Banks Outbidding Investors at Auction in Some Recovering Markets

Real estate investors are being outbid by lenders at foreclosure auctions in some recovering housing markets. More lenders are buying back properties at auction and real estate investors are losing out in markets like Austin and Phoenix.

Banks  are outbidding third-party investors at foreclosure auctions in Austin, according to Harold  McGee, with Nextage Captex Realty. McGee said investors are pulling money out of the bank and investing in residential real estate, especially foreclosures auction properties.

Read more about what’s happening in the Austin real estate market in the May issue of the Foreclosure News Report.

“Very few investors are buying the properties at the auction because the lenders are taking it back themselves,” said McGee, referring to the new trend. “I went with an investor to the courthouse steps  for the February auction, but there were very few investors and the reps for the lenders were outbidding. I have bought all (my foreclosures) through the  MLS.”

In the San Francisco Bay Area, investors are moving their foreclosure search from the Multiple Listing Service to the action block according to Jesse Fowler, a broker with Brown & Co. Real Estate in San Francisco.

“Banks are opening their bids at higher levels at auction and taking them back more often, said Fowler, referring to foreclosure auctions at the courthouse steps. “The banks realize we’re in a seller’s market in San Francisco.”

Fowler called the Bay Area “the hottest real estate market in America.” He said home prices are soaring along the San Francisco peninsula as Googlers and Facebook employees battle with foreign investors for a place to live in the Bay Area.

San Francisco was ranked one of the top 10 places to buy a foreclosure in the May issue of the Foreclosure News Report. Subscribe to the Foreclosure News Report to read more about San Francisco and other cities in the top 10.

This is a sign of a healthy real estate market in these metro areas. If the banks have enough confidence to outbid seasoned investors at the courthouse steps, that means the lenders know they can sell the property at a higher price by repossessing, rehabbing and selling on the Multiple Listing Service (MLS).

What do you think readers? Are banks buying up foreclosed home at auctions near you? Is this a positive trend?
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