A friend of mine just email me the attached graph.
To complete a lenders foreclosure process the bank must go to an all cash auction at the court house. The opening bid is typically simply the loans outstanding balance, but since 2008 the banks have been “dropping” their opening bid to sell the asset directly to an investor.
Purchasing homes at trustee sales come with a lot of risk:
According to the chart in April buyers paid 92% of retail value at the trustee sale. On top of paying 92% the buyer has to catch up taxes, remove the occupant (usually by paying cash-for-keys) and repair the property. Paying 92% essentially means the buyer will have a total cost over market value.
Clearly these are landlords… but how long can this last?