In an effort to streamline the inefficiencies inherent in listing bank-owned properties with agents claiming to be REO specialists, banks are realizing that live auctions offer a much faster method of clearing their REO inventory. One company providing auction marketing services to lenders is the Real Estate Disposition Company. According to their website, REDC has sold in excess of 2.5 billion dollars of real estate assets across the country since 1990 through public "live auction" forums.
Why is this of interest? Because later this month (January 31st) REDC will be conducting a live auction for several properties in and around Reno and Sparks. As you’ll see from the website, the actual description of the auction is Las Vegas South And Surrounding Areas Including Carson City, Reno & Sparks.
At the moment, 328 properties are included for sale in this particular auction, but more are being added daily. The majority of the properties are located in Clark County. However, I quickly scanned through the list of properties and found approximately forty properties located in Washoe County. [Additionally, there are properties for auction in Lyon, Douglas, Nye and El Dorado counties.]
The properties vary widely in characteristics as well as starting bid. For example, here’s an ArrowCreek home, located at 5710 Cedar Trace Ct , previously valued to $920,000, according to the description, with a starting bid of $299,000. This is a 3,847 sq.ft. , four bedroom, 3.5 bath home on a 1.27 acre lot. Not a bad price.
If you’re looking for something even less expensive, there are condos and houses listed with starting bids of $5,000, $1,000 and even $500. For example, here’s a 1,154 sq. ft., three bedroom, two bath home in the North Valleys with a starting bid of $500.
Again, there are all types of properties being auction. The auction date is Saturday, January 31, 2009. The main venue for the auction is in Las Vegas, however there is a remote bidding facility located at the Holiday Inn Reno-Sparks in Sparks, NV. Registration is at 8:00AM and the auction starts at 9:30AM.
Take a look at the list of properties and see if anything interests you. If so, and you feel like you’d like an agent to assist you with the process, give me a call at 775.722.4011. I’ll assist you with the registration process and make sure you have the required docs (cashiers check, loan pre-approval, etc) necessary to bid. We’ll also pre-view the property together and I’ll pull recent solds comparable to the property in which you are interested in order to determine a bidding threshold.
If you prefer to attend the auction unrepresented, I’d still love to hear about your experience there. Especially if you picked up a property at a killer price. Please share with the blog.
BanteringBear
Move to Reno posted:
“…usually some buyers have to buy too because (1) they want to or (2) no reasonable rentals are available.”
Some buyers have to buy because they want to? HUH? I mean, WHAT? No reasonable rentals available? HUH? Where?! Are you living in the twilight zone or something? Your statement is absolute nonsense. Your pretzel logic boggles the imagination.
DownButNotOut
BanteringBear wrote;
‘Until the shills quit spewing erroneous garbage, I’ll continue to post’
Can you enlighten us as to why you call anyone that thinks differently than you shills? Do you know something we don’t? Oops, I guess that’s rhetorical.
Move to Reno
BanteringBear wrote: “Some buyers have to buy because they want to? HUH? I mean, WHAT? No reasonable rentals available? HUH? Where?! Are you living in the twilight zone or something? Your statement is absolute nonsense. Your pretzel logic boggles the imagination.
LOL!
I don’t like to rent, I WANT to buy. Hence I HAVE to buy if possible. Rent money is money flushed down the toilet. Go ahead and flush your money down the toilet. It’s your money. Do with it what you want to and I do with mine what I want to do.
Btw, there are some communities with lousy, over-priced rental property.
BanteringBear
DownButNotOut-
You’re a real estate speculator. You’ve admitted it. I’ve read everything you’ve posted, and it appears as if your strategy is not based upon cash flow, but appreciation. Therefore, it is in your best interests for prices to rise. As such, you are spreading erroneous information as to what constitutes a sound purchase. You are a shill.
Move to Reno-
Lost on you quite apparently, is the difference between want and need. I am absolutely astounded that somebody your age, assuming you’re an adult, does not understand the distinction. There is not a shortage of rental housing, but a glut, and it is STILL more expensive to buy than rent the equivalent in Reno. I would ask you to provide me ANY example to back up your baseless assertions, but I’m not convinced you can even tie your own shoes.
DownButNotOut
BB – At the risk of this becoming our own personal feud, I’ll respectfully agree to disagree with you. Like most I come here for discussion and to hear different points of view. I acknowledge my views aren’t everyone’s, but they’ve treated me well financially over the years.
Among many other things,one difference between us is that I look for opportunity in these times. You choose to sit on the sidelines and watch the carnage. Stay cool.
CommercialLender
Wow, sooooo tempting to jump in here.
1) “rent is throwing money away”… If we’ve all learned anything in these past few years, this old adage is not always right. I was among the very first to sell my house and move to a rental in Jan 06 (listed 8/05). Basically laughed at. Well, I can no longer count on both hands how many of my close friends are now doing the same. They discovered that renting in a DOWN market means _____[bloggers fill in the blank]______. For extra credit, renting in an UP market means ________________.
2) Cost of construction was way over-inflated in the past year due to commodities bubbles, labor/wage bubbles, land valuation bubbles, et.al. So it is not entirely out of the question to point to areas like Detriot to demonstrate that a good deal to a diligent buyer CAN be had under replacement cost. Yes, even in Reno. Even in my commercial mortgage business in the past few [overheated] years, clients found assets “under replacement costs”. Its not too hard, in fact, when ‘replacement costs’ were rediculous ($400 psf for vanilla shell retail in Roseville anyone???). Anyone familiar with the debacle called Magnolia retail center on McCarran at Lakeridge? And land? This cost line item is among the highest ‘beta’ meaning it will go up and down with generally greater swings than other components. Land can even carry a negative value – try environmental issues, demolishion issues, zoning changes gone wrong, neighboring developments, etc. Face it, land has many similarities of a commodity.
3) Supply/Demand and Buy/Sell. Some middle point between both sides here might be advisable. A ‘hood with 100 homes that sold ‘recently’ on average for $100 each has 1 bank owned home that sold at firesale at $75. Does that mean, because a buyer bought, that all homes are now worth $75? Similarly, many builders in 2004-2005 in Reno made people practically camp out in front of their sales office to pay what the builder ridigly told them was list price. Did that mean those homes’ true value was the builders asking? The appraiser might readily throw out my first point as abnormal, but did appraisers ever throw out a sale comp due to my latter point? So how much of s/d is simply market emotions? [Here’s a blog topic for the ages…]
All these concepts were adequately and fully covered in Nov on this blog. I would suggest going back for some reading up on it.
Move to Reno
BanteringBear-
No I understand the difference between want and need. I also understand that you a jerk.
GreenNV
The Magnolia Group, wow. They served the Kool-Aid from the backseat of their concierge Jag. I was one of their architects and was there to the bitter end. The stories I could tell.
FWIW, DP Properties (Dermody) ended up with one of the properties I had accounts receivable with from the Magnolia connection. The bills were paid, no questions asked, though they could easily have stiffed me. If you are dealing with DP (though they have sold off most of their local properties), know that they a joy to work with and won’t trade on their integrity to make the deal. I bow down to them. As to Magnolia, I also bow down, but do a 180.
Guy Johnson
Hey All, Tahoe Ticker just published an interview with me regarding the auction. Check it out at http://www.tahoeticker.com/
At the moment, the interview is on the home page, but if you can’t find it, the title of the piece is: “How to buy a home for under a grand”
BanteringBear
DownButNotOut-
I don’t fault anyone for buying right now. It’s certainly a better time to buy than 4 years ago. I just have a serious problem with the distortion of facts. I have no problems with you, whatsoever, and am happy to agree to disagree.
Move to Reno-
If you understood the difference between a want and need, then you would be able to recognize the purchase of a house as a want. If you do indeed realize this, then I have absolutely no idea why you would go on the record stating otherwise. Color me confused.
BanteringBear
CL-
Is the Magnolia Retail Center the one which has Starbucks, that fondue place, UBS, etc.? Just trying to picture what development you’re talking about. Thanks.
Martin
Was Mr. Stoever affiliated with the Magnolia Group?
Sully
Good article Guy! BTW have the Ticor charts for Dec come out yet?
Move to Reno
cl
(1) Sometimes in the short term it is better to rent than to buy. If I were to move to Reno in 2005 I would not have been a buyer since it was clear that the boom mania was in full force. However, if I were to move to Reno today I would be looking to buy since it would make economic sense to do so. The bottom line is that people who rent for the long term usually do not do as well as those who own real estate for the long term. So the real question is how long does one expect to live in a particular location. People who move every couple of years would be better off renting and those who stay put would be better off buying.
(2) Cost of construction today is probably has low as it will get. So how much per sq ft. are basic new homes in the Reno area?
(3) Still trying to find out how much an acre of land costs in Reno.
smarten
M2R – IMO your observations and questions are too general. For instance, how much does an acre of land cost in Reno? Where exactly in Reno do you have in mind? How about our joker FSBO friend in St. James Village? Now he’s asking $269K. How about Montreux? $575K. How about Sparks [someone more knowledgeable fill in the blank]?
It’s better to rent than to buy when the ratio is out-of-whack and real estate prices are not appreciating [given it’s the prospect of appreciation in value that is the major factor in home ownership]. There’s now a new 3K square foot home for rent in Montreux for $2,500/month. I think it can be had for $2K/month. This is a home that a little over a year ago was priced at about $1.1M. Now it’s priced at under $800K, and there’s even a similar REO for sale at about $600K.
Even though a good value by recent pricing, it’s far, far less expensive to rent than to own. And since prices aren’t likely to be increasing anytime soon [at least the next couple of years], why buy?
Until the cost to own is closer to the cost to rent, IMO there’s no reason to buy. And BTW, at least in Reno, there’s no shortage of quality housing to rent.
Move to Reno
smarten, check out this house for rent. How much do you think it would sell for today and what is your guess on annual property taxes?
http://reno.craigslist.org/apa/993832169.html
As far as my question concerning the price of an acre of land in Reno, the price varies according to the amount of demand for the land which is a function of its location.
new in town
hi we are new in town. is this rental reasonably priced?? how much should the rent be??
http://reno.craigslist.org/apa/980162067.html
CommercialLender
BB,
yes, the center with the fondue restaurant. I’ve actually lost touch with how that mess ended up. Anyone have an update?
GreenNV,
DP is great. I am not at liberty to say much, but they are a good group. they happen to supply directly or indirectly a ton of jobs in Reno as they own so much industrial/warehouse, and that is what Reno needs – further diversification from casinos and single family construction into long term industries like mfgr and logistics. These are also the jobs/companies that tend to be relocated from CA.
Sully
new in town – are you serious? 🙂 Most people on this blog aren’t looking to rent a small hotel. As far as the 10K/mo rent – you can do better in other areas such as sommerset. Diane has a very nice house (I think is available) for about 1/3 of that.
DownButNotOut
NIT – if you do lease this you’ll need to host the 1st blog party just to fill it up!
Gina
I see trolling is still a blog sport 🙂
In Vegas over the holidays I saw billboards for builders offering new homes at under $100 per sq ft.
Anyone know what the builders in Reno are up to lately? Any deals?
Those auctioneers make money off their tacked-on, non-refundable fees when you sign your one-sided agreement to buy a home. States shouldn’t allow these “auctions” but somehow the auctioneers paid off the locals so that what they do is legal.
Move to Reno
looking at that rental at 2220 Schooner Circle, it sold in 2003 for $550K. Assume that FMV for it is $131 a sq ft. That makes $510k selling price. The owners are asking 2K a month in rent.
So since money is currently earning around 3% interest, after tax that’s 2%. 2% of 510K is $10,200 a year which compares to $24,000 in rent. Even if you add the tax deductible property tax, say $4000 and depreciation, say $4000 a year, it would appear that it is cheaper to buy the house than to rent it. Also, it is worth $5000 a year to me to control the property, that is, no one can send me a letter telling me that I have 30 days to vacate the property.
CommercialLender
Move to Reno,
good excercise. If one buys with a more traditional model (using debt), here’s what I think it would look like:
$2,190/mo P&I (assumes your $510K, 80% debt, 30 am, 5.0% rate)
$5,610 ish/yr taxes (based on est 1.1% of price) or $468/mo
$60/mo insurance
$170/mo opportunity cost on down pmt (2% of the 20% down)
less $607 tax deduct (assumes 28% on Int and prop tax)
cost per month to own: $2,281, but ~$490 of that is principal pay down, so true net of $1,791.
Since they are asking $1,950, let’s assume they need to discount that 10%, so $1,755/mo.
Assuming you’d stay for a moderate to long term, then it looks like the house is priced such that you’d buy it not rent it. The landlord must recognize this and want to hold on to the home until prices come back at some point.
DownButNotOut
Good detail CommercialLender. An excellent model to use when calculating rent vs buying. The intrinsic value of being in control of your own home is the tie-breaker if the numbers work.
smarten
Wait a minuite CL and M2R. Your analyses are based upon the assumption this property has a FMV of $510K, and a fair market rent [“FMR”] of $1,900/month. I can’t comment on FMV but I can on FMR. Rent of $1,900/month for Reno residential real estate is A LOT. There are many renters on this Board who have told us about their very nice 4/2, 2,100 square foot SFR rentals in the $1,300/month +/- range. I remember some time ago highlighting new Toll Brothers 5K square foot Somersett homes offered at $1,900/month. So for $1,900/month, the subject property had better be pretty special meaning new higher end construction in Somersett or Arrowhead [in fact just for giggles I went to craigslist, used the key word “Reno,” and found 1,000 housing rentals. I then narrowed my search to just those offered at $1,900/month or greater. I found 155 (15%)].
I suspect from the picture and description the subject property has a FMR of closer to $1,400/month [take a look at the 155 craigslist listings for $1,900/month or more and compare them to the subject property]. I suggest you use this number, run the numbers, and see where you are.
BanteringBear
I agree with Smarten on this. The assumption of a $510k FMV and a $2k FMR is far too optimistic. A rent of $1400-$1500 is much more realistic, and as far as FMV, well, it’s falling by the day.
Sully
Not sure when you guys last looked at rentals here, but 1900/mo for a 3900 sq ft house with a panoramic view is not that far off.
BanteringBear
How “far off” is it, Sully?
BanteringBear
Let’s also remember that “asking prices” on craigslist, whether we are talking about rentals or real estate for sale, have oftentimes little to do with reality. I’ve a friend who is renting in Spanish Springs, a brand new 4 bedroom home, optioned out, on a huge lot, fully fenced and landscaped for $1300. I believe it’s close to 3k square feet. I have a hard time believing in the $2k per month for the listed example. But, that’s not to say that people aren’t getting ripped off on rent. Many are overpaying.
Sully
I’m not saying its worth it, but the rents for executive houses are around $2000/mo. The house on Schooner seems right in line with comps.
I suspect the further out you are, the less you pay. I found a 3/2 1600/ft in University Ridge area for 1300/mo. NO view. I am paying 1200/mo for a two story telephone booth, bonus is the landing pattern for the airport! Nice view of all the planes landing, sound and all. 🙂
smarten
Sully –
There’s a new, 3K+ square foot Montreux home for rent on craigslist at $2,500/month. I’ve stated several times before that the owner is in trouble and I believe would take $2,000/month.
So would you rather rent a Caughlin ranch style home at $1,950/month, or a Montreux mini-McMansion at $2,000/month?
$2,000/month for rental housing in Reno/Sparks is on the upper end of the price spectrum. In fact don’t we all recall how DERRICK used to deride anyone willing to “throw away” this much money in rent?
And just what kind of “panoramic view” does one have from Caughlin Ranch, and what kind of price premium does it warrant?
BanteringBear
Let’s assume the $2k IS the FMR for Schooner. IMO, it’s nuts to assume that is sustainable. As these job losses accelerate, rents are going to be crushed. Forget falling median income, how about no income?! What might seem a good buy today, will look horrendously overpriced in a few years time. The best thing anyone can do right now is stay liquid and mobile.
Sully
I wouldn’t need either as 3K foot is like two houses for me. I do agree that 2K/mo is in the higher end range.
From the angle Schooner is at, the view is pretty good, better than looking a sagebrush covered hills anyway. When it comes to renting, I look at it as a temporary condition. Also, this is the longest period I have gone without owning in my adult life.
So, I prefer to stick with my “sardine can” until I can find something to buy, either as a permanent residence or future rental.
As far as a premium for the view goes, well I don’t give it much unless I was buying.
Inquirung about working the auctions
Hello
I have recently relo’d to Reno area from the Wine Country in Calif. I am a Realtor/Assistant specializing in BPO’s – REO;s the last few years.
Does anyone know how you go about working the auctions (paperwork).
Does anyone from this area know of any agents lookng for an assstant. My time is your time;
Thank You
Tammie
lovingmynulife@yahoo.com