As you may know, I have been heavily involved in the Las Vegas real estate market for the past six years, both as a private investor and as a licensed real estate agent. As an agent specializing in undervalued properties, I have sold homes and condos to homeowners and investors at deep discounts… before and after the bubble burst.
Today’s Las Vegas market represents one of the greatest buying opportunities we have ever seen in real estate. Prices have overcorrected as a result of the credit crunch and have fallen to levels well below builders’ costs. We are seeing condos selling for around $35-$45 per square foot and single-family homes selling for as low as $50-$60 per square foot. From October 2007 to May 2009, the median home price in Las Vegas fell by approximately $10,000 per month…every month. When prices began to stabilize in the summer of 2009, investors realized the bottom was hitting and began to flood the market. Record sales volume was recorded last summer in the Las Vegas Valley. There were more than 3,700 closings in both June and July 2009…exceeding even the previous monthly highs set in the summer of 2004, at the height of the bubble. Of these closings, 45% were cash transactions and 40% were for investors (as opposed to owner-occupiers)…these numbers also exceed the percentages published in 2004.
This extraordinary demand for great properties at great prices in Las Vegas caused the median home sales price to rise in September…the first rise in the Las Vegas market in more than two years. In September, sales also decreased slightly. The general consensus, however, is that this decrease is not due to a reduction in demand, but rather a drastic reduction in supply. In September, only about 1,800 homes were returned to bank ownership through the foreclosure process. On the other hand, in this same month 3,358 single-family homes were sold. Since nearly 70% of all these sales were foreclosure/REO properties, this represents a situation where more homes are being sold than are coming on the market. Prices are low, demand is high, and as a result, prices are beginning to creep up on these REO sales. Additionally, we are seeing multiple offer situations on almost all REO properties that come up for sale. These circumstances are making it very difficult to find a good deal on buying REO properties.
The most viable option at this time to acquire properties below market value is the trustee sale. Once a property owner exceeds the 90-day notice of default period, they are issued a Trustee’s Notice of Sale. After the NOS, or notice of sale, is given, the owner has 21 days to cure the breach or the property will be sold to the highest bidder in the trustee’s sale. Buyers in the trustee’s sale in Las Vegas are currently picking up properties around 20% off already deeply discounted REO listings that are setting current market values. For example: If a house sold in 2007 for $300,000 and is now worth around $100,000 in the REO retail market, it can be picked up at the trustee’s sale for around $80,000. This would represent a purchase price of about 25 cents on the dollar from the highs of just a few years ago.
I have spent the last few months working with a handful of investors and have made several purchases through the trustee’s sale. Buying at the trustee’s sale not only represents a great opportunity for the buy-and-hold investor to purchase properties for cash flow, it also represents the only viable opportunity for investors in Las Vegas to resell a property for a profit. quick.