Foreclosure Auction Volume Could Jump According To Market Forecasts

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Foreclosure Auction Volume Could Jump According To Market Forecasts

Mar 8, 2023 | News | 0 comments

The Auction.com 2023 Distressed Market Outlook shows proactive pricing is vital to optimal distressed disposition during a housing slowdown based on a case study of two nationwide cohorts of foreclosures in Q4 2022.

As a result of proactive pricing, between September 2022 and December 2022, the price of the proactive cohort was reduced by 11%, while the price of the status quo cohort was reduced only by 1%.

According to Ali Haralson, Auction.com President, the home price decline from its peak in May 2022 is now more than 9%, and is expected to continue in many markets, so sellers who are proactively pricing properties minimize the risk of taking on properties whose value is declining daily.

In the last three quarters of 2022, distressed property demand also shifted downward as buyers at foreclosure auctions and REO auctions anticipated the downturn in retail housing and began bidding more cautiously. Home prices are forecasted to fall in 40% of the nation’s largest metro areas in early 2023 as a result of auction bidding behavior, which is a reliable predictor of retail price appreciation.

Taking into account the shifting distressed property demand and slowing retail housing market, the report analyzes lender pricing strategies during foreclosure auctions in Q4 2022. When compared to lenders who stayed with a status quo pricing strategy, lenders who pursued a more proactive pricing approach saw a sales rate net gain of 40 points. Compared to the status quo pricing strategy, proactive pricing lost 2 points in price execution.

Distressed property buyers quickly returned to sustainable bidding strategies as the market slowed in response to spiking mortgage rates as the market was infected with some of the same exuberance that dominated the retail housing market in 2021 and early 2022 according to the CEO of Auction.com Jason Allnutt. He added that this volatile market will reward sellers who can be nimble and responsible in managing distressed dispositions in 2023.