Why the Supreme Court Decision on HOA Foreclosures Is Good News for Everyone

Lenders and investors are squaring off in Las Vegas over the recent Supreme Court ruling that stated that Homeowners Associations (HOAs) have the authority to foreclose on properties and sell them at auctions to recuperate delinquent dues without needing to go to court for permission. The Supreme Court ruled that the super priority lien that the HOA holds on the property for unpaid assessments trumps the first trust deeds held by mortgage lenders. The HOAs are allowed to sell these delinquent properties to recuperate unpaid dues. These properties are often listed for sale at the auctions at prices equal to the total amount of dues owed to the HOA plus collection costs and late fees, which usually equals only a couple thousand dollars.

This means that investors at these HOA auctions can purchase these delinquent homes for a fraction of the cost of their real value, making these properties an excellent investment opportunity. After purchase the property is transferred over to the investors via a quit claim deed or a foreclosure deed which gives them title to the property and allows them to live in, resell, or rent (depending on HOA rental restrictions) the properties. According to the recent supreme court of Nevada ruling the first trust deed held by the mortgagee (the bank) is completely wiped out.

The super priority lien held by the HOAs allows the associations to foreclose on the properties and any delinquent dues to the HOA are paid back.  Any overage from this sale will go in lien priority, with the bank being next in line in most cases, to recover any overage from the HOA foreclosure sale.  This September 18th 2014 ruling has, of course, put many lenders in an uproar as lenders now potentially can lose their security to the property if they choose not to foreclose themselves before the HOA does or if they choose not to pay the back HOA dues to prevent an HOA foreclosure.

The Nevada Supreme Court and the HOAs have no sympathy, however, for the lenders. Since the bank foreclosure process has been taking a very long time (sometimes years!).  HOAs are often left with empty homes and delinquent dues with no possibility of re-payment through the existing owners. Lenders are given the opportunity to pay for the HOA liens to prevent the property from being foreclosed upon by the HOA, but if lenders choose to not pay the liens they run the risk of losing out on possession of the properties that they could foreclose on themselves.

Some lenders claim to be unaware of HOA liens on the property or state that the HOA will not allow banks to pay the liens. In this case the issue of timeliness comes into play. If lenders foreclosed on properties quicker there is less of a chance of the properties remaining vacant for so long and thus acquiring further delinquent dues. If a new owner was allowed to move in quicker the current dues could be consistently paid preventing the HOA from needing to foreclose on the property in the first place.

There has been a definite shift in the real estate market with this new Supreme Court ruling, and some agents are already beginning to notice the difference in how short sales and foreclosures are being handled. Some agents are reporting short sales that are being approved in less than a month, a process that usually drags on for months or even a year or longer in the recent past. Why the sudden quick decision from banks regarding short sale approvals? Banks and lenders are trying to recuperate their losses before the HOAs foreclose first and thus prevent them from losing their security against the homes.

It will be interesting to see how the lenders handle the new ruling and whether it will affect mortgage rates or the ability to get a loan in Nevada. While the banks have stated that HOA foreclosures may be bad news for them in reality it is a great situation for the banks.  The delinquent properties sold at HOA auctions are selling at about 70% of retail value and will actually get the bank their money faster than if they waited to foreclose themselves. Remember that any overage of the HOA auction is paid to the bank.  This is the same way it works with a normal trustee sale.

This decision is also good news for real estate agents and short sale buyers and sellers who may see quicker short sale approvals and re-listing of foreclosed and short sold properties. Residents who live in HOA communities will also benefit as the HOAs will be better able to service and maintain their associations with the recuperated dues.

Local Las Vegas Investors will reap the most rewards, however, especially those who took advantage of the HOA foreclosures prior to the Supreme Court decision. Millions of dollars of equity was created with the Supreme Court ruling and investors who purchased many of these properties are now sitting on a real estate gold mine.

For more information on HOA foreclosures and how you can still take advantage of this investment opportunity contact Glenn Plantone today!

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Why You Should Attend the 2014 Economic Summit

As a Las Vegas Real Estate Investor I know that staying on top of trends in the marketplace is the most valuable tool an investor needs to use in order to gain equity in personal portfolios. I have personally added over $5 million in equity to my personal portfolio in the last 2 years alone, as well as helped add millions more for many other investors I have worked with.

How did I achieve this?

Through my constant vigilance in spotting marketplace trends, identifying where the opportunities lie, having the ability to act on the opportunity, and actually taking action to take advantage of that opportunity.

The Economic Summit is an example of the type of conferences and events I frequent to keep abreast of the trends and opportunities that exist in real estate on a local, national, and global level. Investors who attend this year’s annual “Econosummit” will learn:

1. How current geopolitical events will impact investors on a personal level
2. What to invest in and avoid in today’s economy
3. The outlook for interest rates and how it will impact investors
4. The best strategy to make money in today’s real estate market

This year’s Economic Summit will take place on November 15th and 16th, 2014 and will last from 8am to 8pm on both days. It will be held at the Las Vegas Orleans Hotel. Registration is normally $299 but I have negotiated a special rate through the Las Vegas Investment Club for a discounted registration price of only $99!

I encourage all aspiring real estate investors to take advantage of this special offer for this upcoming Economic Summit in November in Las Vegas. By attending the Economic Summit investors can gain valuable knowledge on market trends to help boost equity in their own personal portfolios…all at an incredible discounted price.

I will be there and I hope you will to!

To take advantage of the $99 special registration rate you must RSVP to Kelsey, my marketing coordinator, by emailing her at info@vip-realty-group.com. This special rate is NOT available through the website. Registration is limited to a maximum of 200 people. This will sell out! RSVP today!

For more information on the Economic Summit, please visit: http://www.econosummit.com/

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Nevada Supreme Court Rules in Favor of Investors

On September 18th, 2014 the Nevada Supreme Court delivered an unexpected ruling in favor of the savvy and adventurous Investors in Las Vegas who had taken a gamble and purchased properties through HOA Foreclosure auctions. The Nevada Supreme Court ruled that the bank’s first lien position had been completely wiped out, which means that all of the Investors who purchased HOA Foreclosure properties (sometimes for as little as thirty cents on the dollar!) now own the properties with no loans against them. The gamble that these Investors took has now paid off as millions of dollars in equity was created in a single day.

The majority of these properties are now completely rehabbed and rented out through property management programs with all liens cleared and all HOA dues and taxes up to date. These properties are insured, managed, and hold a steady cash flow with excellent rates of return. Some of these properties remain un-rehabbed, presenting an excellent equity position for the Investor who wishes to experience the fix and flip opportunity, or for the new buyer who wishes to fix up the home on his or her own to their exact liking. While these properties now contain clear title, please keep in mind that some of these properties are in owner occupied or rental restricted communities, and the new owners will have to abide by all rules and regulations of the existing HOAs.

If you were not one of the Investors who took the gamble before the Nevada Supreme Court ruling passed, fret not. An opportunity exists for you to still purchase these HOA foreclosure properties for less than retail value. VIP Realty Group is presenting an exclusive opportunity for Investors to purchase these properties at 67% of retail value. This is still a tremendous discount from their true value! Why would anyone part with these properties at only 67% of their value instead of full retail price? This is because even though the banks no longer have first positions on these properties there still may be some legal (attorney) wrangling needed to clear title fully and to get these properties in a position that allows them to be re-sold with clear and marketable title.

Every investment has its risks but the risk involved with these HOA foreclosure properties has significantly dropped. Even if purchased at 67% of their retail value these properties present an excellent opportunity for real estate Investors to earn instant equity in great properties!

For more information on how to invest in one of these great properties contact Glenn Plantone, Broker/Owner of VIP Realty Group and local HOA Foreclosure expert, today!

Glenn Plantone     (702) 656-3264

For more information please read: http://www.reviewjournal.com/business/housing/court-ruling-seen-clarification-foreclosures-market

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The Advantages of Investing In HOA Foreclosure Properties

We are all familiar with banks foreclosing on properties, but did you know that Homeowner Associations (HOAs) can also foreclose on homes? HOA Foreclosures have increased over the past year, and in doing so have created an excellent opportunity for investors to pick up discounted properties in the Las Vegas market, sometimes for a little as $.20 on the dollar!

As a Las Vegas Investor, I have personally taken advantage of this opportunity, and have had particular success buying HOA Foreclosure properties through auctions rather than receivables. Auctions take place as trustee sales or private attorney auctions where investors can purchase HOA delinquent receivables for homes, townhouses, and condos. These properties have already been foreclosed on, which makes it easier for the investor. The other option is to buy the delinquent properties directly through the HOA and foreclose on the properties yourselves, but this method is far more complicated, especially since HOA boards are extremely difficult to deal with in Las Vegas.

By purchasing at an HOA Foreclosure auction, the investor is essentially purchasing the foreclosure deed for the property. This deed is then recorded and grants the investor legal possession of the property. Due to the current Nevada super priority lien law, the investor who owns the foreclosure deed has ownership rights superior to those of the bank that holds a note on the property.

Once the property is purchased the investor has many options. If the home is vacant, the property can be renovated and rehabbed so that it can be rented out for a steady cash flow. While this is being done, the investor can hire an attorney to negotiate directly with the bank to go after Quiet Title of the property or to purchase the property from the bank for a discounted price of the current market value. If successful, the investor can own the property free and clear, having purchased what could be a $100,000+ property for $35,000 or less!

If the property is occupied with a renter at the time the foreclosure deed is purchased, the investor can take over the management of the property by having the tenant sign a new lease and have rent paid directly to the investor (now functioning as the new owner). If the tenant refuses to pay rent, the investor can proceed like with any other rental and evict the tenant.

Things are a little trickier if the property is occupied with the former owner at the time the foreclosure deed is purchased. There are three options the former owner can choose: stay in the property, sign a new lease, and pay rent as any other tenant would do; stay without paying rent and ultimately get evicted (unlawful detainer) by the new owner in about a two month period; or the former owner can move out voluntarily, in which case the new owner can rehab the home and get it rented with a new tenant as soon as possible.

Gaining possession of the home is very important as it allows the investor to control the rental and management aspect of the property; however, the investor does not possess a home with free and clear title, so he/she cannot sell the house with title insurance in place. This does not mean that the house could not be sold, but rather the new buyer would not receive free and clear title, and as such could not get title insurance on the home, just like the investor when the property was purchased at the HOA foreclosure auction.

So why would anybody purchase a property that did not have clear title and would be difficult to re-sell? Simply because the benefits outweigh the risks. Yes there may be more work involved than with a traditional property, but investors can purchase homes with great equity for staggering low prices, and if they are successful at winning free and clear title, they walk away with a great investment. Every investment comes with some amount of risk, and HOA Foreclosure properties are no exception. With a myriad of ways for the investor to procure free and clear title, the chances are in his/her favor of succeeding. Even if the investor is unable to achieve free and clear title, he/she can hire an attorney to negotiate a deal with the bank to recover as much of the investor’s investment as possible. While this is happening, the investor can continue to hold on to the property and take in rental income which reduces the investor’s risk every month.

Bottom line HOA Foreclosure properties present a new form of investing that provide investors an opportunity to purchase a great property with huge equity for incredibly low prices. This investment opportunity has a tremendous upside and very little downside based on the current legislation and history that I have witnessed as a Las Vegas Investor. I have personally purchased and sold about 70 of these HOA foreclosure properties and aided about 100 other investors in this process.

If you are interested in learning more about how to take advantage of the HOA foreclosure auctions, or if you would like to purchase an HOA foreclosure home, feel free to give me a call directly. I can answer any and all questions and describe in detail how I have been able to partner with investors to purchase the HOA foreclosure homes for 20-30 cents on the dollar and manage them effectively while getting the maximum return.

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Great Time to Sell Investment Property in Las Vegas

Since the beginning of 2013 home prices in Las Vegas have risen considerably, even as much as 40% in some locations. This has created a nice equity position for a lot of Investors. As prices slow down to a more reasonable rate, an opportunity exists for Investors to move recently gained equity into larger and more productive properties using the 1031 Tax Deferred Exchange Strategy while also deferring tax liability.

The outlook for the real estate market in Las Vegas is very positive as many projects that were on hold for the past several years are now being completed. New residential builders have begun building new subdivisions throughout the city. Several new water parks have opened up recently in the southern part of the valley, plans for large commercial developments are moving forward, and large developments that were on hold are now being completed. An upward pressure on prices now exists in Las Vegas as demand increases and supply remains low.

Using the 1031 Exchange Strategy the Investor can defer payment of Capital Gains, which is an excellent vehicle to leverage equity while prices are still affordable.

There are some requirements Investors have to take into consideration when utilizing the 1031 Exchange Strategy. These include:

  1. Property must be exchanged like kind for like kind, such as Real Estate for Real Estate. This can be Single Family Homes for Commercial units, Multi-Units, or even Land. Other property can also be exchanged, such as Vessels for Vessels or Aircraft for Aircraft, but this article will focus on Real Estate.
  2. Properties must be held for Investment or in connection with a trade or business.
  3. The Investor must purchase properties of greater value than the property he/she is considering relinquishing.
  4. The Investor must re-invest all proceeds from the sale of the relinquished property into the replacement property.
  5. The Investor must re-acquire debt equal to or greater than debt paid off from the relinquished property, or replace the debt with additional cash.

To take advantage of this strategy, an Investor has to complete the dual parts of the transaction: transferring (sale) of the relinquished property and acquiring (purchase) of the replacement property. The Investor must acquire title to the replacement property in the same manner as title was held in the relinquished property (there may be some exceptions to this rule).

The Investor must meet two deadlines, both of which begin on the date of the transfer of the relinquished property. The replacement property must be identified within 45 days after the completion of the sale of the relinquished property. The exchange must be completed either within 180 days from the date of the closing of the relinquished property, or the due date of the Investor’s federal income tax return together with all extensions.

The Investor must also follow the identification rules to successfully complete the 1031 Exchange Strategy. The replacement of the properties must be made in writing and signed by the Investor. There are two common rules to follow:

  1. Three Properties Rule: three properties can be identified without regard to their fair market value.
  2. 200% Rule: any number of properties can be identified as long as their combined fair market value does not exceed 200% of the fair market value of all of the relinquished property.

By following these steps and taking advantage of the 1031 Exchange Strategy, Investors can utilize the equity gained from increased home prices to purchase more productive properties before home prices drop again and stabilize.

Interested in exploring the advantages of using the 1031 Tax Deferred Exchange Strategy to accelerate your equity position in your real estate holdings? Call (702) 656-3264 anytime for a personal consultation with real estate expert Glenn Plantone, Broker/Owner of Vegas International Properties Realty Group. With particular specialization in Investor clients, property flipping, and HOA Foreclosure homes, Glenn Plantone has a unique and advanced knowledge of the real estate industry and can help transform the current equity position of your real estate investments into a performing and profitable portfolio.

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Trustee’s Sale Becomes Best Buying Option as Home Prices Rise in September

As you may know I have been very heavily involved in the Las Vegas real estate market for the last six years, both as a private investor and as a licensed real estate agent. As an agent specializing in undervalued properties, I have sold homes and condos to both owner occupants and investors at great discounts…before and after the bubble burst.

The current Las Vegas market represents one of the greatest buying opportunities that we have ever seen in real estate. Prices have over-corrected as a result of the credit crisis and have come down to levels that are way below builders’ costs. We are seeing condos selling at about $35-$45 per square foot and single family homes selling as low as $50 to $60 per square foot. From October of 2007 to May of 2009, the average median home price in Las Vegas fell approximately $10,000 per month…every month. As prices began to stabilize in the summer of 2009, investors realized that a bottom was arriving and began to flood back into the market. This past summer saw record sales volume in the Las Vegas valley. There were over 3700 closes in both June and July, 2009…beating even the previous monthly highs set in the summer of 2004, at the height of the bubble. Of these closings, 45% were cash deals and 40% were to investors (as opposed to owner occupants)…these numbers also exceed the percentages posted in 2004.

This extraordinary demand for great properties at great prices in Las Vegas caused the median home sale price to increase in September…the first increase in the Las Vegas market in over two years. September also saw sales taper off slightly. The general consensus, however, is that this decline is not because of a reduction in demand, but rather because of a drastic reduction in supply. In September only around 1800 homes were returned to bank ownership through the foreclosure process. In contrast, 3358 single family homes sold in this same month. Since almost 70% of all these sales were on foreclosure/REO properties, this represents a situation where more homes are being sold than are coming on to the market. The prices are low, the demand is high and, as a result, prices are starting to creep up on these REO sales. In addition, we are seeing multiple bid situations on almost every REO property that comes up for sale. These circumstances are making finding good deals by buying REO properties very difficult.

The most viable option at this time for acquiring properties below market value is at the trustee’s sale. Once the owner of a property passes his 90 day notice of default period, he is issued a notice of trustee’s sale. After the NOS, or notice of sale, is given, the owner has 21 days to cure the default or the property will be sold to the highest bidder at the trustee’s sale. Buyers at the trustee’s sale in Las Vegas are currently picking up properties for a discount of about 20% under the already heavily discounted REO listings that are setting current market values. For example: If a home sold in 2007 for $300,000, and it is now worth about $100,000 on the REO retail market, it may be picked up at the trustee’s sale for around $80,000. This would represent a buy price of approximately 25 cents on the dollar from the highs of just a few years ago.

I have spent the last several months working with a handful of investors and have made several purchases through the trustee’s sale. If you are interested in finding good properties at the best prices in the hottest foreclosure market we have ever seen (and may ever see) please give me a call or shoot me an email and I can go over the details with you. Buying at the trustee’s sale represents not only a great opportunity for the buy and hold investor to purchase properties for cash flow, but also represents the only viable opportunity for flip investors in Las Vegas to actually resell a property for a quick flip profit.

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Short Sales or REOs?

Over the last year, many of my clients have asked me about the feasibility of short sales…both from a seller’s perspective, as a way out of an upside down property; and from a buyer’s perspective, as a way to acquire properties below market rate. Up until recently I have advised most of my clients away from short sales…as a buyer or as a seller. The reason was simple: lots of time invested, small chance of success. As a rule, since the housing bubble burst and the credit crunch began, banks have been overwhelmed with defaults and the departments in charge of evaluating and approving short sales have been notoriously slow and inefficient. Trying to negotiate a short sale with the bank often resulted in frustration for all parties involved with a very low success rate.

As a result, I have advised my investor clients to seek out REOs as the best buying opportunity here in Las Vegas. Time, however, are changing. My recent articles on the Las Vegas housing marketing have highlighting the dwindling supply of bank-owned REO properties available. Each month the demand for these REOs and the closings exceed the fresh supply of foreclosed homes coming from the banks. This has resulted in bidding wars across the Las Vegas valley as investors and primary residents eager to capitalize on the best real estate buying opportunity in decades flock to purchase the REOs that make their way on to the market. But with the percentage of homeowners behind on their mortgages still at all time highs, why is the number of foreclosures entering the market declining? The answer may be the increase in short sales.

Brian Wargo of the Las Vegas Sun recently wrote an article discussing this increase in short sales. In it, he quote Larry Murphy, president of the real estate monitoring firm SalesTraq, who says that of the 35,742 closings through the first three quarters of 2009 75% were foreclosures and only 10% were short sales. However, of the 11,249 contingent sales currently in place in Las Vegas, 71% are short sales and only 21% are REOs or foreclosure homes. This represents a dramatic shift in banking policy.

Murphy believes banks are becoming much more willing to consider short sales because they are finally realizing that short sales generate a higher sales price for the banks than REOs. Data supports this. The median price of homes sold through foreclosure is $116,900, while the median price for homes sold through short sales is $150,000.

The federal government has also adopted standardized rules for short sales, simplifying the process. This, combined with the pressure being exerted by the Obama administration to keep homeowners out of foreclosure, is creating a much higher approval rate for short sales. This, in turn, is keeping the flood of foreclosures that we had been expecting here in Las Vegas off the books and creating the progressively lower inventory monthly of bank-owned REO homes.

All-in-all, whether you are a seller looking to get out of an upside down situation or a buyer looking to capitalize on low home prices, now may be a great time to consider the short sale as an option.

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Latest Update — MGM Signature Towers

It has been a little over three months since my last update on the MGM Signature Condos and I wanted to update my readers on the new developments that have been taking place. Those of you who are on my mailing list will have received a spread sheet I produced that details the profitability of a studio unit purchased recently for $150,000. This same unit was selling for $465,000 at its high three years ago. The spreadsheet shows that purchasing the studio unit for $150K, or roughly 32 cents on the dollar, would result in positive cash flow for the new owner.

In crunching the numbers on the MGM Condos, I have come across an interesting anomaly that I would like to share with you: The one bedroom units that are placed into the rental program have historically generated lower occupancy rates than the studios. Yet they cost about twice as much (the new lowest 1 bed sale has been $185,000), the HOA fees are nearly twice as high ($1000 vs. $500 for the studio), and they only rent for about $40 more per night. Potential investors should keep this in mind when considering studios vs. one bedroom units at the MGM Signature Towers. The one bedroom units are getting close to being a good deal for a buyer that is thinking of either living in it, renting it outside of the MGM rental program, or just holding it as a second home. But the one bedrooms are not as attractive as the studios from a pure investment perspective.

So far, the six lowest price studio sales in the entire project have been transactions that I have been able to negotiate for my clients. I was recently able to broker a deal in which one of my investors purchased a bulk bundle of four studio units at what amounted to $118,000 each. The Mountain View studio units are selling for the $120K-140K range and the strip view studios are now selling in the $140K to $180K range. The higher range would include the studios with a patio. The unit I discussed in the first paragraph that originally comped for $465K and recently sold for $150K, was a higher floor studio with a strip view and also a patio.

The inventory remains very light at this time. Currently, there are only 9 bank-owned foreclosures available in the MGM Signature Condos. 8 of them are studio units and one is a one bedroom condo. There are still quite a few short sales in various stages, but we are beginning to see a lot of short sales reverting back to the bank and becoming foreclosures as the short sale process is very slow and agents and banks are often unable to get them approved before the foreclosure happens.

Because of the light inventory of REOs and the difficulty in successfully negotiating short sales, I am beginning to look at the Trustees Sale in order to purchase affordable MGM Signature units for my investors. We are starting to see many studio units being sold at the Trustee Sale for around $120,000. MGM Signature Condos continue to be a great investment opportunity for those looking to acquire properties and utilize a buy and hold strategy. However, the really good news is that if you are looking to buy and flip, there is the opportunity to make $20,000-$50,000 per condo in a two month period through purchasing MGM Signature units at the Trustees Sale. If you are interested in this opportunity, please contact me for more details.

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Las Vegas Mayor Oscar Goodman to Speak at October Las Vegas Real Estate Insider Club Meeting

The Las Vegas Real Estate Insider Club is proud to host special guest speaker Mayor Oscar Goodman at their upcoming meeting, held Wednesday October 14th. In order to accommodate the increased number of guests expected to attend, the meeting will be held at a special venue this month… the conference center high atop the Newport Lofts in downtown Las Vegas. The mayor will likely address such topics as the state of the economy, the redevelopment efforts downtown, and the housing market in Las Vegas.

In addition to the presentation from Mayor Goodman, the Club will welcome its usual line up of speakers discussing current Las Vegas housing market conditions, the national economy, foreclosure properties and more. Tamara Bostrom from Spiral Digitial Media will discuss how professionals can use the internet to generate new business in this challenging economic climate.

The Las Vegas Real Estate Insider Club, which normally meets the second Wednesday of each month at Putters Grill on Rainbow at the 215, was founded almost three years ago by full time real estate investor Glenn Plantone. Glenn’s vision was to create a forum for other investors and professionals involved in real estate and related trades to meet and exchange ideas and opportunities as well as have the opportunity to hear timely, educational presentations from local and national real estate experts. Thus far, the Club has enjoyed tremendous success and anticipates welcoming over 150 members and guests to the Newport Lofts downtown for the October meeting featuring Las Vegas Mayor Oscar Goodman.

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Shrinking Inventory Necessitates New Buying Strategies

The Las Vegas real estate market has endured an amazing roller coaster ride in the last ten years. Homeowners in the Las Vegas valley saw very modest price appreciation throughout the 90’s and the early part of this decade. In 2003, sales began to pick up and by 2004 Las Vegas was the hottest market in the United States. Prices shot up to astronomical new heights only to come crashing down a few years later. The 2007 and 2008 season saw the Las Vegas real estate market become as cold as ice as both prices and closings plummeted and foreclosures soared. But all things come full circle and since the summer of 2008, the Vegas market has been picking up steam and has in fact enjoyed record sales going into the summer of 2009. In fact, there were more sales in June and July of this year than during any previous month on record…including the heyday back in 2004. The continued bad news, is that after 18 months of price drops the huge gains in appreciation that we saw from 2003 to 2006 have not only been erased, but we have receded to levels of a decade ago. The average median home price in Las Vegas has settled near $130,000. Virtually everyone that purchased in Las Vegas after 1998 is now upside down in their home. It does not make a lot of sense to most Las Vegans as homes are now selling well below builder’s replacement costs.

This drastic decrease in prices has brought droves of investors back into the Las Vegas real estate market. 80% of closings in the last several months have been on REO or post-foreclosure bank owned homes. Cash buyers have been dominating the market and getting great properties for around $40 to $70 per square foot. Unfortunately, the inventory of bank owned homes is now at an all time low of under 2000 units. This represents less than a two week supply of inventory based on the fact that the majority of the 4702 and 4602 closings in June and July were REOs. Even though Las Vegas is the “foreclosure capital of the world”, we are continuing to see foreclosure inventory shrink on a monthly basis. June and July saw nearly 3300 homes per month revert to the banks through foreclosure, but this pales in comparison to the over 3700 REO sales per month that we saw at the same time. This disparity means that we are loosing nearly 400 homes per month from the inventory of bank owned homes.

The low inventory is causing heavy competition for the homes that are available. REOs coming on to the market today are creating bidding wars as investors try to snatch up cash flowing properties at great, low prices. Both owner occupants and investors looking to take advantage of great buying conditions are finding that they are having serious difficulty getting homes under contract. This excess of demand is beginning to drive prices up on bank owned homes.

For months, I have touted the benefits of buying REOs directly from the banks. The process is simply and easy, and, until recently, investors could use this method to acquire great properties at great prices. But those days appear to be coming to a close, at least for the time being. There has been talk for over six months, since the moratorium on foreclosures ended in March of this year, that the banks have a surplus of inventory they are holding back. The problem seems to be that no one knows when or if this rumored inventory will be released. Until or unless that day comes, I am now advocating that investors change their strategy for acquiring properties in Las Vegas. Plan B is to buy homes at the trustee’s sale. After the notice of default (giving a late paying home owner 90 days to cure the late payment) and the notice of sale (giving them another 21 days) a home is sold at the trustees sale. At this sale, the property will either be bought by a third party (you or I) or it goes back to the bank and will eventually become a bank owned, MLS listed REO foreclosure property.

Previously, I have not advocated buying at the trustee sale because there are many restrictions and hassles involved in this method of purchase. Not the lease of which is that properties cannot be financed…cash must be paid at the time of sale. However, with the inventory of REO homes tightening so drastically, I am now finding that trustee sales are offering opportunities to purchase homes at 20-30% below the price that would be paid once the home becomes an REO. Buying at the trustee sale also eliminates the competition of multiple offers. This is where the true investor can now turn to get great wholesale deals. Investors must continue to adapt in order to profit in today’s real estate market. I believe trustee sales in Las Vegas are the next step in this evolution.

Anyone interested in getting involved and finding great homes at the best prices with the least amount of competition feel free to get in touch with me for more information.

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