The Auction Effect is Becoming More Mainstream. What You Need to Know: Miriam Moore and Eva Tapia From ServiceLink

Miriam Moore

Miriam Moore is President of Default Services for ServiceLink, a national provider of transaction services to the mortgage industry. In this role, she is responsible for the overall management and performance of ServiceLink Auction and ServiceLink’s Default Title, Process Solutions, Valuations and Field Services divisions, as well as the development of default products and services to meet the needs of servicer and investor clients.

Eva Tapia

Eva Tapia is the Senior Vice President within ServiceLink Auction’s division. She is responsible for the overall management and performance of ServiceLink Auction through process improvement, client service and innovation to provide the level of tech-enabled service that servicers expect.

Widespread inventory shortage has piqued the interest of mainstream buyers who are now pursuing auction properties as a means to fulfill their dream of homeownership.

According to ServiceLink’s 2024 State of Homebuying Report, which surveyed 1,519 people who either purchased or attempted to purchase a home in the last four years, 54% of respondents said they are interested in purchasing a home via auction. That number is up drastically from the 33% who said they planned to go the auction route just two years ago and 43% who were willing to explore an auction purchase in 2023.

Once an industry dominated by investors, one of the biggest appeals of auction for today’s buyers is the wide net an online platform casts, allowing them to view foreclosed, recently foreclosed and bank-owned properties up for auction located anywhere across the country while sitting in the comfort of their home. Buyers can expand their search and look beyond their existing neighborhood to find better deals, specifically on distressed properties that may need a little TLC but have the potential to be their next forever home.

A Younger Market

For millennials—those born between 1981 and 1996—and Gen Z—born between 1997 and 2012—utilizing technology for nearly every task is second nature. They’re comfortable making the majority of their purchases online, and that includes buying a house.

Not surprisingly, these younger generations are most interested in exploring auction properties. Based on the 2024 SOHBR results, 67% of millennials and 64% of Gen Z were willing to explore an auction purchase in 2024, a stark rise from the 39% of both generations who were interested in 2023, and much higher than the 29% of baby boomers who planned to look at auction this year.

While potential cost savings and being able to bid on a home remotely were the top two reasons to buy at auction, respondents also said they like the faster closing process and feel like they have more transparency into the process with auction.

Today’s buyers also know what they want, and auction provides them with an additional avenue to get there while expanding their search. According to SOHBR respondents, Gen Z wants a larger home with more space and Gen X wants that, coupled with more space between homes. In today’s market, where competition is high, auctions give buyers a greater chance to find what they are looking for, at a price they can afford, if they are willing to put in a little sweat equity along the way. 

Education Matters

One barrier that younger generations could face in the auction space is the need for cash in hand during a foreclosure. Having access to vital resources that help these buyers through the process—even determining how to get funding–is a must, especially in the auction space. For first-time home buyers, this is likely the biggest purchase they have ever made. So, it’s important that they feel comfortable and know how to maneuver their way through this space. Auction platforms offer help to buyers, whether they have an agent or are looking on their own. They strive to make it easy for the buyer and provide them with the information they need at every step of the way. 

Using a platform, like ServiceLink Auction’s Learning Center, provides buyers with all the tips and tools they need to purchase at a foreclosure auction on the courthouse steps or post-foreclosure online sales. Auction can be intimidating for novice buyers, so it’s important to hold their hand and provide them with the information they need to maneuver through the process. With the right tools, anyone can buy at auction, not just investors with years of experience in the space.

Building Community

While Fix-and-Flip remains a prime option for investors, many of today’s buyers are looking at auction to purchase their primary residence. Forty-five percent of 2024 SOHBR respondents said they plan to live in the home they buy at auction. These numbers were highest for Gen Z (51%) and millennials (50%), while only 38% of baby boomers interested in buying at auction planned to live at the property.

These findings are in line with recent neighborhood stabilization efforts, that focus on owner-occupied home purchases.

There is a large focus by the GSEs on neighborhood stabilization. They want to see individuals purchase homes with the intent to stay there for several years. Efforts like the U.S. Department of Housing and Urban Development’s First-Look policy provides first-time homebuyers and nonprofits with an exclusive opportunity to purchase a home within 30 days of listing without having to compete with investors. Buyer-exclusive programs like this help get people who are invested in the community into these homes and help stabilize the neighborhood.

Why You Should Pay Attention

No one likes foreclosure. While there are many efforts underway to keep people in their homes, foreclosure is often the last resort. When there’s nothing left to keep the person in their home, a competitive market ultimately means that the borrower gets the highest and best for their property value. National visibility through online marketing often brings more interest and higher sale prices for the original owner.

For servicers, as well, the added competition is great news, as they receive a higher yield. With properties selling faster, there’s also less of a risk that property damage will occur as it sits on the market.

It’s important to understand the state of the local market—down to the zip code—and stay up to date on changes underway to stay ahead of the current trends.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)