Investors More Bearish, But Still Buying Aggressively at Auction | Think Realty | A Real Estate of Mind

Abstract

Investors aren't just buying a higher percentage of properties available at foreclosure auction; they're willing to pay higher prices. In the five years before the pandemic, the sales price at foreclosure auction was 78% of the estimated as-is value on average, meaning buyers were paying 22% below that as-is value. Many foreclosure auction buyers renovate and resell to owner-occupant buyers and other buyers who rely on financing. "We are still undersupplied," said Atlanta-area buyer Tony Tritt, who has been buying and renovating distressed properties for about 25 years. Like the majority of Auction.com buyers, Tritt is expecting a possible slowdown in his market, but he believes the undercurrent of undersupply will help cushion the market from a full-fledged home price crash like he witnessed in the aftermath of the 2008 recession. "You make your money in real estate when you buy a house, not when you sell it. If you buy right, then you're going to renovate right," said Tritt. "The market is going to tell us what the sales price is. We don't get to choose that." Last, a strong rental market provides a cushion for local community developer buyers should a home price correction occur.