Roberta's Las Vegas Real Estate Blog: Las Vegas Foreclosure Auctions

Las Vegas Foreclosure Auctions

You may have caught my last post about the Las Vegas Foreclosures and the call I received on the $40k 4BR, listed on a site often quoted in the media as a leading source. Since then I've had it brought to my attention that it was actually one of the Las Vegas Bank Owned - Priced Right? pricier listings, after seeing this "REO" that was included from their search.

For some strange reason I'm beginning to doubt the accuracy of these sources of foreclosure information that are portrayed in the media as credible. It seems I'm not alone, and found this reprint of an Atlanta Journal Constitution Story. The VP of marketing of this leading source says they never realised their website information would come under such "scrutiny". Could it be that it adversely effects the housing market, that in turn effects the nation's economy? That this effects the lives of every homeowner or those that may want to be? Even their subscribers, that are paying $50 a month for this "information"?

It seems that they create other questionable perceptions. Like this one, by only having 1435 resales listed for the Las Vegas market, while tens of thousands of some state of foreclosure are listed. Again, is this accurate? They aren't anything close to the GLVAR MLS figures.

Then today I got the latest Foreclosure Auction ad wrapped around the front of my morning paper. WOW, 280 "Lender Foreclosed Homes" up for bid at some amazing "starting bids". Are these auctions more realistic, or creating more misconceptions?


Of course you can visit their website for more information, so I did. It seems like a good idea, since I've been asked about these Foreclosure Auctions and bidders are allowed to be represented by a registered agent. They even offer a 1% commission to agents on properties that actually close. On their home page they list links to FAQ's and "How do Auctions Work", and a small text mention of *see our terms and conditions. On the plus side, they do include a link to a PDF file on the individual listing page. It starts out explaining the buyer's need to do their Due Diligence. Sounds good so far, right?

That's just a small sample and you can read the entire page at the link above, but it appears to spell everything out in detail, including the "Previously valued to" and how that price was determined. Considering it could be possible that I could be asked to represent a bidder, I thought it appropriate that I do some random "Due Diligence" just for practice. OMG!! What about this one??? An over ½ MILLION dollar "Previously valued to" condo, with a starting bid of just $69,000!!! Now THIS could attract some bidders!

How much more straight forward can you get? They even give the address and unit number of the property. Well there appears to be some unusual issues with this. One, it's not "Lender Owned". At least according to the Clark Co. assessor's website. They show it being the same owner since 2005. The Clark Co. recorder's online information also lists the last filing as of March 2005. It appears something is wrong here...that's the same address.

Yes, and near the bottom there's the last sale / price in 03/05. Wait a minute... does that say that this unit sold near the peak of the boom market for $144,000??? Oh wait, the listing does say it has upgrades. That must account for a big portion of the extra $388,000 "Price valued to".

Well that one must have been a fluke. I figured I should check one more, and maybe a little less extreme of an eye catching value. How about a 4200+ sf home built in 2006 that's only "Price valued to" $587,900, with an opening bid of $229,000. Still an eye catching deal.

Well this is a little better. It is actually owned by a lender. It also had a foreclosed sale price listed on the Clark Co. assessor's site that was very close to the "Price valued to". Being a REALTOR® I also have access to the listing history of this property, and can say that the lender did originally list it for $587,900.

Oh, and in all fairness I can also say that this property had been sold new for $602,405. I can also say that while the bank had it they had reduced the price every month, until it was lowered to $519,900 as of Jan 31, 08, and is still currently an active listing at this price. MY, that's quite a difference and it does make you wonder about that opening bid of $229,000. Well of course they do mention in those Terms and Conditions that there could be a reserve price. I wonder...would the reserve be closer to the $229,000, or the listing price of $519,900?

OH MY, and "except where prohibited by law, they could actually have someone bidding against you, up to the reserve price. Does this mean they would have a shill, a plant among the bidders to drive the price up beyond that eye catching starting bid?

Then it appears that even if your bid doesn't meet the reserve amount, you could still be the WINNER! "Subject to Confirmation", of course. You only have to put up you $5000 Earnest Money cash or Certified Check, and of course the 5% Bidders Premium. That's only held for 15 business days while the seller determines to accept or reject your offer. Goodness, the earnest money alone if all 280 properties had a winner would be $1.4 million.

There was a recent Las Vegas Review Journal article about Real Estate auctions. Towards the end there are mentions of how many deals actually close escrow. It appears rather low.

Of course everything is all spelled out in this auction's "Terms and Conditions" .

It would appear that makes it all legal. There are more realistically priced homes in the mix and obviously some values to be had, but with these low ball numbers included I have to wonder about what impression it sets. These low starting bids, and these apparently less than accurate foreclosure information sources must appear to many as housing market prices falling much more sharply than they actually are. They'll need to wait until it hits bottom or risk the possibility of buying negative equity. With the housing market already dragging the economy down, and these sources nationwide and internationally on the Internet, it seems to create a poor situation for our nation's economic recovery...and that effects most everyone. From homeowners trying to refinance amid dropping appraisal values, to those loosing their jobs directly or indirectly from the housing market decline.

Edited to add:

This link about "Auctions available to You" from the National Association of REALTORS®.

It appears they use a little more straight forward approach in the three auction types listed there.

If you are interested in relocating to Las Vegas or would like information on Las Vegas real estate, please email me roberta@search4lasvegashomes.com or call me at 702-354-8988. I look forward to hearing from you!

Comment balloon 6 commentsRoberta LaRocca • March 09 2008 12:46AM

Comments

Roberta....  what format are you using for your posts?  Or are you using HTML?

jeff belonger
Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 11 years ago
Jeff:  I use HTML.
Posted by Roberta LaRocca, REALTOR®, Broker, Salesperson, Property Management (Simply Vegas Real Estate) over 11 years ago
We've seen the same thing out here in Arizona.  I didn't find this out until an Realtor partner asked me if I could help him with a client looking for a foreclosure in a subdivision.  It was pretty sad how few public record notices of default were NOT on the list.
Posted by Mark Organek, On a journey to accomplish one huge goal. (And the United States of America) over 11 years ago
Very interesting article and thanks for sharing.  You did a good job with formatting it.
Posted by Tom Davis, FREE Delaware Homes Search!, $$ Save $$ - Find Homes! Delaware Realtor (Harrington ERA,DE Homes For Sale, $$ Save $$ Buy Today !) over 11 years ago
We are going to see more of this until the market gets a bit stronger and we will have to do our due diligence for buyers in this market.
Posted by Terry & Bonnie Westbrook, Westbrook Realty - Grand Rapids Forest Hills MI Re (Westbrook Realty Broker-Owner) over 11 years ago

Mark: Yes, and this makes it confusing for both the buyers and the agents.

Tom: Thanks. I like to have an explanation available for my clients, and figured I would share, since it this has been growing. Some look at it these as a great marketing tool, but for the long haul it appears to create more agent distrust. Buyers don't know who to believe.

Terry: Yes we will have to do our due diligence, as always. The only thing is, look at that 2nd auction example. You do your due diligence for a buyer just last week, and find this home on the MLS. It's a current listing in their price range and needs. A 2 year old home that is $83,000 under the price sold new. $68,000 under the original listing price and $65,000 under the value listed by the bank as a foreclosure. You show the home and they put in an offer Friday night.

The next morning your clients pick up the paper or go online and see the same home starting at $229,000, over $290,000 under the offer they just made.

From their eyes, how do you look as an agent? Do you think your credibility just took a major hit from their point of view?

 

Posted by Roberta LaRocca, REALTOR®, Broker, Salesperson, Property Management (Simply Vegas Real Estate) over 11 years ago

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