There were 327 Trustee’s Deeds recorded in May 2010. Of these, 49 were bought on the courthouse steps by private parties. This works out to about 15% which is unprecedented. A year ago, the average was 2-4%. The Investors seem to think there is money to be made in the banks’ inattention to detail and local market conditions. There are to usual suspects (NRES, Greenstreet, Mayfair, Celerety (Edge), Wood is Good). But there seems to be a growing number of individuals trying to get in on the party. I’m seeing the $.01 offer over the bank’s opening bid fall by the wayside and some properties being bid up. The old boys club at the courthouse could get ugly as more parties enter the fray.
NRES is still the big dog at the party, but they seem to be reining it in a bit. They bought 10 properties last month, but only sold 8. I’ve updated my Page/NRES chart here, if you are interested. Page Ventures and NRES both ran at about 44% gross profit (minus clean up and remodel costs, fees and transfer costs), but NRES 3 is only running at an average 27% gross margin so far. Page Ventures is still trying to clear 649 Alpine View in IV. It has been reduced to $719,900, so a sale will represent a loss based on their $658,750 purchase price. I guess you can’t bat 1000% every time.
A couple NODs piqued my interest in the last few week. The Sparks Holiday Inn is in deep doo-doo. And the YMCA of the Sierra got another one (you need to also search under "Young Man" to check the history),
Dyson gets bored when I stop and talk to the neighbors on our walks around the neighborhood, and his cute carry the leash in his mouth can turn into gnaw this sucker off in a flash if he gets bored. I lost his third leash yesterday while talking to the president of the HOA about local gossip. The great new is that I found Advanced Awning and Interiors on Rock in Sparks who can repair it! They didn’t even bat an eye when asked if they could expand their general area of service to include leash restoration. I alway love the Reno/Sparks can-do spirit. But until Monday, the beast is on the short leash.
smarten
Good work [again] Mike! This is the time where the individual investor who really knows nothing about the nuances of trustee’s sales gets burned.
Two IV SFR make the point. First, PV’s acquisition of Alpine View. Just because the IV SFR median sales price teeters at about $1M; and an IV SFR goes to trustee’s sale for less than $700K; doesn’t mean there’s instant money to be made.
Another IV update. Remember the three new SFRs on College Ave. which went to trustee’s sale about three months ago? If memory serves, close to $5.2M was owed on the construction loan and title reverted to the lender at an opening bid of close to $4M. Shortly thereafter all three homes were listed on our local MLS at about $1.4M+/- each. Well the first [and least expensive] of the three [857 College] just closed escrow at $1.375M.
I guess that what these two IV examples may suggest is that the price paid at trustee’s sale actually represents FMV [rather than some fraction thereof]. I fear all these new foreclosure players [at least in IV] are going to be learning the hard way.
cheez o
Good input, Mike. House a few door down from me just sold (REO) for about a 50% shave off original price. Looks like an “investor” at least the grass may get watered.
Love the dog. Could (almost) sell me a house.
Sully
What will really be interesting is seeing if these 15%ers sell within the next two months. Any longer time frame and the risk/reward ratio gets a bit shaky.
No sales would pretty much back up comments that the home buyers credit front loaded the market and most of the buyers have already bought.
smarten
I have a dumb question Mike.
When one of these investors purchases at a trustee’s sale and secures his/her/its trustee’s deed, who pays the RPT at recordation? I’m guessing the purchaser but thought you might now for sure. Assuming my guess is correct, in NV. this becomes a non inconsequential surcharge [surprise] the investor is immediately presented with after completing the first leg of his/her/its hopeful spin off.
Sully
smarthen, are you referring to real property tax? If so, its split. The title company pro rates it and purchaser pays any unused amount as of date of closing.
Sully
If it’s the transfer tax then:
The buyer and seller are jointly and severally liable for the payment of the taxes imposed by NRS 375.020,
375.023 and 375.026 and any penalties and interest imposed pursuant to subsection 3.
bob_c
Love to see a chart of the other 85% (or 96-98%)
MikeZ
[MikeM] “This works out to about 15% which is unprecedented. A year ago, the average was 2-4%.”
Very interesting.
Have you plotted the change month-by-month? (care to share?)
Has the rate been gradually ramping up, from 2-4% to 15%, or did it jump recently?
smarten
Sully, I meant the transfer tax which I guess technically, is a RPTT. I asked the question I did because there is no escrow when a trustee’s sale takes place. But you bring up a good point; could the buyer at a trustee’s sale compel the seller to pay half the RPTT even if it balks?
Also, take a look at NRS 375.030(4) which states that notwithstanding your citation, “a buyer and seller [may] agree…by contract or otherwise that one party or the other will be responsible for the payment of the tax due pursuant to this chapter…” FWIW when I submitted my offer to purchase my IV home, I included a clause that obligated the seller to pay the RPTT. The seller agreed, and he was the one who paid it.
Sully
Yeah, I agree. The tax usually shows up on the Declaration of Value and doesn’t say who paid it, however you know it WAS paid.
Even having to pay half of this fee at Trustees sale and another half at final sale would start to erode the flipping profits. It would be very interesting to find out more about the realtor fees involved in these transactions when they re sell.
inclinejj
Smarten,
I found the answer to that on one of the trustee’s website. I will look for it tomorrow.
When you buy the house on the courthouse steps you step aside with the trustee and fill out some paper work the trustee gives you a bill of sale and the trustee mails you the trustees deed for recording. Then you have to pay the transfer tax based on the price you paid and give that money to the recorders to record the trustees deed.
billddrummer
to inclinejj,
That’s true unless you’re a GSE (Fannie, Freddie or their ilk).
By federal law, they are prohibited from paying RPTT.
How much $$$ has the county lost because the GSEs don’t pay the transfer tax?
inclinejj
Oh wow I didn’t know that.
The Federal Gov’t is the biggest mafia out there..
States are the lessor Mafia..
Counties then Cities