Las Vegas Trustee Sale Auction - The Real Foreclosure Real Estate Auction
The place that the act of foreclosure takes place is the Trustee Sale Auction. Nevada State Law requires lenders who are foreclosing on homes, condos or commercial properties in Las Vegas, Henderson or North Las Vegas to run them at a foreclosure auction that is called the Trustee Sale Auction. The lender can't bid more than the foreclosing loan and if a third party bids one dollar more than the loan amount, the bank is out and only other third parties can bid against the original bidder. The second or third mortgages get wiped out. This problem however doesn't exist any longer and most properties are not worth even half the loan amount, however sometimes the bank will sell the property for far less than comparable retail (MLS) prices to avoid two closing costs, real estate agent (Realtor) commissions and other headaches.
About 20% of homes, condominiums or commercial properties sold through the Las Vegas Trustee Sale Auction are purchased by a third party at up to 30% below retail prices. However, those who want to flip (buy and sell quickly) a home or condo in Las Vegas should look forward to an 8%-10% net profit per real estate deal which, if done correctly 3-4 times per year, can provide for a 30%-40% profit per year. There are not many investment opportunities that allow for this kind of profit per year. The Trustee Sale Auction offers the best deals. However, extreme care should be exercised when buying, since liens for back taxes, back HOA fees, and some service fees like trash collection fees come with the property and have to be researched before bidding.
The most important business advice given to me was by an Omaha sales man who made a living by buying cars from dealer auctions and retailing them. His advice was that you make your money while buying and not when you sell. The trick is to know how much you can sell a property for before you buy it. The same rules apply here. Properties should be picked with competition in mind, this is a real estate auction after all.
To be successful at the Trustee Sale Foreclosure Auction, one has to know what are the best properties to buy at the foreclosure auction. To answer that, the buyer or his agent have to figure out what is the best square footage to buy, as this varies with location. For example it is hard to rent 4000 square foot homes in some areas of east Las Vegas and the buyer would have been better off buying two 1800 square foot homes since they are easier to rent. Gross rental income VS purchase price, days on the market before leased are among many consideration that go toward successful investing in the Las Vegas area.
The Trustee Sale Auction only avails the Parcel number and the address for the property plus the foreclosing loan amount. The address has to be converted to information, for example: 555 Las Vegas Boulevard has to be converted to a 1990 built three bedroom home with two bath and 5500 square foot yard. And then a COMP has to be done to figure out how much comparable homes are selling for through the Las Vegas MLS, the DOM and how quickly and for how much these are rented for in order to figure out the price difference before one bids on a property. Once the buyer or agent knows all the right information on a property they then wait until the property that matches the buyer's criteria hits the auction and then bid.