Investing in Distressed Assets: The Q1 2026 REO and Texas Foreclosure Auction Report

Navigating the New Normal in Distressed Real EstateWelcome back to another essential update for real estate investors, note buyers, and market watchers! We are officially in Q2 of 2026, and the landscape of distressed property is shifting rapidly. In this episode, we dive deep into the latest data from the Texas foreclosure auctions and broader national trends. Is the market entering a crisis, or are we simply returning to pre-pandemic normalization? Whether you are looking for residential opportunities in Harris County or commercial assets in North Texas, this episode provides the data-backed roadmap you need to stay ahead of the curve.National Trends & Q1 Market DataWe kick things off by breaking down the latest quarterly report from Auction.com, featuring insights from industry expert Darren Blomquist. Across the USA, we are seeing a significant return to 2020 levels of market stress.National Volume Spike: Foreclosure auction volume increased 33% in 2026, reaching a six-year high.Widespread Distress: 44 states and the District of Columbia reported annual increases in foreclosure volume.Normalization vs. Crisis: While volume is up, the data suggests a steady "normalization" to pre-pandemic levels rather than a sudden market crash.Equity Erosion: Average equity for scheduled foreclosures has declined to 26.9%—a 13% drop year-over-year—driven by cooling property values.The REO Shift: Banks are increasingly taking properties back at auction and listing them as REOs on digital platforms at "market-attuned" pricing.The Texas Lone Star Update: May 2026As one of the leading foreclosure states in the country, Texas is seeing a fascinating month-over-month shift. We break down the residential and commercial filings for May:The Monthly Drop: Despite an annual upward trend, May saw 3,774 filings—a 20% decrease from April.Commercial Snapshot: There are 456 commercial filings across Texas this month, with North Texas (DFW area) leading the charge at 144 filings.County Breakdown:Harris County: Remains a powerhouse with 698 residential filings.Bexar County: Holding steady with 397 filings.Dallas & Tarrant: Seeing slight month-over-month declines but still high-volume markets.The "Zero" List: Notably, Fort Bend and Montgomery counties showed zero scheduled foreclosures in the reported data for this specific period.Strategies for InvestorsWe also discuss how to capitalize on these trends, including a recap of our session with Texas legend Arnie Abramson on making money at tax sales. Learn why buyers are currently paying roughly 67 cents on the dollar for auction assets and how "bid-ask spreads" are narrowing as sellers adjust to sluggish conditions.Conclusion: Take Action in the Distressed MarketThe numbers don’t lie—the foreclosure supply is rebuilding, and the opportunities for prepared investors are growing. Don't wait for the competition to catch up. Use the resources mentioned in today's show, like Roddy’s List and Foreclosure.com, to do your due diligence and start bidding with confidence. If you found this update helpful, subscribe to the Note Closers Show Podcast and join us at the next auction. Until next time, go out there, take action, and we’ll see you at the top! Watch the Original VIDEO HERE!Got Questions? Book a Call With Scott HERE!Connect with Scott on LinkedIn here! Use Scott's AI Clone HERE!