In a time when affordable homeownership and neighborhood stabilization are critical issues, Auction.com and its buyers are helping to create positive change. The Neighborhood Homes Investment Act aims to expand affordable homeownership and stabilize neighborhoods, and Auction.com buyers, known as local community developers, have been actively supporting these goals for some time now.
Furthermore, Auction.com continues to add tools and programs that help expand homeownership. For example, its Market Validation Program is a responsible foreclosure alternative, and its program supporting First Look helps make single-family homes more accessible to owner-occupants, which strengthens neighborhoods.
The Rise of Local Community Developers: Getting to Know Today’s Auction Buyers
Most Auction.com buyers describe themselves as local community developers (77%) or owner-occupants (15%). These dedicated individuals invest in distressed properties within their communities, demonstrating their strong roots and commitment to positively impacting neighborhoods. Bottom line: They purchase distressed properties locally, care about the communities in which they invest, and make a positive impact by helping to stabilize and develop neighborhoods through their work.
The Power of Neighborhood Stabilization: Making Homeownership More Accessible
Auction.com’s buyers are driven by an ardent desire to improve neighborhoods, expand homeownership, and provide affordable housing. According to a recent survey, 89% of Auction.com buyers rank these motivations among their top three reasons for investing in distressed properties.
“(I am) renovating homes at a reasonable price so that people in our community can hopefully have good quality, affordable housing to purchase,” said local community developer Pamela from Kansas.
Another reason homeownership can be more accessible is that foreclosure or REO auctions are generally faster in getting homes into the hands of owner occupants when compared to traditional REO sales. Critical reasons include:
- Competitive bidding fosters urgency and competition among buyers
- Quick rehabilitation, easy access, and established home improvement network expedite the process
- Local buyers possess knowledge and efficient local resources
What’s more, this commitment to community well-being is directly tied to Auction.com’s mission statement: “We create better outcomes for neighborhoods, buyers, and sellers through transparency, technology, and care.”
Adding Value Through Renovations: Increasing Home Values for Owner-Occupants
Local community developers understand the importance of making homes affordable, especially in low-income neighborhoods. To achieve this, 88% of Auction.com buyers invest at least $10,000 in property renovations, with almost half spending between $20,000 and $50,000. By renovating and reselling properties to owner-occupants, these buyers increase home values, contribute to neighborhood stability, and support the local economy.
“We put finishes in homes that we would like to have in our own homes,” said Auction.com buyer Kristen from Massachusetts. “We want those purchasing our homes to love the quality and design of the home and not need to do any additional work. We always look for the hidden things that need to be fixed or changed and never settle for shoddy construction.”
Moreover, investing in distressed properties supports job creation, with 68% of buyers saying they contribute to at least three local jobs through their investments.
“My greatest asset in real estate is the ability to keep trades, laborers, landscapers, title, agents busy and making a consistent income,” said Auction.com buyer Michael from Oregon. “It’s a good feeling knowing that so many people are able to be taken care of by my real estate purchase and renovations.”
In a 2022 study, the Urban Institute partnered with Auction.com to explore a path to obtain affordable homes and why more people don’t take advantage of this opportunity. The Urban Institute said that although distressed sales are one of the best ways for owner-occupants to enter the housing market, most distressed properties are sold to small investors. Then, the properties often trade to owner-occupants at resale. The reason? Distressed properties tend to require renovations, and most owner-occupants may not have the expertise or inclination to undertake major rehab. That is where Local Community Developers become the bridge between distressed homes and owner-occupants: Auction.com buyers purchase distressed properties, fix them, and resell them to owner-occupants at affordable prices.
Finally, an analysis of resales shows that renovated foreclosures sell for a price point that requires just 20 percent of the median family income in the surrounding neighborhood on average. Even in cases where the property is not resold to an owner-occupant, renovated foreclosures often represent quality, affordable housing for renters. The same analysis shows the average fair market rent for renovated foreclosures requires 22 percent of the local family income.
Local Buyers Create a Big Impact: Providing Affordable Homes One Purchase at a Time
Auction.com buyers, particularly local community developers, focus on purchasing a limited number of properties each year (94% buy 10 or fewer). This approach allows them to invest time and care into their properties and the communities they serve.
“I have one property that was occupied at purchase,” said Local Community Developer Karen from California. “I self-manage it and have not raised the rent for a single mother with five kids.”
Expanding Homeownership: The Distressed Market Outlook
Auction.com’s efforts align with its mission to optimize the homeownership rate for distressed property dispositions. Analysis of homeownership rates for over 263,000 distressed dispositions since 2018 reveals that 77% of renovated properties resold on the retail market and 77% resold at the REO auction were owner-occupied. These numbers demonstrate the effectiveness of Auction.com’s local community developers in helping families achieve homeownership.
The Passion Behind the Purpose
Local community developers are driven by their passion for making a difference in people’s lives. Buyers like Steve Johnson are enthusiastic about creating homeownership opportunities.
“I grew up in a rental home,” said Steve from Tennessee. “We never owned the home we lived in, so being able to own my home and help other people own homes is a passion of mine.”
These buyers genuinely care about improving neighborhoods and understand the value of homeownership in transforming lives.
In addition, according to the 2023 Buyer Insights Report, 73% of Auction.com buyers said that, when necessary, they offer some type of graceful exit if the property they bought has a current occupant. This may include covering relocation costs, offering lease-back options, or providing buy-back opportunities. These developers prioritize the well-being of people and strive to stabilize and enhance neighborhoods through responsible actions. Overall, they aim to provide high-quality, affordable housing for local residents without causing property values to soar and keep homes accessible to those who need them, especially in low-income areas.
A Win-Win-Win Scenario for All
Auction.com and its buyers, particularly the local community developers, are at the forefront of expanding homeownership and stabilizing neighborhoods. With their commitment to community well-being, responsible renovation practices, and dedication to providing affordable housing, they create a win-win-win scenario: servicers sell properties, occupants find a compassionate transition when necessary, and communities undergo positive transformations, one property at a time.
Resources
2023 Auction.com Buyer Insights Report
What is a Local Community Developer
An Inclusive Auction Marketplace Helps Expand Homeownership
2023 Auction.com Distressed Market Outlook
Neighborhood Homes Investment Act