Buying at the Auction Becomes More Difficult

 

 

In recent months, REO sales have continued to plummet in Las Vegas.  REOs are properties that have been foreclosed upon, have been sent to the Trustees’ auction, and then have returned to the bank.  These bank-owned real estate assets, or REOs, are then placed on the market for traditional buyers or investors to purchase through a standard MLS listing.  Because foreclosures have slowed to a mere fraction of their pace from a year ago, the number of properties at the auction has dropped dramatically and competition for these properties has increased to a frenzy level.  Many properties are bid up higher than they are worth and banks have no need to buy them back.  Hence the decline in REOs.

This increased competition for bargain properties has affected investors and their ability to snatch up potential rental properties at the Trustees’ sale auction.  I recently interviewed Richard Weiss on my radio show, “The Las Vegas Real Estate Reality Hour,” about just this topic.  Richard has been a professional buyer at the Las Vegas trustees’ sale for several years.  If you are interested in learning more about how the Trustees’ auction has changed and how to purchase properties through the foreclosure auction, visit my website and listen to the recording of Richard’s show.  All of my back episodes are available for listening at www.teamplantone.com.  On the left side of the home page is a radio icon.  Click on Playlist and then click on Buying at the Trustees’ Sale.

Judicial Foreclosures Fuel Speculation on the Future of Home Prices in Las Vegas

Just when you thought it was safe to go back in the water...  Median home prices in Las Vegas have been rising steadily since shortly after AB 284 was passed last October.  In fact,  many Realtors have noted that the last few months have felt more like the boom years prior to the housing bubble collapse then the middle of an economic recession.  Extremely low inventory, brought on by the sudden, dramatic decline in foreclosures in the wake of AB 284 have created a Sellers’ market where multiple buyers are often competing for the same property and homes are selling at or above list price.

In the midst of this enthusiasm reminiscent of the “good old days” many financial analysts and real estate guru’s (including myself) have been consistently warning that the final effects of AB 284 are likely to be negative, not positive, and that things which appear too good to be true generally are.  We are just now beginning to hear the first rumblings of what the exact nature of this inevitable reprise might be.

A few days ago, a blog post from a local Las Vegas Realtor was brought to my attention.  His entry discussed a Judicial Foreclosure that had just recently been carried out against a client of his.  No clue what a Judicial Foreclosure might be?  Not surprising...they haven’t traditionally been used in Nevada, because there has been no need.  Foreclosure proceedings have typically been handled in Nevada, as they are in most of the rest of the country, through the normal notice of default, notice of foreclosure, Trutees’ sale/auction process that we have all come to understand.  However, with the passage of AB 284 the banks were faced with a dilemma.  With AB 284, the State of Nevada made it impossible for banks to initiate and proceed with foreclosures through the usual channels without utilizing countless employee hours to verify paperwork at every step.  All the additional regulations in AB 284 that were designed to “protect” the homeowners, increased the amount of time and effort required by the banks to initiate a foreclosure proceeding without incurring large fines.  This put the banks in a difficult position.  They could, conceivably, continue to foreclose, but the procedure they must now use would be so time consuming that it bordered on “not worth it” financially.

The solution to the banks’ problems may be Judicial Foreclosure.  In a Judicial Foreclosure proceeding, banks actually sue the homeowner in a court of law for breach of contract.  They then call upon clauses that exist within most mortgage contracts guaranteeing the plaintiff (the bank) all legal fees required to collect the defaulted upon debt from the defendant (the homeowner.)  Do Judicial Foreclosures take more employee hours and more out of pocket costs for the banks than even post-AB 284 standard foreclosure proceedings?  Of course.  But, the banks can seek additional damages through Judicial Foreclosures (like legal fees) that they cannot seek via the traditional foreclosure process.  

In the example cited in the blog, the homeowner was sued for their back payments plus interest, plus forefeiture of the property, plus the deficiency (difference between what is owed on the home and the amount borrowed), plus legal fees and other costs associated with the foreclosure.  The defendant was served in June of 2012 and less than two months later she had lost her home and had to declare bankruptcy.  Ironically, she had planned to list her home for short sale just as soon as she received an NOD from the bank.  She never received one.  Instead, she was summoned to court.

There is a lot of speculation beginning in the Las Vegas real estate world as to what a wave of Judicial Foreclosures might mean for the housing recovery.  Some say that it would usher in a fresh wave of foreclosures that would halt the rise of home prices and drive Las Vegas real estate into another recession.  Others, myself included, believe that even if Judicial Foreclosures become rigeur de jour in the Las Vegas real estate market, the procedures are likely to be more time consuming for the banks and, as result, are less likely to result in a large number of foreclosures being dumped on the market at one time.  They would more likely create a steady flow of foreclosures which would certainly not drive home prices up, but would likely be absorbed by the high demand for affordable Las Vegas real estate and would not, therefore, result in prices decreasing dramatically either.

Only time will tell whether or not Judicial Foreclosures will catch on in Las Vegas or what the effects will be.  But one thing remains certain: buy and hold investors who purchase properties with strong positive cash flow will be cushioned from the short term market movements that can cripple investors looking to turn quick, flip profits.  Las Vegas remains a great place for investors to purchase rental real estate, as long as they buy smart.

Las Vegas Real Estate In For Another Roller Coaster Ride

Las Vegas real estate is currently experiencing its largest upheaval since the bubble burst four years ago.  The passage of Nevada Assembly Bill 284 has resulted in extreme and far reaching consequences that have rapidly and dramatically changed the face of the Las Vegas real estate market.  Most notably has been the unbelievable drop in foreclosures over the last seven months and the resulting steep decline in standing inventory of REOs.  In August of 2011 there were 4,063 notice of defaults (NOD) filed in Clark County.  The notice of default is the first step in the foreclosure process.  In the following month, September 2011, there were 3,108 NODs.  Immediately after the passage of AB 284, in October of 2011, there were only 44 notice of defaults filed in all of Clark County!  44!  In the six months since that time the largest number of NODs recorded was 209 in January of 2012.

At first glance, one might be tempted to look at these numbers as a positive for the Las Vegas housing market.  If banks can’t foreclose then there will be no new foreclosures coming up for sale on the market (true.)  If there are no new foreclosures then the existing supply of distressed properties for sale on the Las Vegas MLS will be consumed (also true...there are currently only 400 REOs for sale, less than a two week supply.)  So once the REOs and foreclosure properties are consumed buyers will be forced to purchase “conventional” sales and pay the higher prices that those owners are asking for their properties (false...here is where the paradigm breaks down.)  In a perfect world, it would be nice to assume that falling foreclosure rates would signal a rise in home prices as potential buyers are forced to purchase homes through conventional channels and pay the higher prices needed to break even by sellers who bought several years ago when Las Vegas prices were on their way up.  Unfortunately, that’s not what is happening...and here’s why:

1.  Over 50% of sales in Las Vegas in the last three years have been cash deals.  Why?  Because the Las Vegas real estate market has been kept afloat by investors.  These investors have come in to take advantage of the great cash flow rates that can be generated by purchasing distressed properties, in many cases renovating them, and then offering them for rent to displaced homeowners.  But this equation only works if the homes the investors are purchasing can be bought at a cost low enough to allow the properties to cash flow once they are rented.  If there are no longer distressed properties to buy, the investors will not pay more for conventional homes, they will simply stop buying real estate in Las Vegas and move on to the next opportunity.  This will effectively eliminate over 50% of Las Vegas real estate sales, drastically slowing demand and dramatically hurting the Las Vegas housing market’s chances for recovery.

2.  Loans are still extremely difficult to come by.  It has never been harder to qualify for a home loan.  Many would-be buyers continue to be sidelined by lending restrictions and the ongoing credit crunch.  Some buyers have been able to successfully purchase foreclosures or REOs using hard money or alternative financing and then refinance into a more attractive loan after several months.  This type of purchase was only possible because of the instant equity available to home buyers when they purchase a foreclosure or REO.  Eliminating foreclosure properties from inventory eliminates this option.

3.  Even when potential home buyers are willing to pay the asking price on a conventional sale and have the necessary pre-qualifications to obtain financing for a home purchase, properties are simply failing to appraise for the sale price.  We have run into this time and time again when selling our own properties.  Because the only comps available to appraisers, in many cases, come from years worth of foreclosure sales, the properties are just not being appraised high enough to allow sales to go through with financing.  This means that even when owner occupant buyers are willing to pay the price that the seller is asking, the banks are not willing to finance the purchase without a qualifying appraisal...thereby killing the deal.

Of course these are just the immediate effects of AB 284 on the market itself.  None of this takes into account the effect that AB 284 is having on the lending institutions themselves.  If the banks are unable to foreclose on non-performing assets, they are unable to put themselves in a position to be able to loan more money...a situation that further delays the recovery of the lending industry and the end of the credit crunch.

Now What?

The logical next question for investors is, “Does this mean that the Las Vegas real estate market is dead for investors and it’s time to move on?”  The short answer is “No.”  There are still great deals with tremendous cash flow to be had in Las Vegas.  But you have to know where to look.  The strategies that were working six months ago are not working now.  The trustees’ sale is hopeless.  What few properties that are available are being bid up to prices that no longer make sense for an investor.  REOs are almost non-existent and are also selling for ridiculous prices.  So, once again, we have had to reach deep into our bag of tricks, completely reimagine our acquisition process, and find a way to secure high quality, high cash flowing properties for our investor clients...just like we’ve been doing consistently for the last three years.  In the second part of this article, I will tell you how.

Until then, if you are interested  in learning more about how to invest in the new face of Las Vegas real estate please contact me directly:

Glenn Plantone
VIP Realty
(702) 656-3264 xt: 203
glenn@teamplantone.com
www.teamplantone.com

The Last House In Las Vegas

They say that a picture is worth a thousand words...but when this image crossed my desk it rendered me speechless:



This graph shows the Notice of Defaults that have been filed in Clark County from March of 2011 through February of this year (2012.) You will see that as soon as AB 284 passed the Nevada legislature banks became almost completely handcuffed against trying to pursue the foreclosure process. This lack of fresh inventory has pushed Las Vegas standing inventory to ridiculous lows. This is not helping the economic recovery!

I wrote an open letter to our local politicians regarding AB 284. In it, I outlined what the results would be if AB 284 was allowed to pass. My predictions are all coming true. A copy of the letter follows:

AB 284 - Fighting Corruption or More Red Tape?

The Problem

Free market capitalism rests on the idea that the best way to ensure a fair economy is to allow the forces of supply vs. demand to set prices within an open market. Real estate markets have traditionally been one of the purest examples of demand driving prices. A home owner (be it an individual or a builder) places their home on the market for the price that they believe the potential buyer will be willing to pay. Once a final price is agreed upon, in most cases, a third party enters the equation. This third party is the bank (or other lending institution.) The bank makes a contract with the home buyer that they will pay the seller the full amount of the purchase on behalf of the buyer, and, in exchange for that, the buyer will repay the bank over a period of time (usually 30 years.)

As we know from watching the world’s markets, perhaps most notably the commodities market, the price that real goods sell for does not always reflect their “real” value. Prices can become “artificially inflated” for a wide variety of reasons including speculation that many times proves to be incorrect. When this happens prices often rise or decline quickly to “correct” for these misperceptions.

Unfortunately, in 2008 we witnessed a very large correction in the nation’s real estate market. Over the previous several years, especially in states like Nevada, California, Florida and Arizona, home prices had risen dramatically. These price spikes were based on many factors including population growth, sudden shortages of supply, perceived continued economic growth in these regions, etc. During this time period, millions of consumers signed their names on the dotted line and agreed to pay what they felt was a fair price for their home. The banks agreed to finance these buyers and the sellers of the properties walked away with the money.

Fast forward 3-8 years. The economy has declined, population growth and economic growth have halted in these metro centers, and home prices have plummeted up to 75% in some areas. Individuals find themselves in the regrettable position of not being able to meet the mortgage payments on their homes and not being able to sell them for anywhere near the price that they purchased them for. Investors who purchased properties in order to generate income find that they cannot rent the properties for enough to cover their payments to the bank. Some homeowners decide to strategically walk away from properties are valued at 25% of what they once were and will likely take 10, 20, or even 30 years to return to their previous value.

Do I feel sorry for these individuals? Absolutely. Have I personally, as a real estate investor and realtor, been adversely affected by the decline in home prices? Absolutely. Do I believe that people who don’t make their mortgage payments deserve to be foreclosed upon? ABSOLUTELY! That’s right...you heard it hear...I believe that anyone who does not make their mortgage payments deserves to be foreclosed upon. This is the process that drives our economy. This is the core of capitalism. It is plain and simple and everyone knows and expects it.

The Solution?

On May 20th, 2011, the Nevada Assembly passed (33-9) Bill 284 with overwhelming support from Assembly Leader Marcus Conklin. This bill was widely touted as a measure to aid economic recovery and bolster housing prices in our troubled state.

One of the writers of the bill commented, “AB 284 will help the Nevada economy recover...AB 284 increases criminal penalties where “robo-signing” conduct occurs, and it creates a NEW private right of action for borrowers, which includes attorneys’ fees and a mandatory fine when a foreclosure has not proceeded properly. Ultimately, this will aid in stabilizing real property values and restoring transparency and integrity in the foreclosure process, both of which are key to recovery. The Bill requires that the foreclosing party supplement the Notice of Default with a notarized Affidavit of Authority. The Affidavit of Authority, i) states the identity of the trustee, ii) describes the amount in default, iii) lists the full name and address of the current beneficiary (and every prior beneficiary under the deed of trust), and iv) includes the penalties and costs related to the default and foreclosure.”

The Scapegoat

Ultimately, allowing the real estate market to correct itself through the foreclosure process may be painful, but it will work. Just as the stock market and the commodities markets regulate themselves and move forward, real estate will do the same thing...if left alone. The problem is that we can’t seem to let it alone and allow the process to run it’s course. Why? Because we must punish the scapegoat.

In ancient times a scapegoat was sometimes a literal goat and sometimes a criminal or a beggar who would be thrust out from a community or put to death after a natural disaster or other calamity in order to appease the gods or god of that nation. Our modern day scapegoat for the housing crisis has become the banks and other lending institutions.

Let me stop you for a moment as you remind me that the banks have re-packaged loans in ways that might not have been transparent and they have, in some very few cases, “robosigned” documents relating to foreclosure proceedings. Yes, I know. It doesn’t matter. Nothing that the banks have done has affected the price of real estate in any meaningful way WHATSOEVER. The banks are very large and have massive resources on hand so they have become a perfect scapegoat. But, as inconvenient as this truth may be, the banks have done nothing wrong here...at least nothing of consequence. Buyers came to the banks and mortgage lenders several years ago and asked for a loan to purchase property. The banks approved the loan, gave the money (mortgage) and the home was purchased. Whether or not the loan was sold, or packaged, or “robosigned” really does not matter. The buyer, somewhere along the line, stopped making payments. He received a notice of default. This was followed by a notice of foreclosure. At this point the bank has a right to foreclose. End of story. Or at least it should be.

The Scenario

As it stands currently, in default saturated areas like my hometown of Las Vegas, foreclosures are dragging on for unbelievable periods of time. I personally know individuals who have not made a payment on their homes for almost 5 years and have still not been FORECLOSED UPON! The banks are overwhelmed. They have lost money (as they deserved to as a result of their bad investments, just as homeowners deserved to lose money on their bad investments) and have cut staff in response. They are now trying to process a huge increase in foreclosures with limited personnel. The government’s recent response to this is to add a huge measure of red tape to the foreclosure process in the form of Assembly Bill 284. This bill forces banks to provide, among other things, affidavits proving that they have the right to foreclose on each individual homeowner. One of the attorneys who helped draft the bill summarizes the purpose of this law accurately when she states (as quoted above), “this will aid in stabilizing real property values.” How, exactly, will it accomplish this? There is only one way: by making it so difficult for banks to foreclose that the number of foreclosures decreases.

Why Not?

So what’s not to love? Fewer foreclosures means more people get to stay in their homes right? Yes, their homes that are still unsellable because the basis price is ridiculous compared to today’s values. The only way to “reset” a property’s value is for it to go through a foreclosure or short sale process. Delaying this is simply delaying the inevitable while also crippling the very lending institutions that you want to start making loans to new purchasers in order to defrost the current credit freeze.

As opposed to this delay, here is how things naturally take their course when foreclosures are allowed to move forward: Typical owner occupants in Las Vegas may have bought a home in 2006 for $300,000 with payments of $2650 per month. They had an FHA home loan and put down 3.5% (about $10,500) when they purchased the home. They made their payments for 3 years and stopped sometime in 2008. They stayed in their home making no mortgage payments and got foreclosed upon sometime in 2011 (3 years after they have made no payments on their home). Once foreclosed they move across the street into a totally rehabbed turnkey model match home bought by an investor for $80,000 at a trustee sale or as an REO (real estate owned bank foreclosure) and pay $1200 in rent per month to that investor (saving over $1450 per month from their previous home payment.) This savings is actually even greater as they are no longer paying property taxes, insurance, HOA dues, or maintenance on the home as these expenses are being covered by the investor, who by the way is getting a nice 10% return on his money if this is a cash investment and a 20% return if he was able to finance the investment home.

This is not the ideal situation, but this is how the economy works. This is how the housing market heals itself and moves on. If our politicians continue to take the “feel good” approach to economics they will hurt the very homeowners that they pretend to be helping. Politicians at both the local and national level have been playing the procrastination game for the last three years and it has only caused our city and our nation to slump further and further into the grips of recession and home value decline. As difficult as it may be, the only way to get out of this crisis is to walk through. Let the banks foreclose. Let the bleeding stop. Then the healing can begin.

Another Bulk REO Transaction in Las Vegas

Glenn Plantone of VIP Realty recently brokered another bulk transaction of foreclosed properties here in Las Vegas. This time, the bulk package was held by a Midwestern bank looking to move their Las Vegas inventory quickly. The package was comprised of nine REO properties and was sold to a local Las Vegas investor. This is the second such bulk deal that Plantone and his team have successfully brokered in the last few months. Late last year, Team Plantone completed a transaction of 15 homes for a Hawaiian investor looking to acquire buy and hold properties with great returns in Las Vegas.

The current bulk package consisted of four former model homes in the northwest part of Las Vegas and five other one-of-kind casita homes in North Las Vegas. The homes were built in 2007 (North Las Vegas) and 2004 (Northwest). Glenn Plantone represents buyers from all over the world that are looking to the Las Vegas real estate market for cash flow and future appreciation potential. Team Plantone has developed a reputation as a one stop shop for out of state investors looking for a full service real estate team that makes buying Las Vegas investment property easy. By catering to this need, Glenn has become one of the busiest buyers’ agents in Las Vegas.

The Las Vegas real estate market has become a hot bed for cash purchases in the last two years, as investors from all over the world flock to Sin City looking for 8-12% returns on their money. During the last three years, more than 50% of all single family home sales in Las Vegas have been all cash purchases. Many of these buyers are foreign nationals, with Chinese and Canadian investors leading the pack.

Plantone’s team represents buyers (and occasionally sellers) who are looking to purchase short sales, foreclosures, bulk packages, trustees’ sale properties, auction properties and distressed homes. Once the homes have been purchased at low wholesale prices Team Plantone manages the complete renovation of these properties and gets them ready for investors by placing long term tenants in the homes. These turn-key investment properties are generating average CAP rates of between 8-12%. A typical example from recent sales would be a 3 bedroom, 2 bath home built in 2005 that rents for $1000 per month and sold to an investor for $84,995. Most of these cash buyers are purchasing newer homes (2003-2007) for prices in the range of $80,000 to $150,000.

The full service team at VIP Realty is led by Plantone and specializes in accommodating the investor from the purchase to the rehab and from rental to management. Glenn Plantone truly understands what investors are looking for because, in addition to being a full time Broker and Agent, Glenn is also a full time investor. He currently owns over 30 investment properties himself.

An Open Letter to Appraisers In the Las Vegas Real Estate Market

For the last three years, my team and I have purchased, renovated and resold over 100 properties in the Northwest Las Vegas area. Currently, our greatest challenge lies not in construction headaches, buying competition or even the scarcity of financing but in obtaining fair appraisals for our renovated homes that are re-entering the market.

Our business model consists of purchasing homes at a discount (REOs, trustees’ sales, and short sales), fixing them up, and selling them at today's retail value. Our properties sell at the top of the market because of the quality that we put into them. Most of our homes are literally better than new construction. We only rehab houses that are 10 years old or newer, and then we put in lots of upgrades that builders do not: landscaping, ceiling fans, blinds, upgraded flooring and fixtures, complete appliance packages (often including washer and dryer.) Of course, we also include new carpet, new (non-white) paint, and the like.

Even though our properties are generally better than any other homes available in the neighborhood, we still generally price them below the highest recent comp for the area. This is because we know that because our property is a flip (being resold within 90 days of our purchase) it is going to be more closely scrutinized by the lending bank and will often require two appraisals.

Our request to you, the appraiser, is simply that you compare apples to apples when drawing up your appraisal. As you know, most distressed properties (REOs and short sales) are in very poor condition. Our homes are not distressed and as such they sell for a price higher than trustees’ sale purchases, REOs, and short sales. When you are looking at comparable sales in the area, we would ask that you compare non-distressed sales and not use REOs and short sales in your comps, just as you would not use trustees’ sale data. We understand that non-distressed homes are the minority at the moment and that REOs and short sales make up as much as 75% of the resale market at this time. However, there are sufficient examples of non-distressed sales in the area to paint an accurate picture of comparable value.

According to Larry Murphy (of Las Vegas Crystal Ball and SalesTraq) certain types of homes are currently selling for certain dollar amounts per square foot in the Las Vegas marketplace. As of June 2011, Murphy released figures based on his exhaustive database of recent sales that shows that trustees’ sale homes are currently selling for around $65 per square foot, bank owned foreclosures (REO’s) for about $71 per square foot, short sales for around $80 per square foot, non-distressed properties at $88 per square foot, and new construction at $100 per square foot.

We appreciate your efforts to use the right types of homes in your market research during this challenging period in the real estate market.
Glenn Plantone
Wynn Realty
(702) 656-3264
gsplantone@gmail.com

www.glennplantone.com

If you’d like to see more of Glenn’s articles, follow his blog at:
www.vegasforeclosures.blogspot.com

Las Vegas Real Estate: A Matter of Perspective

Like anything in life, it’s all about perspective and how we choose to look at a situation.
We all have the same data about the housing market available to us. For some, the data reads bleak... this is the worst real estate market ever (at least since the Great Depression). For others, it is the opportunity of a lifetime (also like the Depression if you were around to accumulate real estate at that time).

I ask this question: If the market is so terrible, why are cash investors flocking to Las Vegas, scooping up homes at record levels, and paying cash for them? My perspective, along with most of the other happy, cash investors, is that this is truly the opportunity of a lifetime and we are taking advantage of it now while the iron is still smoking hot. Over 5500 homes were sold in Las Vegas in June of this year (2011). This is the most since August of 2005, the heyday of Las Vegas real estate. But this time around, statistics show that nearly 55% of purchasers are cash buyers and nearly 80% are investors buying up what they can as fast as they can. In 2005 the percentage of cash buyers was very low and the percentage of owner occupied properties was much higher. With prices dropping nearly 70% over the last 4 years, investors are getting rates of return between 8-12% on cash investments and 15-25% on financed investments. The only downside seems to be that with all of this demand, actually acquiring one of these great Las Vegas investment properties is not as easy as you might think.

Just how cheaply you can acquire investment property in Las Vegas in 2011 depends on what type of property you are purchasing. Each form of purchase has its own distinct advantages and disadvantages. Foreclosure properties that are liquidated at the Trustees’ Sale usually fetch around $55/sq. ft. The Las Vegas Trustees’ Sale represents the least expensive and simultaneously the most difficult way to acquire property. You must come to the sale daily in order to bid on properties that can be seemingly endlessly postponed, you must bring all cash to purchase the property, and even then, you are often competing with several other cash buyers on a property that is sold “as is” with no disclosures and limited opportunity to view the property beforehand. I do not recommend the Trustees’ Sale as a means of acquiring property for any but the most experienced professional.

Bank owned foreclosures (or REOs) are currently selling for around $64 per square foot in the Las Vegas market. These properties provide greater visibility for the purchaser and allow for financing options, but the rather substantial downside to this is that the REO market in Las Vegas has become extremely competitive. It is very rare, at the moment, to encounter an REO listing that does not turn into a multiple offer situation, with bidding wars often raising selling prices to well over $75/sq. ft.

Short sales are the next cheapest way to acquire Las Vegas investment property...usually being approved at around $70/sq. ft. This is still a bargain compared to the average closing price of $78/sq. ft. for non-distressed sales and $98/sq. ft. for new construction. Like auction properties and REOs, however, short sales are very rarely in move-in ready condition and usually require some level of renovation before they are ready to rent out. While less competitive than REOs, short sales require lots of time and patience and result in lots of “misses” for every “hit.”

I have become the third busiest buyers’ agent in all of Las Vegas by dealing exclusively with investors that are looking to take advantage of this phenomenal buying opportunity in Las Vegas but want to avoid the stress of hunting for properties on the open market. My team specializes in sniffing out all the best bargains in Las Vegas. We purchase properties from the Trustees’ Sale, from banks, as short sales, and occasionally from private owners and builders. We then rehab these properties to better-than-new condition, find and place a quality long term renter or lease option tenant in the property, and then sell them to our investor cilents for prices that are still below $70/sq. ft. and allow for CAP rates of 10% and higher. Wynn Realty offers in-house property management and renter placement, which works extremely well considering the majority of our clients are from out of state or out of the country.

If you have been sitting on the sidelines, waiting for a good time to act on the greatest real estate buying opportunity of our lifetime...maybe today is a good day to call. I’d love to speak with you.

Glenn Plantone
Wynn Realty
(702) 656-3264
gsplantone@gmail.com

www.glennplantone.com

If you’d like to see more of Glenn’s articles, follow his blog at:
www.vegasforeclosures.blogspot.com

"Flip This House" Las Vegas Style

I have been an avid fan of “Flip This House” since it debuted several years ago on A&E. I have watched as Than Merrill, Rudy Martinez, and the rest of the gang flipped foreclosures for profit in cities across the U.S. And sometimes, I’ve wondered to myself, where do they find these guys? Some of the decisions that I watch being made on the show are questionable at best, and the outcomes often seem a little...hmm, shall we say, overly optimistic? Many times, when they tally the expenses at the end of the show, there seem to be quite a few fees that are left out of the equation in order to make it look like the flips turned a profit, or perhaps a larger profit than they actually did.

As the marketing director for Team Plantone of Wynn Realty, I work for a house flipper here in Las Vegas that I would bet puts up numbers that can rival any of the stars on “Flip This House.” I have worked with Glenn Plantone for the last four years, and have watched him grow his team and refine his methods to best serve his investor clients. Last year, Glenn successfully flipped 31 properties in Las Vegas, mostly foreclosures and short sales, and this year he is on track to double or triple that figure.

Glenn actually has a very unique method for acquiring, flipping and reselling properties. Glenn starts by acquiring the properties either through short sales, at the foreclosure auction, or post-foreclosure through bank-owned REOs. Once the properties have been purchased, like the flipper on “Flip This House”, Glenn rehabs the properties to better than new condition. At this point, the similarities end. Most flippers, including those on the show “Flip This House”, liquidate their renovated properties to traditional owner-occupant buyers. Glenn takes the system a step further; by first, placing long term renters or lease option tenants in the rehabbed property; and second, selling the property as a turn-key investment property to his investor clients.

Since Las Vegas has led the nation in foreclosures for the last several years, there are many displaced families looking for rental housing. Glenn’s method provides these families with quality, affordable housing. Simultaneously, Las Vegas continues to be a hot spot for investors looking to capitalize on historically low home prices and high rates of cash flow return. Glenn’s method provides them with turn-key investment properties that couldn’t be easier to own...they are already renovated, professionally managed, and have a cash-flowing tenant in place by the time Glenn offers them for sale to his investors.

I have really enjoyed working with Team Plantone over the last several years and watching a true flipping professional in action. Maybe the “Flip This House” producers will take notice some day. After all, Glenn is posting numbers that should make him the number one buying agent in all of Las Vegas this quarter. Until then, we’ll continue to do our thing...flipping houses, Las Vegas style.

If you are interested in purchasing one of Glenn’s turn-key flips or, if you are interested in investing with Glenn, please contact him for more information.

Glenn Plantone
Wynn Realty
(702) 656-3264
gsplantone@gmail.com

www.glennplantone.com or www.vegasforeclosures.blogspot.com

Short Sales Continue to Rise at MGM Signature Towers

As a licensed Realtor here in Las Vegas, over the last three years I have followed the sales trends at the MGM Signature Hotel Condo very closely. (I have also sold 15 units over that time period.) I have also written and published several articles geared primarily towards investors looking to purchase MGM units at today’s new, low prices. This article is directed more towards the original owners who purchased properties at the height of the market and are now finding themselves upside down in their units. In this article, I will offer information on current market statistics and what options may be available to MGM Signature owners going forward.


As you are probably aware, since the MGM property auction of April, 2009, prices have been dropping dramatically. In the first quarter of 2010 (Jan 1st to March 31st), we saw 18 one bedroom units at the MGM Signature sold through the multiple listing service. Unit 125-714 established a new, low price for one bedrooms at $165,000. This same unit had sold new in 2007 for $705,000. That means the new sales price was roughly 24 cents on the dollar. During the first quarter, the highest sale price for a one bedroom was $271,000. These sales statistics do not include cash deals at the trustee sale.


Studios at the MGM Signature in the first quarter of this year sold for prices ranging from $114,000 to $218,000. Unit 125-205 is a low floor, strip side studio unit with a patio that sold new for $485,000. It sold this quarter for $114,000. (Also approximately 24 cents on the dollar.) The good news for new investors is that studios can actually cash flow at these lows. One bedrooms are still not cash flowing, even at the new lows, because of their higher HOA dues. This is the reason why we are seeing the studios in the MGM towers selling for a higher price per square foot than the one bedroom units.


Since the beginning of 2009, when we began to see foreclosures mounting at the MGM Signature, there have been a total of 168 studios and 67 one bedroom units foreclosed upon and resold within the 1728 unit complex. This represents about 14% of the total complex. I believe that we will continue to see distressed sales on MGM Signature properties since virtually every original investor is upside down and very few paid cash for their entire investment. However, I do believe that the nature of those distressed sales is changing in a very significant way.


As of this writing, there is only one bank owned REO foreclosure unit in the entire project. This is because foreclosures are slowing dramatically and being replaced by short sales. There are a total of 41 units currently listed for short sale. Because of the government’s push to get short sales approved and accepted, they have picked up dramatically in the Las Vegas market. Last year short sales amounted to 8% of all sales while REOs accounted for about 75%. Already this year, short sales have risen to 25% of all sales while REOs have dropped to 50%. At this rate, I project that we will see a total switch of REOs and short sales by the end of the year.


There is a huge advantage to having your unit go through a short sale vs. a foreclosure. Credit experts tell me that a foreclosure will generate a 200 point hit to your credit report as opposed to an average of near 50 points with a short sale. Also, if you work with a seasoned Realtor and they are able to successfully negotiate a short sale that eliminates a deficiency judgment, you do not have to worry about the bank coming after you for the difference between what you owe and what the property fetches at the foreclosure auction.


Most analysts feel that we are in for a long ride before property values are anywhere close to the levels of 2007. At the April meeting of the Real Estate Insiders Club here in Las Vegas, Mary Riddel, Associate Professor of Economics at UNLV, made it clear that she believes we are in for about 8-12 years before we see any substantial appreciation in real estate values in the Las Vegas Market.


So, if you are an upside down MGM Signature owner, what are your options?


Keep in mind that I am not an Attorney, CPA, or Investment Advisor and I do suggest that you seek legal, professional counsel before deciding how to proceed. My goal here is to give you some general outlines and to summarize your present options.


Hang On: If you can, this will preserve your credit. In considering this option though, you need to determine if you can afford negative cash flow from your unit over the next 10 years or longer until values rise to more than the amount that you owe and/or cash flow becomes greater than your costs of ownership.


Foreclosure: Most likely your worst option of the bunch. If you stop making payments on your unit, the bank will eventually auction off the property and take it away. This will hurt your credit tremendously and stay on your credit report for up to 7 years. You will also be vulnerable to a deficiency judgment.


Deed in Lieu of Foreclosure: Just turn the keys into the bank and be done with it. This will immediately release you from most of your personal indebtedness associated with the defaulted loan, however you will still be vulnerable to a deficiency judgment. A deed in lieu will hurt your credit a little less than an actual foreclosure but far more than a short sale.


Short Sale: More and more property owners are now looking at this option. With an experienced Realtor, you have a good chance of being able to successfully navigate the short sale process and sell your property to the new investors now coming in. However, if you inadvertently hire an inexperienced representative, you may very well find your unit foreclosed upon before you are able to get a short sale approved by the bank and sold to a buyer.


If you are considering short selling your MGM Signature unit, I would love to discuss your options with you. I specialize in both the MGM Towers and short sales. I am currently successfully negotiating 5-7 short sales per month and we are seeing bank approvals coming in at a much faster clip in the last few months.


Please feel free to contact me should you have any questions at all about the market, and/or the process for properly handling your unit.


Glenn Plantone

(702) 769-9872 or gsplantone@gmail.com

Fierce Competition for Available REOs Means Investors Need to Change Course in 2010

I love the Las Vegas real estate market! Just like the city itself, the Las Vegas real estate market is always changing, always exciting. We saw the market reach bottom last year and begin to stabilize again as investors rushed back in to Las Vegas to snatch up foreclosure deals that generated phenomenal cash flow and excellent potential for appreciation. 2009 was definitely the year of the bank owned foreclosure property, or REO. In 2009, nearly 75% of all real estate sales in the Las Vegas valley were bank owned foreclosures (of the 71 homes I personally sold last year, 69 were foreclosures). However, towards the end of the year, these numbers began to change. Foreclosure inventories started to tighten up and as the year went on, the number of foreclosures as a percentage of total home sales continued to shrink. By January of 2010 only 57% of all Las Vegas real estate sales were bank owned foreclosure properties. Why?

The short answer is that there are fewer homes going into foreclosure. In December, 2009 there were only 1228 homes and condos foreclosed upon in all of Las Vegas, and in January, 2010 there were just 1352 homes and condos that made their way to the foreclosure trustees sale. These numbers are way down, to less than 15% of the total number of foreclosures reported in Las Vegas during the same months a year earlier. A major reason for this decrease in foreclosures, is the change in focus at the banks from foreclosing to short selling or modifying loans. As the Obama administration continues to push for banks to work with beleaguered home owners, short sales have risen sharply, as foreclosures have declined.

After having been in the low teens in early 2009, the number of short sales as a percentage of total home sales in Las Vegas rose to 22% in February of 2010.

I believe that short sales will be the answer in 2010 for investors looking to acquire property in Las Vegas at discounted prices. As REO inventory continues to shrink, even all cash investors are finding that while prices are low and cash flow is high, getting an REO under contract is a difficult and often unsuccessful prospect. By the end of 2009, homes listed in the multiple listing service (MLS) were, once again, like the old days of 2004 and 2005, getting multiple offers and selling for levels above their listing price. Houses that are priced right can be getting 10 to 15 offers within the first couple of days on the market. In February of this year, 50% of all home and condo sales were cash deals. The investors are back again in Las Vegas and they are dominating the market place. At this point, it is virtually impossible for a VA ($0 down) or FHA (3.5% down) buyer to get an REO home under contract. Both investors and potential owner occupants have a much better shot at securing a home if they go with a resale or new construction home. Unfortunately, resales and new construction do not offer the great prices that REOs do. So what is an investor to do?

I believe that the next great way to acquire properties will be through short sales. Short sales are gaining momentum as banks realize that they present a much better alternative for all parties involved than a foreclosure. Althoug short sales may sell for around the same price as bank owned REOs, the bank saves all of the fees and costs associated with a foreclosure, so their bottom line is much better. Plus, having a tenant or owner in place means the property will likely remain in better shape (less theft and vandalism) than a foreclosure. Short sales also represent a faster sale for the bank with no rehab and no down time for vacancy. Short sales are also great for investor buyers as they are much less competitive than REOs and in many cases they come with a built in tenant. Frequently, the owner or renter will wish to stay in the home they have already been living in and, in some cases, may even pay higher than average rent to do so.

New legislation, such as the Home Affordable Foreclosure Alternative Program (HAFA), which takes effect on April 5th, will aid homeowners in getting short sales approved and should keep more people from losing their homes to foreclosure. The banks are already receiving government incentives to negotiate with homeowners and facilitate short sales, so this new legislation should only further ease the process. Some banks are starting to implement new, more streamlined systems for short sale negotiations, such as Bank of America's new "Equator" system. It will take time to see how these new systems work, but I personally just got a B of A short sale approved at record speed this week.

In the last week alone, I have had 3 short sales approved and accepted by the bank. The first one was a 2200 sq ft. SFH at only $119K and the other two were 2 bedroom condos at $48K and $50K. All three of these were tied up by my investors in a matter of minutes after I announced them. This method of concentrating on bank approved short sales is undoubtedly the best way to purchase property in 2010. There are no multiple offers, no need to bid way over list price to secure a deal, just simply "I want it and I got it" at the approved price.

Being a small boat in the ocean enables me to quickly change and adapt to the continuous fluctuations in the Las Vegas real estate market with quick precision. This gives me a tremendous advantage over the large REO companies (ocean liners) that need to retool, chart their new course and attempt to change direction. Mark my words, short sales will be a very large part of the Las Vegas Real Estate Market in 2010. This is where we all need to be focusing our buying efforts.

If you are interested in purchasing short sales in the Las Vegas area, contact Glenn Plantone at:
(702) 769-9872 or teamplantone@gmail.com

How to Buy Investment Properties in 2010

For much of 2009, the quickest, easiest and best way to purchase an investment property in Las Vegas, was to purchase a bank owned foreclosure, or REO. In fact, 75% of all sales in Las Vegas in 2009 were bank owned REO foreclosures. In some individual months, this number was as high as 85%.


But then a funny thing happened...Banks started to realize that short sales present a viable way for them to receive money on their loans without having to go through the hassle and expense of a foreclosure and resale. The government also stepped in with a series of new regulations aimed at slowing the nation's foreclosure rate and encouraging banks to negotiate short sales. These factors, combined with sustained high demand for REO properties, has pushed REO foreclosure inventory in Las Vegas to unbelievably low levels.


As of this writing, REO inventory listed on the MLS in Las Vegas stands at 1331 single family homes available for sale (not counting contingent and pending sales.) This number has been decreasing for about a year and now represents less than a two week supply of REO inventory. 3429 homes sold in Las Vegas in January, 2010. During the same month, only 1352 foreclosure homes went back to the banks. This represents an amazingly low supply of only 11 days of REO inventory on today's market.


Investors and realtors are seeing firsthand the results of this dramatic decrease in inventory. With prices in the Las Vegas valley continuing to hold at record lows, the competition for available REO inventory has been extremely stiff. Many investors, including my clients, are having to put in upwards of 10 offers to get just one accepted. Cash buyers continue to represent about 50% of the market and primary occupants or investors with financing in place are finding it very difficult to compete. Of the nearly 75 deals I closed last year for my investor clients, only 5 were not all cash deals. And even with all cash buyers, I have found it more and more difficult to secure properties.


As a result, I believe that 2010 will be a big year for short sales. A short sale is when a bank accepts a sale price that is less than the amount owed on the home. Short sales can be a great win-win situation for both buyer and seller. The seller is able to get out from under their loan without the negative effect on their credit that a foreclosure would have. The buyer is able to purchase a property for much less than current market value. Once a home or condo is approved for a short sale by the bank, the buyer will typically have 30 days to close on the home.


As available REO inventory in the Las Vegas valley continues to shrink, I am expecting the number of short sales to continue to increase. The amount of short sales this year is already close to double month-over-month from last year's totals. I am currently getting two to three short sales approved per month.


By way of example, I have a short sale available now that is a 2221 sq. ft., 4 bedroom/3 bath home for $119,995. This home sold new three years ago for $329,000. It is now priced at only $54/sq. ft., well below builders' replacement costs. This home only needs about $2500 to be fully rent ready (carpet cleaned, repaint, a couple of appliances) and then it will rent for $1295 per month.

HUD Drops 90 Day Seasoning Rule - Makes Acquiring and Reselling Foreclosures Even Easie

The Department of Housing and Urban Development recently announced a temporary policy change that will have significant positive benefits for anyone looking to acquire foreclosures, especially those looking to fix and flip.  Previously, FHA has required that any borrowers seeking to finance their home purchase using an FHA loan, must purchase the property from a seller who has been the owner of record for 90 days or more.  This has made it difficult for investors looking to rehab gutted foreclosure properties and resell them for a reasonable profit since they then had to either hold the property for 90 days (dramatically increasing their holding costs and decreasing potential profit margin) or they could not sell to buyers looking to purchase a property with an FHA loan product.  The 90 day seasoning rule also made it difficult for investors or primaries looking to purchase REOs using FHA loans.  With the available inventory of REOs shrinking and demand rising, banks are usually able to liquidate their best REOs on the open market within days or weeks of taking title after a foreclosure.  Since the bank did not, in those cases, own the property for 90 days or more, those looking to pick up bargain priced REOs using an FHA loan couldn't do so.

This will all change starting February 1st when HUD will begin a one year period during which the 90 day seasoning requirement will be lifted.  In a document announcing the change, HUD Secretary Shaun Donovan said, "As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential home buyers.  FHA has an unprecedented opportunity to fulfill its mission by helping many home buyers find affordable housing while contributing to neighborhood stabilization."

"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens. In the same document Stevens states,  "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."

The temporary lifting of the 90 day seasoning requirement will come with some restrictions that are designed to prevent abuses. Probably the most significant is a clause stating, "In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions."  It appears that all that is necessary to meet these "specific conditions" is to show that substantial improvements/repairs have been made to the property to justify the extra cost.  This should not be a problem for rehabbers as they can show these improvements via receipts, before-and-after photos and descriptions of work completed etc.

This change to the FHA guidelines is scheduled to only last for a year, so now is definitely a great time for investors interested in flipping properties and home buyers looking to purchase a residence to jump into the market.  If you are interested in purchasing REO properties for investment purposes in Las Vegas, foreclosure capital of the nation, please contact Glenn Plantone today.

Glenn Plantone (702) 769-9872 or teamplantone@gmail.com

MGM Update January 2010

As those of you who follow my articles and blogs know, I have been tracking the MGM Signature Towers Hotel Condo in Las Vegas very closely over the last year. Many of my investors have asked me to write an update on the project. Here is the most recent information on price and sales trends from the beginning of last year (2009) to the start of this year (2010).

The MGM Signature is a Hotel Condo complex consisting of three high rise buildings that were completed in 2006. This makes it one of the few Las Vegas high rise condo projects that was completely finished and sold at boom prices. All three buildings (576 units per building) totaling 1728 total units were sold before the real estate bubble burst in 2007. In 2006 an average studio unit (520 sq. feet) sold brand new for $485,000 and an average one bedroom unit (874 sq feet) sold for $745,000. The least expensive studio sold originally for $318,250 and the least expensive one bedroom was sold for $494,000. Most were financed with 20% to 30% down and there were very few cash sales.

The MGM now represents a unique buying opportunity for investors as the real estate crash has sent prices tumbling to between $0.20 and $0.25 on the dollar from their original sales prices only four years ago. By the end of 2009, we were seeing several studios selling in the $120,000 range and one bedrooms in the $180-$190,000’s. I have followed the project since the prices started falling in 2007 and by 2009 I was ready to recommend the project to my investor clients. I continue to work hard to find units for my clients and the lowest possible prices and because of my experience and knowledge of the project, I have the distinction of having negotiated the lowest purchase prices for both a studio ($99,900 at the end of 2009) and a one bedroom unit ($176K for a beautiful 8th floor pool and mountain view just one week ago.)

In 2008 we saw very few foreclosures and very few resales on the MGM properties. That changed dramatically in 2009. Last year there were over 220 studios and 90 one bedroom units that were foreclosed upon. This figure represents about 18% of the total project. By comparison, other condo projects in Las Vegas experienced foreclosure rates as high as 35% in 2009. I believe that we will see an avalanche of foreclosures on the MGM Signature properties in 2010. Normally, this wave of foreclosures would mean even lower unit prices to come. But I think the heavy demand for the MGM Signature units will keep prices stable throughout 2010. Because the prices have dropped so steeply, the properties are now able to generate positive cash flow. This is keeping demand extremely high for the few available units that come onto the market. We have run into multiple offer situations for all of the foreclosure units that have come onto the market over the last several months.

The MGM Signature was built and marketed as a hotel-condo, as such, it offers tremendous flexibility. You are able to live in the unit full time if you desire, rent it out independently to a long term tenant, lease it out for short term nightly rentals and manage it yourself, or place it with a management company who will handle short term nightly rentals for you and split the revenue with you. Using a management company is the most popular choice for most investors. With sufficient notice, you are able to stay in your own unit as often as you like with minimal cleaning costs if you choose to have the room serviced by your management company. Most investors use the MGM Hotel Residential Services Company as their management company, but many do not realize that there are three other companies that provide excellent service, some with higher occupancy and in most cases better revenue splits for the investor. This, of course, could mean a higher cash flow on your investment. I have a detailed analysis of the similarities and differences between the four companies if you should desire to compare them. (Contact me if you would like to receive a copy of this comparison.)

Currently, there are four ways to buy a unit at the MGM Signature. The first is to buy a resale unit. I don't recommend this method. Resale units are either units that have been bought by other investors at cheaper prices and are now being resold or units where the owners are desperately trying to lose as little money as possible on the sale.

The second method is to purchase a short sale. The short sale route is long and tedious but we have had some success. We tie up the unit at a good low price and wait and hope that the negotiator is able to get an approval from the bank before the unit is sold off at the foreclosure auction. I have had a couple of short sales that have ended with a successful purchase and lost a couple to the foreclosure auction.

The third way to acquire MGM Signature units, is to buy a bank owned foreclosure property (an REO.) This is a great method and the most common way I use to acquire properties for my investor clients. We are able to get a good look at the unit, get good clean title, and have the purchase of the unit done safely and easily. Because of my contacts with the various listing brokers I have been able to develop great relationships and purchase many units for my investors at the best possible prices.

The final way to acquire units, is to buy them at the foreclosure auction (trustee's sale) before they return to the bank and become an REO. This method has its risks but with proper due diligence it represents the absolute best way to get the lowest price possible.

I have been very successful in purchasing Signature units for my investors because I have been attacking this project from all three sides.

I highly recommend that anyone interested in the MGM Signature come and stay at the hotel-condo and visit with me so that you can gain a clear understanding of all the variables that are involved in this project. We can tour the property, talk about and meet with the management companies, look at the one bedroom vs. the studio units, discuss the psychology of views (strip side vs. mountain side) and get a general overall understanding of the property.

I will be following the MGM Signature Towers very closely this year as I project it will be a great time to pick up units at prices well below the developers cost to build. Feel free to contact me directly should you have any questions or interest. May we all have a great 2010.

Thanks

Glenn Plantone

702.769.9872 (cell)

teamplantone@gmail.com

2009 In Review

2009 was a year of expectations and a year of hopes.  Some of these were met, some were exceeded, and others will wait and continue to seek fulfillment in 2010.  We all knew that the foreclosure wave would continue to sweep over the nation’s beleaguered real estate markets.  And it did.  Las Vegas once again led the United States in foreclosures as more bank owned properties than ever flooded the market.  We hoped that this influx of affordable properties would lure some investors back into the stagnant Las Vegas real estate market.  But no one expected just how tantalizing that lure would be.  As investors from California, Canada, and all over the world sought to purchase cheap Las Vegas real estate that was suddenly cash flowing positively for the first time in years, home sales in the valley boomed.  Throughout the summer of 2009, Las Vegas posted sales numbers that exceeded those of the boom years in 2003 and 2004.  As quickly as foreclosures re-entered the market, they were gobbled up in their REO form by eager investors cashing in on what had become the greatest real estate buying opportunity of our lifetime. 

And we all hoped that this re-energizing of the real estate market would spread to the economy at large.  It didn’t.  To spite the high hopes of many generated by the seemingly endless stream of economic stimulus packages introduced by the new Presidential administration, an economic recovery failed to materialize and December saw some of the worst unemployment statistics since the recession began.

And yet, this bad news for the economy at large, may translate into good news for investors looking to purchase real estate in 2010. Normally, the excess of demand that we have been seeing in the Las Vegas market would push real estate prices higher.  But the general economic downturn may curb those price hikes and keep properties in Las Vegas at their historically affordable levels through the next year.  Especially for those willing to acquire properties through the trustee sale, properties that need a little work, or unconventional properties like high rise condos. 

As the supply of turn key, single family REOs has dwindled over the latter half of the year, my investors have found that the best way to acquire profitable real estate in Las Vegas is to think outside the “herd.”  We have been investing with great success in properties purchased through the trustee sale auction, high rise properties like the MGM Signature Condos, and properties that are not “turn key” such as “stripped” foreclosure homes.  Since the vast majority of investors are not purchasing these types of properties, we are able to continue to get great deals on investments that will generate strong positive cash flow.

I look forward to 2010 as a year that will continue to allow my clients to purchase Las Vegas real estate at deeply discounted properties.  Hopefully, the nation’s job, credit, and financial markets will begin a steady recovery and everyone can begin to benefit again from a robust economy.  Until then, we are wise to once again remember the words of the great financial giant Baron Rothschild who made his fortune largely during the years of the Great Depression, he said, “Buy when there is blood in the streets...even if the blood is your own.”  Now is truly the time to take advantage of every opportunity to create wealth for our future. 

If you are interested in taking advantage of this historic opportunity to purchase great Las Vegas real estate, contact Glenn Plantone at 702-769-9872.

Drop Bids at Trustee Sales

Drop Bids at Trustee Sales

The Arizona Republic recently ran an article discussing the practice of "drop bids" at the Maricopa County foreclosure auction. When a lender posts a Notice of Sale amount (often referred to as the minimum bid) and then drops the amount hours or even minutes before the opening of the auction, this process is known as a drop bid and is considered illegal in Arizona. Ideally, lenders are encouraged to post the Notice of Sale amounts for foreclosure properties that will be sold at the trustee sale at least 24 hours prior to the start of the sale.

According to the article, up until recently, the majority of homes brought to auction through the trustee sale were failing to sell and were reverting back to the banks. These properties would then re-enter the market as REOs. This all changed last month as a record 1,000 properties sold through the public foreclosure auction process. This was five times the number that sold in January. According to the Republic, "Real estate market watchers and unsuccessful bidders at the auctions say drop bids are driving the record number of auction sales."

No one seems to be sure why banks would choose to lower the minimum bid without adequate notice. Those who are up in arms over the practice tend to imply that the reasons are malicious, but there are other possibilities. Kelly Braaksma, a trustee sale expert and CEO of FAST (Foreclosure Auction Service Team) a company that specializes in helping investors to purchase properties at auction, says that the uncertainties surrounding properties coming to auction may have more to do with last minute price changes than anything else. "Lenders are inundated with foreclosure properties," Braaksma says, "of the hundreds or thousands of properties slated to be auctioned off at any particular trustee sale, only a few dozen may actually make it up to bid. The rest are postponed, canceled, reinstated, etc. All the aspects of the sale, including starting bid price, are constantly in flux right up until the last minute."

Whatever the reason, the Arizona Republic continues by saying, "Drop-bid purchases enable the few who know about the deals to buy homes and quickly resell them for hefty profits...Buyers aware of the "drop bids" scoop up the houses before other bidders know about the price drops."

Mr. Braaksma has developed a system that analyzes historical opening bids from various lenders, along with a myriad of other data and generates algorithms that predict which properties are most likely to actually make it to auction and which will most likely have opening bids that make them worthwhile to investors. I have formed an alliance with FAST in order to provide this service to my clients looking to purchase at the trustee sale. I don't charge more for the service, clients pay only my standard commission at the close of a sale. But for this commission, they are provided not only with all of the reports and data that FAST generates, but also with a representative that will be present at every Trustee auction, available to purchase these choice properties and take advantage of last minute drop bids.

If you are interested in using trustee sales / foreclosure auctions to acquire property, please contact me and I will send you a packet with more information on the process:
Glenn Plantone (702) 769-9872

Click here to read the full Arizona Republic article