How Remote Auction Technology is Empowering Local Community Developers

This piece originally appeared in the April 2022 edition of DS News magazine, online now.

As more properties are foreclosed in 2022, remote auction technology will help ensure that more of these distressed properties are sold to local community developers who will responsibly rehabilitate and convert homes. quality housing at affordable prices, mainly for owner-occupiers. .

“Being here and helping to improve communities is just beyond satisfying because real estate was something my dad was passionate about,” said Sue McCormick, an buyer who bought three properties from foreclosure in 2021 in his hometown of Dayton, Ohio. “I’m happy to say that all of our home sales for our rehabs have been sold to owner-occupiers.”

McCormick doesn’t fit the stereotype many have of foreclosure buyers: Wall Street-backed institutional investors snap up thousands of properties across the country each year to build a single-family rental empire. In almost complete contrast to that stereotype, McCormick started buying in 2020 and has been able to buy, rehab, and resell a handful of distressed properties — all in and around the neighborhoods where she grew up in Dayton — even while maintaining a full-time , work from nine to five.

The institutional investor stereotype was fine in the years following the 2008 recession, but most foreclosure auction buyers in 2021 were more like McCormick: 99% bought 10 or fewer homes through foreclosure auctions over the year, and the median distance between foreclosure auction buyers and the properties they purchased was just 15 miles, according to data from

Like McCormick, these local community developers sell most of their remodeled foreclosure resales to homeowners: 68% among resellers who sold 10 or fewer remodeled foreclosures in 2020 and 2021 combined, according to an analysis of subsequent sales after the sale of foreclosure using a public record and Multiple Listing Service (MLS) data.

The renovations carried out by these local community developers have recovered the full market value of the houses, which have been resold for an average of 104% of their estimated value after repair. This post-repair value was based on an automated valuation model from ATTOM Data Solutions.

Despite recouping full market value through renovation, renovated foreclosures sold by local community developers were still affordable to local buyers, selling at a price-to-income ratio of just 3.5 times the median household income in the surrounding census tract. Median family income data comes from the latest Census Bureau estimates.

Growing competition
Technology-fueled innovation at the foreclosure auction helps buyers like McCormick compete.

“I’ve found myself competing with bigger investors at times and it can be frustrating because I know they have deep pockets,” she said, noting that remote auction technology was helping her. to compete with these big investors. “I use Remote Bid (on the mobile app) 75% of the time because I travel for work, so a lot of times I’m away from my laptop, not home. I could be on the road.”

“I just like the process in general,” she added. “I don’t need to be in a crowded room. I love this idea, especially now during the pandemic.

Remote auction technology allows potential foreclosure buyers to remotely purchase properties at a foreclosure auction, even in states that still mandate a traditional in-person auction, all states except Ohio and Florida.

This technology is available in nearly 900 counties through the remote bidding feature of the mobile app. Potential buyers can follow, bid and buy at live auctions from anywhere their mobile phone has data coverage.

Level the playing field for local buyers
An analysis of remote bids placed and won in 2021 shows that technology is helping to level the playing field for local, low-volume buyers. With the ability to bid remotely, these local community developers are better equipped to compete and beat large institutional buyers whose capital and resources have historically given them the upper hand at in-person foreclosure auctions.

“Chattanooga just got inundated with investors from California and other places…there’s no property you can buy and afford there,” said Steve Johnson, an buyer. based in Chattanooga, Tennessee, who bought two properties across the border in Georgia. using Remote Bid in 2021.

Analysis shows that remote auction technology is helping buyers from local community developers like Johnson expand their buying radius. In 2021, the median distance between remote bidders and properties to bid on was 39 miles, compared to a median of 16 miles for in-person auction bidders.

The expanded buy radius enabled by Remote Bid was most evident among small and medium volume buyers, resulting in a median buy radius comparable to high volume buyers.

Small-volume buyers — those bidding on 10 or fewer properties in 2021 — are bidding on properties a median 13 miles from where they live when bidding at in-person foreclosure auctions. That was just over half the 22-mile auction radius for high-volume buyers — those bidding on 10 or more properties in 2021 — at in-person auctions. But the median buy radius for low-volume shoppers using Remote Bid was 37 miles, just six miles below the median buy radius for high-volume shoppers using Remote Bid (43 miles) and above. the median radius of 25 miles for all large buyers. .

A higher percentage of bidders using remote bidding were out of state: 21% versus 10% for in-person bidders. But many of those bidders are like Johnson, leveraging technology to bid on properties that may be across the border but are still within driving distance.

The two properties Johnson bought in 2021 via Remote Bid were within driving distance of his home, and he visited both regularly to carry out renovations after the purchase. Remote bidding has gained the most traction in the states of Georgia and Texas, where all statewide foreclosure auctions are held on the first Tuesday of each month. These “Super Tuesday” auctions have traditionally hampered bids from resource-constrained buyers like Johnson.

“You don’t have to go sit in the courthouse,” Johnson said, describing the experience of buying both properties through Remote Bid. He bought both homes at the March Super Tuesday foreclosure auction in Georgia, even though they were in two different counties with live foreclosure auctions happening simultaneously. “There were a host of auctions going on at Warner Robins that day. … I went ahead and placed a remote bid for the Warner Robins property and then also placed a remote offer on the Wadley (property).