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.
Tom
Guy, do the terms of the sale make this an absolute sale type public auction, with no reserve price, all properties will in fact be sold?
Guy Johnson
Tom, it appears these are absolute sales. I didn’t see anything on the site’s FAQs to indicate otherwise.
From the FAQ: “You will be presented with the Winning Bidder Confirmation sheet to sign. This will identify the specific property you bid upon as well as the winning bid amount, buyer’s premium and total purchase price. You will then be escorted to the documentation area. Financing opportunities will then be discussed with designated lenders and documentation of the transaction will be completed. During this time, you will endorse your cashier’s check over to the closing agent (a major title or escrow company or closing attorneys) as well as your provide your personal check or cash equal to 5% of the total purchase price to make your auction day earnest money deposit. Escrow will then be open, financing type chosen, purchase documentation executed and on your way to home ownership.”
Tom
I think that such Confirmation Sheet procedure is applicable if you are the “winner” at the auction. But there is nothing I have found on their website or in their FAQs about their sales that would indicate to me that a seller cannot put in a reserve price or a “bid” by which the property is effectively removed by from the auction by the seller. I have sent them an email inquiry on this point.
Guy Johnson
Your email to them is a great idea. If they respond, please share. Thanks Tom.
Sully
Tom, it is subject to confirmation.
Go to auction site (i.e Las Vegas Jan 31.) see terms and conditions. Page 5. All properties have a reserve price – the starting bid is not the reserve price.
inclinejj
Ever hear of shill bidders?
What is the buyers premium..5%?
downtownjunkie
I second that inclinejj….
Sully
Incline – yes it is 5%.
Guy Johnson
Thanks to Sully for finding the Terms and Conditions link:
https://www.mlhdocs.com/auctions/auctions196/196-pav-general-terms.pdf
So, yes there is a reserve price; and no it is not necessarily the starting bid price.
BanteringBear
It’s just another shill auction. Unless it’s absolute, there’s no reason to even waste any time with these shams. We haven’t reached the point of true desperation on the part of lenders. There is absolutely no reason to rush into buying a house right now. It’s a perfect time to just sit back and watch the carnage.
Martin
Oh come on, anybody who thinks this outfit is going to auction off a house “previously valued to $920,000” (for whatever that phony figure may be worth) for anything near $299,000 is inhaling laughing gas.
These “auctions” are being held all over the country. They ALWAYS have a reserve. And they ALWAYS have the shills in the crowd forcing up the bids. And they ALWAYS post the starting bids at a ridicuous figure to make the laughing gas crowd think some fantastic opportunity is at hand. Now I’m not saying that a decent deal cannot ever be found at these events, but nobody is going to walk away with a $920K house for $300K. Ain’t gonna happen.
Sully
I remember an old saying – The fine print taketh what the big print giveth! 🙂
bondstevenbond
Here’s to Sully, Incline, Downtown, Bear, and Martin. I was thinking the exact same thing when I read Guy’s original post, and I’d like to echo your sentiments.
This auction is an insult to buyer intelligence. If they’d put those houses on Ebay, then at least we’d know the true reserve price. Bear, you are exactly right. Let’s watch a bunch of suckers, smucks, and shills bid up 5710 Cedar Trace Ct to 600,000……only to find none bought it because the hidden reserve was 750,000. I agree with you Bear, sit back, put some ice in your wine, and watch the carnage.
DownButNotOut
Above, it doesn’t mean there won’t be any deals there though. The point of going to these type of auctions is finding the one or two gems in them. For some savvy buyers it could be worth the effort.And it is a lot of effort.
On that note there is a lot of negativity towards any purchase from the regulars here,(inclinejj’s offer aside) and although I generally agree with you this still seems to be a time to find those gems that once the bottom has been realized by everyone, won’t be out here anymore, at least from a basis that there’s plenty of time to research the property.
GreenNV
There are some interesting items in the Terms and Conditions:
“The Auction will be conducted by REDC (“Auctioneer”). Auctioneer, as used in these Terms and Conditions, shall include, but not be limited to, any and all of its agents, employees, representatives, officers and directors.”
Then from the Reserve Price section:
“Except where prohibited by law, the Auctioneer may open bidding on any property by placing a bid on the behalf of the Seller and may further bid on behalf of the Seller, up to the amount of the Reserve Price, by placing successive or consecutive bids for a Property, or by placing bids in response to other bidders.”
So the “Auctioneer” is the whole sales team, their friends and family, and anyone else they decide to bring in. And they are allowed by the Terms and Conditions of the auction to place shill bids without having to identify their shilldom. What a crock!
Remember 260 Lakeview in Verdi that went to auction just about a year ago? I think there was a $50,000 opening bid, and it sold for $338,000 at auction. With a little paint and landscape work, it hit the market this summer at $450,000 as I recall, reduced to $425,000, then pulled from the market. It was still sitting empty the last time I drove by a couple weeks ago. With mortgage or opportunity costs, commissions, taxes, and the minimal improvement costs, this one is quickly becoming a money pit.
There is a whole cul-de-sac listed for the current sale, Demos in North Reno just above McCarran. The chain of title on a lot of the homes is pretty iffy. “Former value” of two of the parcels that are vacant lots are listed at $260,000 and $99,000. Don’t take those former values quoted on the site too seriously – they are defined as last asking price, or the last Realtor estimate of value (among other things).
Will there be bargains available at the auction? Who knows. At least you have the opportunity to do some inspections before you bid, unlike the courthouse steps. But don’t expect your dreams of becoming a land baron to come true.
smarten
Please Guy; don’t advertise crap schemes like these in the future. I’m a little late to the party but according to https://www.mlhdocs.com/auctions/auctions196/196-pav-general-terms.pdf [yes, this is where the fine print is located]:
1. ALL properties have an UNPUBLISHED minimum reserve price.
2. IN ADDITION, the highest bid MUST be accepted by the seller [another garbage REO intermediary] up to 15 days after the buyer’s successful bid.
3. IN ADDITION, the buyer MUST pay a 5% SURCHARGE [this is starting to sound like an auto auction].
4. And did I mention all sales are as is no warranty?
I don’t know what’s happening, but I’m starting to agree more and more with BB. Unless there’s no minimum reserve price and the sale is absolute, IT’S NOT AN AUCTION no matter what label you assign! It’s really just another eBAY scam.
And if the scheme is crap, what makes anyone think the substance isn’t?
Perry
In a somewhat related topic. I heard a story on KPCC from LA today that talked about a condo project that is in a similar boat as ours. It looks as though they have not pre-sold enough of the units in order to get units financed so they’re having an auction.
They do have minimum bids so it’s not an absolute auction. They intend to have a board displaying all the current bids on various units. They said that every time a bid is placed a timer is reset. No need to try and bid at the last second. Then, after there have been no bids on any properties they’re going to end the auction. My question is if they don’t sell all the units needed to reach their numbers is the whole thing a bust?
They should consider doing something like this here but only let it be a real auction. How long does it make sense for these companies to hold on to these places? When do they just cut their losses?
http://www.therowanauction.com/howitworks.php
Reno Ignoramus
Are there any Montage condos included in the “auction”……:)
Ralph
No Montage condos yet. Probably going to have to wait until Summer/Fall for the auction at the Corus Towers.
BanteringBear
Perry asked:
“How long does it make sense for these companies to hold on to these places? When do they just cut their losses?”
Since prices are dropping so quickly, and we are experiencing an uncomfortable level of deflation to say the least, it makes absolutely NO SENSE to hold on to the properties. They should be unloading them at any price and as fast as they can, but instead, they’re mired in a web of hope and prayer. Praying for prices to stop falling. Praying for a bailout, inflation, something, anything. It’s just not working. There’s no magic solution.
There is but ONE thing that can support house prices- INCOMES. Until prices fall to where the average person can afford them, they will NEVER find support. As GreenNV has just demonstrated, we’ve got a situation where SPECULATORS are buying the foreclosures, and trying to flip them. While a precious few might succeed, MOST will get burned. Flipping houses in a declining market is financial suicide. You can’t succeed on good business sense alone, you need luck. Anybody who’s business plan is based on luck needs to check their head.
DownButNotOut
Have you considered the cost of mortar and bricks? How about when the price of a unit is less than the cost to build it?
Some have a basic absolute that income drives prices, yet history shows that really isn’t the case. If it was, the stock market would be irrelevant. It’s about potential. More importantly perceived potential. Black and white? I wish it were.
Jay
Here is my experience at almost buying a auction home in Cold Springs in May-August, 2008.
Nice 2005 home with stucco, tile roof, 4/2/3, complete with “mold”. Learned that in NV, auction homes do not have to disclose the presence of mold. The home had a “winterized” notice on the door, and both water and electric was turned off. The mold was only slightly visable on the third walk-through, as it had been hot for the previous two weeks. I was fortunate to have written two seperate checks to the auction co, and was able to obtain the second (much larger) check back from the title closing company, by sheer luck. I didn’t make the time to have the utilities turned on and have it inspected, in the two days allowable, as I was living at the time, out of state.
The professional mold removal company inspected it by micro-camera, and gave me the estimate. After they pulled up the expensive carpet, they found it had to be replaced, and the bank would not pay any of the repair cost, so I walked. Two months later, the house was auctioned a second time, with no repairs done, and the mold damaged carpet had not been “tacked” down. I called the auction co (a different co than the first), and asked them if the mold had been removed and the house certified mold-free. The auction employee said she could not find any mention of the house having mold damage.
Besides the mold damage, the auction was worth going to. Out of about 15 bidders, it appeared I was the only owner/occupant bidding on a home. Just have a inspection done with all utilities on (credit union requires this), know the top price your willing to bid on it, and don’t get caught up in the excitement.
DownButNotOut
Due to my new views on Real Estate I’m forced to change my name. DBNO came from the way everything I owned was taking a dive, but as of now, I am on the Up and Up.I recently refinanced and rented the last of my properties, and although I’ve taken a hit, overall I’m still in play. Therefore from here on out I will write under my new pseudo name, On the Up and Up. I will still banter with those I disagree with, but if not me, who would? Gospel is overrated.
billddrummer
To DBNO,
I respectfully disagree with you about incomes/prices. And I also question your association between stock market prices and home prices.
The reason we got here was because people lost sight of homes as residences, and attempted to see them as investments instead.
As we’ve seen, this view is flawed.
Incomes drive home prices to the extent that incomes and debt ratios provide the support for mortgage lending now, unlike three years ago.
But I do agree with you that stock market prices move independently of household incomes. In my opinion, the perception of loss in the markets has been a primary contributor to the falloff in consumer confidence, with job insecurity and income restriction also contributing factors.
Move to Reno
Guy, thanks for starting this thread. The comments have re-enforced my take on these auctions. If one is going to buy a foreclosed property, one needs time to give the home a very good inspection and to look at the transaction from all angles.
Move to Reno
billdrummer, I tend to look at houses as investments and not as a residence. It’s fairly well-known that you make money in real estate when you buy and not when you sell, that is, homes that are well bought at the right time tend to produce capital gains when sold. The current problem is that a lot of folks made bad investment decisions from 2003-2007.
Anybody who buys a house near the bottom of the current downturn and lives in that house for at least 15 years, will probably make some money IF they buy a well-built house in a good location.
inclinejj
Keep an eye on Craigslist before the auction..you might see a chance to make a couple hundred easy bucks being a shill bidder for the auction company
Montage buyer4
BD- yes the association between the stock market is a stretch, although most of the larger builders are traded. And you’re right about how we got here.
I was trying to make the correlation between perceived value and actual value as opposed the the argument income is or should be the only driver the sales price. After all if it costs $135/sf to build a house, and it’s selling for $100/sf houses are not going to built until the inventory is sold and prices rise. But they don’t, in this example rise because income rose – they rise because the cost of building dictates it.
Because of that I feel if there is quality, well located property out there that is selling less than the cost of the bricks and mortar, it would seem to be a good investment for favorable future appreciation.
DownButNotOut
Sorry Billddrummer, I wrote the above on my wife’s computer where her (screen) name came up automatically.Thanks to my 17 year old son, it looks like I’m going to have to reset my laptop.
PricesDontAlwaysGoUp
How about when the price of a unit is less than the cost to build it?
How about when the cost to build drops?
Have you tried pricing contractors these days? They’ll fall all over each other bidding 40-50% off what they bid 2 years ago. And they’ll even show up on time, too (that’s how bad the market is today).
A friend just got his driveway redone for 60% of what he was quoted in 2006.
BanteringBear
“Have you considered the cost of mortar and bricks? How about when the price of a unit is less than the cost to build it?”
Irrelevant. Ever gone home shopping in Detroit? How does $1 for a house sound? Do you think you could build a turn of the century brick home for a dollar? Of course not. Perhaps you should head out to Detroit, and blow your whole wad, because it seems right up your alley.
Move to Reno
BB, that’s pretty weak reasoning. The plain fact of the matter is that all real estate is local and Down but not Out was referring to the Reno market. Yes, construction costs are down now because of material, land and labor costs are down but where will those prices be in 5 years or 10 years.
I built a house 15 years ago at $40 a sq ft. Today it would cost $125. MOre importantly, the land sold for $5500 an acre. Today, the land is worth about $17,000 an acre.
Eventually, the surplus of homes for sale in Reno will disappear and the market will return to fundamentals. Where that sq. ft. price point will be is not known since it depends many factors.
SmartMoney
Interesting that 15 years ago the stock market was trading at 4,000 (Dow Jones), it’s currently at around 8,500. So slightly more than double.
But according to Move To Reno, the cost to build has trippled in 15 years, and land has trippled ($5500 to $17,000).
The stock markets historical return is 10% per year over its history. Real-estate is much much less, around 5% – 6% at best.
Has real estate really trippled over the last 15 years? If so, it’s obvious prices are still way over-inflated.
Move to Reno
SmartMoney, I was referring to the local market here in Oklahoma. I don’t know what construction or land prices were in Reno 15 years ago. But to answer your question, prices here in Oklahoma are not over-inflated. We never had a boom. The market has slowed a bit and house prices are down about 5% but land prices continue to go up. It’s just a question of supply and demand. The town I live in is growing and demand for land is high given the limited supply close to the town.
Also, it’s hard to sell a house here for more than $250k no matter how big or nice it is. A lot of houses here sell for $60k or $90k.
BanteringBear
Move to Reno posted:
“BB, that’s pretty weak reasoning.”
No, it’s not. In fact, it illustrates perfectly the fact that house prices are set by buyers- NOT builders, or realtors, or any other industry shill. It matters not the cost of construction, but what a BUYER is willing and able to spend. The ECONOMY is what produces a healthy buyer, and the it also dictates what they can afford. The economy in Reno is not healthy, and wages are paltry. So housing follows suit. Your land example is what’s weak.
BanteringBear
Geez, I shouldn’t have even wasted the time responding, Move to Reno. I see you’re espousing the “running out of land” mantra in your latest comment. Unbelievable.
Move to Reno
Land is an important part of housing prices and in some locations is the biggest part. BB, your assertion that land has unlimited supply is wrong. How much is an acre of land in Reno, anyway? I would like to buy 10 acres in the city limits.
Your reasoning is weak if you think that buyers always set housing prices. The fact is that sometimes there is more demand for housing than there is supply. Then sellers set the price.
As to affordability, that’s an important element that puts a lid on pricing for SOME people but the point we are talking about is what building costs will be in in ten years in relation to current housing price per sq. ft. I suspect that they will be higher because of global demand for raw materials.
BanteringBear
Move to Reno. The selling price of a house is determined by the buyer, not the seller. You’re sorely mistaken. It’s called a MARKET. Look it up sometime.
Phil
What I don’t get is the two new developments proposed and paassed by Reno and Sparks. I would guess we are getting to the point of cost and sale price are about the same. Why bother?
Someone thinks things will get better….
My take on things is there is still 2 years of price decreases.
What do you think the market will be like when intrest rates are 10%?
I still enjoy my home bought at the end of ’06 even if I am taking a bath on the price. I really did not think the market would get this bad however. No regrets except that I bought a house way too large for the two of us.
HOA meeting tonght and R&B will no longer be there as they have defaulted on the rest of the project. Two banks now own the rest of the project and they are not interested in being represented.
BanteringBear
An asset, any asset, is only worth what the market will bear, which means what a party is willing and able to pay. Sellers do not set the price. If they did, everybody would just sell their house for ten million dollars! Unfortunately for the greedheads, it doesn’t work that way.
Historically, housing prices ARE local, and reflect what local wages afford. The credit bubble was global, so all areas were affected regardless of median income, even Oklahoma (I know first hand of “investors” rushing into Oklahoma City, so don’t give me that “prices in OK aren’t inflated” BS). Just because an area didn’t see huge run-ups, does NOT mean it wasn’t affected. Without the bubble, many areas would have, *gasp!*, declined.
Phil
Maybe the mess in California will have some employers looking elsewhere to set up shop?
Maybe here?
Probably not, I have very little confidence in the cities to do anything along this line.
Move to Reno
Selling price of real estate is an agreement between the buyer AND the seller. It’s called a meeting of the minds or something like that. Sellers can want $10 million and the buyer may want $1 but to say the buyer sets the price is not true since the seller can wait for another buyer. Plenty of cases where multiple buyers out bid each other to own stocks or houses. It’s called a market.
What you don’t understand about the Oklahoma market is that it was severely depressed for many years (decades) when the oil price collasped in 1983. The result was far worse than what is going on today in Nevada since Oklahoma lost a good percentage of population at that time. Demand for housing simply disappeared. What you saw in Oklahoma in the early 2000’s was the housing market responding to increased population growth, full employment and the price of petroleum increasing above $20 a barrel. The State income tax dropped from 7% to 5%. Housing prices today in Oklahoma are reasonable although the psychological fallout from the national economic crisis has had some impact.
DownButNotOut
BanteringBear said,
in January 13th, 2009 at 10:15 pm
Irrelevant. Ever gone home shopping in Detroit? How does $1 for a house sound? Do you think you could build a turn of the century brick home for a dollar? Of course not. Perhaps you should head out to Detroit, and blow your whole wad, because it seems right up your alley
That’s your comparison????Do you even read what you write? Try next time as this ‘Detroit for a dollar’ comparison is out in left field.
BanteringBear
“Sellers can want $10 million and the buyer may want $1 but to say the buyer sets the price is not true since the seller can wait for another buyer. Plenty of cases where multiple buyers out bid each other to own stocks or houses. It’s called a market.”
You’re missing an important point here. NO buyer HAS to buy, but some sellers HAVE to sell. Very important point overlooked by you. The BUYER sets the selling price. If a certain seller doesn’t want to take what’s offered, the buyer simply moves on to one who does.
Bidding wars? That was due to the credit bubble. There are no bidding wars in a normal, healthy market. You a realtor?
BanteringBear
DownButNotOut posted:
“That’s your comparison????Do you even read what you write? Try next time as this ‘Detroit for a dollar’ comparison is out in left field.”
Is that the best response you can come up with? Figures.
BanteringBear
Move to Reno, and DownButNotOut are excellent examples of the denial and delusion which runs so deep in the minds of many people when it comes to real estate. People go to unbelievable lengths to justify high house prices, and to defend their purchases.
When presented with facts, they choose to wholeheartedly ignore them. It’s like the old Upton Sinclair saying goes, “It is difficult to get a man to understand something if his livelihood depends upon his not understanding it.”
DownButNotOut
Wow!
Move to Reno
No, I’m not a realtor. That’s a good point about some sellers have to sell but usually some buyers have to buy too because (1) they want to or (2) no reasonable rentals are available. So both buyers and sellers can wait but several of both chose not to. BTW, I didn’t overlook it since my father told me that bit sage advice 50 years ago.
There are still bidding contests among buyers in Las Vegas for REOs. A bank puts a prime property on the market at a very low price and the buyers start putting in bids ABOVE the asking price.
BanteringBear wrote:”Move to Reno, and DownButNotOut are excellent examples of the denial and delusion which runs so deep in the minds of many people when it comes to real estate. People go to unbelievable lengths to justify high house prices, and to defend their purchases.”
Look buddy, don’t hoard it all to yourself. Divide and share.
God almighty, I would love to know where you buy your stuff.
Royal Flush
Dear BB
Get a job. Volunteer. Raise a family. Dig a hole in your backyard. Adopt an elderly friend. Learn to play the flute. Sew. Make cute dogs from balloons. Stretch. Just step away from the computer man…me think you opine too much.
BanteringBear
Dear Royal-
Mind your own business. I don’t tell you how to live your life, so stay out of mine. I’m sick and tired of the misinformation and nonsense which is associated with real estate. If you don’t like it, then don’t read it. Until the shills quit spewing erroneous garbage, I’ll continue to post.