Higher Sales Prices Benefit Sellers, Neighborhoods and Noteholders. IRVINE and SILICON VALLEY, Calif. – June 17, 2014 – Auction.com, the world’s largest online real estate marketplace, today released a report prepared by Beacon Economics, an independent research and consulting firm, that concludes that the company’s Market Validation Program™ (MVP™) delivered significant increases in short sale prices, and reduced short sale discounts for both single family homes and condominiums.
“Our MVP program has delivered tangible benefits to the key constituents in short sales transactions across the country,” said Jeff Frieden, CEO and Co-Founder of Auction.com. “By delivering higher short sales prices, we’ve reduced the deficiency and potential tax burden of distressed borrowers, protected property values for other homeowners in the neighborhood, and enabled lenders and investors to reduce their losses.”
The Beacon Economics report, titled “An Analysis of Short-Sale Prices: Traditional Short-Sales vs. an Auction Platform,” analyzes short sales data from nine markets on transactions completed between March 2013 and January 2014. Among its findings, the report concluded that:
- Single family homes sold on Auction.com sold for 10.7 percent more than their original short sale offers
- Condominiums sold on Auction.com sold for 11.4 percent more than their original short sale offers
“One of the unique aspects of this program is that it is a collaborative effort between real estate professionals, mortgage servicers and Auction.com aimed at delivering the best outcome for all parties,” added Charlie Lee, EVP/Short Sales of Auction.com. “By adding the global exposure and transparency of an online auction to the local market expertise of real estate agents and brokers, we can work together to protect the interests of distressed property sellers, neighboring property owners and lenders.”
Jessica Collins, a real estate agent with Snow Canyon Marketing in St. George, Utah, shared her experience with the program. “I used Auction.com on a short sale property I had listed. They were able to answer my seller’s questions and concerns and I felt that this was the best route to get the short sale done successfully. The online platform gave us great exposure to investors and buyers all over the country...and I think it helped get the home sold faster. I am very pleased with the results and look forward to working with them again in the near future.”
The MVP program is the first of its kind in the industry. Once an offer is received by the mortgage servicer or lender, the listing agent and borrower are asked to put the property on Auction.com for an online auction, to see if a higher bid can be attained, or to validate that the offer is the best available price. This helps fulfill the servicer’s responsibility to reduce loss severity and deliver the best possible return to the mortgage holder, and improves the likelihood of a short sale offer being approved.
“In an industry that has imperfect information, the auctioning process helps prevent inefficient offers from being accepted by a seller because it raises awareness of a property's assets to more potential buyers,” said Christopher Thornberg, one of the study’s lead authors and Founding Partner of Beacon Economics. “Not only does Auction.com yield higher prices for short-sales listed through the MVP program than originally offered to the seller, but we found the final prices were significantly greater than the short-sale prices we projected based on similar property characteristics.”
On a national basis, over 8,000 short sales have been conducted via the MVP program, which has generated higher offers on 54 percent of the properties marketed. Some regions had even stronger performance: for example, over 67 percent of homes marketed in California generated a higher bid, with sales prices averaging $50,000 more than the original offer. The Beacon Economic report had similar findings when analyzing data from the nine markets included in the study: Chicago, Las Vegas, Los Angeles, Miami, Phoenix, Riverside/San Bernardino, Sacramento, San Diego and Tampa.
The company also offers a direct-to-auction product for borrowers and servicers who prefer to do short sales directly via an online auction rather than waiting to receive an initial offer. For more information on the MVP program, visit auction.com/lp/market-validation/.
Auction.com, LLC, is the nation’s leading online real estate marketplace. Founded in 2008, the company has sold nearly $20 billion in assets since 2010. Auction.com has over 900 employees and offices in Irvine and Silicon Valley, California as well as offices in Atlanta, Austin, Denver, Miami, Newport Beach, New York and Plano. Visit Auction.com for more information.
About Beacon Economics
Beacon Economics, LLC is an independent economic research and consulting firm with offices in Los Angeles and the San Francisco Bay Area. The firm delivers economic analysis and data sites that help their clients make informed, strategic decisions about investment, growth, revenue, policy, and other critical economic and financial issues. Their nationally recognized forecasters were among the first to predict the collapse of the housing market and foretell the onset and depth of the economic downturn that followed. Core areas of expertise include economic and revenue forecasting, market and industry analysis, economic impact studies, economic policy analysis, and international trade analysis.