com’s market research and analysis team, which is led by Daren Blomquist. Among the
findings in the report:
- Online auctions now top acquisition strategy, with rising interest in remote bidding technology for live auctions.
- Most hold-as-rental buyers, small-volume buyers and online auction buyers plan an increase or no change in property acquisitions in 2020.
- 14% percent of buyers expect flat or declining home prices in 2020, up from 7% in 2019.
- 76% of buyers bought five or fewer properties in 2019.
- A growing majority of buyers ranked rehabbing and reselling to owner-occupants as their preferred investing strategy.
- One-third of buyers ranked hold-as-rental as their preferred investing strategy.
- More than 80% of both rehab-and-resell and hold-as-rental buyers budget at least 10% of a property’s purchase price for rehab costs.
- 46% of buyers acquire a majority of investment properties from Auction.com.
“Most foreclosure buyers are small-volume investors purchasing fewer than five properties a year, and more than 90% of them are either selling to owner-occupants or holding the properties as rentals,” said Jason Allnutt, Auction.com CEO. “This broad base of buyers is proving resilient even in the midst of market turmoil, leveraging the power of online auctions even as other sources of inventory are on the decline.”
