If you are a mortgage broker or private lender, you might have picked up on a trend in your investor client conversations—you're hearing more and more of them ask about auction investment opportunities. And with good reason: In 2025, with conventional inventory constrained and interest rates remaining stable at 6.7%, auctions are a goldmine for savvy investors to buy properties at up to 20-30% below market.
While the MLS conducts about 30% of transactions, auctions have the potential to capture tons of off-market value that brokers can then share with investor clients. But here's what most brokers get wrong—not all auction properties are created equal, and understanding which types to pursue can make all the difference between a seamless deal and an expensive mistake. From bank-owned foreclosures to short-sale gems, each category of auction has its own risk-reward profile. The solution for brokers is knowing which kind of auction properties to go after and how to present them to financing providers. Below are five property types that brokers can focus on—and how to make each of them pay off.
Several factors are driving investors toward auctions this year. First and foremost, traditional inventory remains constrained, with only 2.1 months of supply on average across the country. Two, rising property taxes and insurance rates are driving overleveraged owners into distressed selling. Three, and most importantly perhaps, the stigma attached to auctions has diminished—today's purchasers realize that an auction property's meaning has broadened far beyond distressed sales to encompass prime opportunities from motivated sellers.
For brokers, this is two-fold: Your investor clients are likely already thinking about auctions, and they require your guidance to do so effectively. The brokers who are succeeding in this area are those who can differentiate between types of property, educate clients on financing options, and help them act with speed when the proper opportunity presents itself.
Also referred to as real estate–owned (REO) properties, these are properties that were not sold at the foreclosure auction and were returned to the initial lender, typically a bank or credit union.
Based on RealtyTrac’s findings, REO inventory fell 12% year-over-year in Q1 2025, which means competition in the sector is increasing.
These are homes sold at auction by real estate agents or private owners, sometimes prior to ever being listed on the MLS.
National auction volume climbed 18% through April 2025 as rising interest rates (up to 6.8% on 30-year fixed) pushed more owners to seek accelerated sales.
Known as Claims Without Conveyance of Title (CWCOT) or "second-chance" foreclosures, these are cash-only auctions of distressed property where the title stays with the borrower, but risk shifts to the buyer.
As of April 2025, HUD's First Look program opened some CWCOT properties to non-profits and owner-occupants only. Investors bid 30 days later—usually at deep discounts.
These are live or internet auctions conducted by a trustee appointed by the court (typically a lawyer or title company) after borrower default. They are sold to the highest cash bidder, usually the amount financed plus any associated fees.
Trustee sale activity continues strongest in 2025 in California, Texas, and Florida. Examples of leading counties include Los Angeles and Cook County, which provide scale for brokers with local expertise.
Sales by owners who, desperate to avoid foreclosure, put homes on the market to sell for less than they owe. When advertised through an auction, they bring short-sale pricing together with the quickness of an auction.
Short-sale auction postings have increased 12% year-over-year as delinquency levels rose to 4% nationwide, offering discount chances for brokers' customers.
No matter the type of auction, investors need tailored financing:
RCN Capital's broker-friendly referral program provides you with competitive commission structures and white-labeled marketing materials, so you can close more deals.
Auction investments are not all "fire sales" for distressed properties. They represent a range, from non-bank owned and REO, to CWCOT, trustee auctions, and short-sale listings, each with special benefits. In 2025's low inventory and increasing rates (30-year FRM near 6.8%), off-market auction transactions can provide the best real estate opportunities.
Key Takeaways for Brokers:
To help your clients maximize the returns on their next investment, partner with a lender that can provide you with the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors and lending partners. If you are looking to offer fast, efficient financing to your clients, RCN Capital has competitive loan options and an award-winning broker referral program available to partners.