Ever wished you could more easily predict foreclosures and find homeowners with a higher likelihood of listing or selling in the near future as a real estate investor? Currently, less than 1% of all homes go into foreclosure each year. As such, finding reliable data on the likelihood of certain residential properties falling into foreclosure is hard to find and even more difficult to analyze.
Our unique propensity to default data and scoring system can help you uncover the probability that a home will go into foreclosure. You can use this data to help find properties at a higher risk of default and find homeowners who may be motivated to list or sell their property — giving you an edge among your competitors.
In this post, we explore how real estate investors use our propensity to default data to do just that — providing you with an in-depth look at how this data works, the models behind it, and how it may benefit you.
Why should I use propensity to default data as a real estate investor?
As a real estate investor, it can be a challenge to find real-time data on properties’ likelihood of going into foreclosure. In addition, it can be difficult and time-consuming to analyze this data in order to spot trends and help pinpoint probability somewhat accurately and reliably.
While several data providers can offer a blanket insight into market trends and make sound predictions on foreclosure trends across the U.S. — this kind of analysis typically doesn’t provide the granular insights you need to find homeowners ready to list or sell right now.
As a real estate investor, having access to predictive analytics that help assess whether specific residential properties may go into foreclosure can help you make more informed business decisions that help you find new prospective deals and potentially help you stay ahead of your competitors. Using advanced algorithms and predictive analytics, you can use ATTOM’s propensity to default data and analytics to help uncover new opportunities and homeowners that may wish to sell.
A look at ATTOM’s propensity to default data
As the number of homeowners defaulting on their mortgage is notably small each year, it can be hard to detect a consistent pattern in available preforeclosure and foreclosure datapoints without the right technology. At ATTOM, we use predictive modelling and advanced algorithms to help analyze the likelihood of certain residential properties going into foreclosure.
Supported by an advanced predictive model, which utilizes ATTOM’s extensive foreclosure and mortgage data alongside tax return information from Powerlytics, encompassing over 150 million households across the United States, the Propensity to Default score identifies which properties have the highest and lowest likelihood of going into foreclosure over the next 12 months.
We deliver unique residential default propensity scores for properties with mortgages. Our predictive module creates propensity to default scores by combining data from Powerlytics’ proprietary database with our own robust historical mortgage and pre-foreclosure data.
We currently provide a propensity to default score for nearly every property with an active mortgage in the U.S. Here’s how it works: each property in our database gets given a normalized probability score from 0-100. The higher the score is to 100, the more likely the property is to default within the next 12 months.
In addition, we also group each property into “propensity groups,” so you can compare the likelihood of a property going into default in the next year in comparison to other properties listed in our database.
Let’s take a look at our model’s efficacy
How accurate are our foreclosure probability and propensity group scores?
According to our latest tests:
- Our model can identify 95.5% of the residential properties that will go into foreclosure status (Notice of Default or Lis Pendens) in the following 12 months by focusing on the top 3 deciles of ATTOM IDs.
- This group has a 3.2 times higher likelihood of going into foreclosure status than a randomly selected property.
To help ensure accuracy, we update our model every quarter with a rigorous validation and testing process. Currently, we focus on residential homes with one or more home loans — providing coverage on over 57 million residential properties across all 50 states. While this data and scoring doesn’t mean that every property identified will go into default — the
the model is built to highlight homes with the highest foreclosure propensity.
Learn more about ATTOM’s unique propensity to default data
As a real estate investor, having access to information on how likely certain properties are to fall into foreclosure can go a long way in helping you to find homeowners who are likely to default on their mortgage — helping to open up new business opportunities and potentially increasing your returns. However, without a dedicated provider, this data can be hard to find and even more challenging to analyze.
Want to learn more about our unique propensity to default data and how it may help you as a real estate investor? Get our exclusive white paper here.
