Once a golden goose and a source of steady profit for real estate investors, the foreclosure auction market is going through a dramatic shift in 2025.
The supply of distressed properties are decreasing. As a result, properties are selling for higher prices impacting the profit margins that fixed-and-flipper investors and value-driven buyers like Ron Meyers of Ron Buys Florida Homes once banked on.
“Buying at foreclosure auctions is getting harder; there are fewer distressed properties, and prices are way up,” Meyers said. “It feels like everyone is competing for the same house, and profit margins just aren’t what they used to be.
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“I recently bid on a house [at auction] that would’ve gone for around $150,000 a few years back. The bidding shot up to $210,000, and the numbers didn’t make sense after factoring in repairs and resale value — that’s been happening a lot, so I’m having to change how I find deals.”
Peter Diamond, a real estate and structure expert agrees.
“For years, foreclosure auctions were the investor’s go-to for low prices and predictable margins,” Diamond said. “Now, with inventory shrinking and competition driving up bids, the easy wins are disappearing.”
Investors can no longer rely on foreclosure discounts alone due to rising costs and thinner margins, he added.
What does this mean for investors looking to capitalize on high profits? GOBankingRates brings you the alternative strategies savvy real estate investors use to generate higher profits that are no longer available on the auction block.
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Find Off-Market Properties With Direct-to-Seller Marketing
One strategy is to find properties before they hit the market with direct-to-seller marketing. Meyers uses this strategy by finding motivated sellers who want to sell fast without the hassle of listing their home on the market and paying a realtor commission. He said he generates leads through the internet through Google PPC ads, Facebook advertising and his Google business profile.
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Partner With Wholesalers and Local Agents
Another alternative acquisition strategy is building strong relationships with wholesalers and local agents. Meyers works with top agents by referring sellers who are better suited for retail listings.
“In return, they keep me in the loop on properties that might be a good fit for a quick cash sale before they hit the market or go to auction,” Meyers explained. “With these strategies in place, I have found that I no longer need to rely on the auction calendars or bidding process to purchase properties.”
Focus on Pre-Foreclosures
Some investors find great deals in pre-foreclosures by partnering with banks and reaching out to homeowners in the pre-foreclosure stage.
According to Patrick Schultz, the co-founder of Uncle Tex Buys Houses, the real opportunity is in the pre-foreclosure phase, where big data gives investors a window into homeowner distress long before a property goes to auction.
“Compared to the Great Financial Crisis, investors now have access to a staggering amount of real-time data — everything from missed mortgage payments and utility shutoffs to lien filings and property code violations like tall overgrown lawn (our favorite under-the-radar sign),” Schultz noted.
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This article originally appeared on GOBankingRates.com: Foreclosures Are Decreasing: 3 Things This Means for Real Estate Investors