New Wave of Foreclosures Means Trustee Sales Will Continue to Offer Great Buying Opportunities

For the last two years, Las Vegas has led the nation in foreclosures. Most recently, those foreclosures have made their way to the Trustee Sale in order to be liquidated. The Trustee Sale has offered investors a great way to acquire properties at rock bottom prices. But many people are now looking at the recent increases in sales volume in the Las Vegas valley, combined with a leveling off in price declines, and speculated that the elusive bottom to the real estate market collapse may have arrived. But has it?

In a recent article in the Las Vegas Review Journal, experts discussed the "shadow inventory" of foreclosure homes that is poised to enter the market over the next two to three years. According to Rick Shargo, senior vice president of RealtyTrac, approximately $2.5 trillion worth of adjustable-rate mortgages are due to reset between July, 2010 and August 2011. Shargo estimated that foreclosure filings could approach 4 million nationwide next year with about half of them coming primarily in four states -- Florida, Nevada, California and Arizona. While the first wave of foreclosures that hit Las Vegas and the nation two years ago were comprised mainly of sub-prime borrowers defaulting on sketchy loans, this next wave is expected to come from more creditworthy borrowers in higher-end homes who've lost their jobs or have negative equity in their homes and can't sell.

According to housing analyst Larry Murphy of Las Vegas-based SalesTraq, hundreds if not thousands of Las Vegas homeowners haven't made a mortgage payment in more than a year and still haven't received a foreclosure notice. Murphy was quoted in the Las Vegas Review Journal article as saying, "That's how backed up it is. The banks are overwhelmed. If two out of three homeowners in Las Vegas are upside down, it's a matter of time. If the economy doesn't improve, a lot of people are going to take a walk and they're not showing up on the radar right now."

As prices have continued to fall in the Las Vegas valley, investors have been able to purchase properties that can generate very strong cash flow or can be rehabbed and flipped for a profit. This next wave of foreclosures represents more buying opportunities through the Trustee Sale. Once a home owner becomes severely delinquent on their mortgage, they are issued a notice of default by the bank. If the default is not cured, this is follow by a notice of sale. Should the homeowner not be able to become current on their payments, or sell their property, the property will be foreclosed upon and offered for auction at the trustee sale. Thousands of properties were auctioned last year in Las Vegas through the trustee sale. But making a successful purchase at the sale requires a lot of work. It is important that a property be thoroughly researched before the auction, and then the bidding procedures at the auction can be frustrating for investors as frequent delays make attending the auction almost daily a necessity in order to secure the best properties.

Matt Jenkins is a foreclosure and trustee sale expert who is in regular attendance at the Las Vegas trustee sale auctions. If you are interested in acquiring deeply discounted properties using this method, please contact Matt for more information on the process.

Trustee Sales and the Foreclosure Process

Trustee Sales are the final step in the foreclosure process. When a homeowner is not able to make their mortgage payments and falls late by 60 days or more, it triggers the start of the foreclosure process. The first step occurs when the bank or lien holder records a Notice of Default with the county and sends that same notice to the borrower. From this point, the homeowner has 90 days to reinstate the mortgage according to the terms of the lender or they will receive a Notice of Sale. The Notice of Sale is recorded at the County Recorder's Office and is also often posted on the property. This notice sets the date for the Trustee Sale. There are approximately 30 days from the date the Notice of Sale is issued to the Trustee Sale. During those 30 days, the homeowner still has a chance to reinstate their mortgage.

For Clark County properties, the Trustee Sale takes place on the Las Vegas courthouse steps downtown. The county will list what properties are expected to come up for sale and what the starting bid will be. The potential buyer is responsible for performing all due diligence on a property before the Sale. If there are no third party bidders for the property at the Trustee Sale, or if the minimum reserve amount is not met, the property will usually revert back to the bank and become an REO. This REO will then be marked up and placed for sale through a real estate broker contracted by the bank.

Trustee Sales are the best opportunity for investors to purchase properties for prices well below market value, without the hassle of dealing with short sales or other "creative" purchase methods. I specialize in helping my investor clients purchase properties through the Trustee Sale. I have developed a turn-key method for analyzing potential deals and obtaining properties. If you are interested in investing in Trustee Sales and would like more information, please contact me.