Investors are undaunted by rising home prices and increasing interest rates, and perhaps even encouraged by it, as the share of third-party sales at foreclosure auctions reached a new high.
In fact, third party buyers, those who are not associated with the lender or former owner, made up 28.5% of all completed foreclosure auctions in 2016, according to the Year-End 2016 U.S. Home Sales Report from ATTOM Data Solutions, a fused property database.
The remaining 71.5% went back to the foreclosing lender. This is up from 23.5% in 2015 and the highest point going back to the earliest data available in 2000.
“The increased competition at the foreclosure auction is resulting in higher sales prices there, which can even result in surplus proceeds going to the distressed homeowner in some cases after other lien holders have been paid,” ATTOM senior vice president Daren Blomquist said.
“Our analysis of sales prices at completed foreclosure auctions in 2016 shows the smallest average loss from the property’s previous sale price since 2007, with 29% of properties nationwide selling for more than the previous sales price at the foreclosure auction,” Blomquist said. “In a handful of markets such as Seattle, Los Angeles, Portland, San Francisco and San Diego, more than 50% of properties sold at foreclosure auctions in 2016 sold for more than their previous sale price.”
“The housing market hit several important milestones in 2016, with distressed sales at a nine-year low and home prices at a 10-year high, just barely below the pre-recession peak in 2006,” Blomquist said. “This was all good news for home sellers, who realized their biggest average profits since purchase nationwide in 2016.”
“Even distressed property sellers are benefitting from this hot seller’s market, with a record-high share of homes at foreclosure auction being purchased by third-party buyers rather than reverting back to the foreclosing bank,” he said.