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 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:
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 firstname.lastname@example.org or call me at 702-354-8988. I look forward to hearing from you!