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How to Get the Lowest
Possible Price on a Home

By Mark Karten on October 22, 2009

Everyone loves a bargain, right? I've discussed the possibility of buying properties on the courthouse steps, which is the "cheapest way" to get a property, or is it?

Every month I get the statistics for Clark County which shows the breakdown of the trustee sales by day, zip code and disposition. I've been talking a lot about our shadow inventory which are the bank-owned homes, yet to be released for sale. To see where that number originates, click HERE for September's report, courtesy of First American Title.

To understand the report, there are two pages. The first page shows there were 14,915 properties sent to Trustee's sale. 80% of those were either postponed or cancelled by the banks, usually because they're in the midst of a short sale or loan modification.

16% (2,409 homes) were bought back by the bank and those will become foreclosure properties in the future. However, this number is in the thousands each month, yet our inventory only shows a fraction of those homes coming to market (which add to the shadow inventory theory.)

The remaining 4% (586 homes) were purchased by third parties. These are the homes bought by individuals or investment companies, sometimes for pennies on the dollar, and then renovated and sold at market value. Although the process may sound simple, there are plenty of chances to mess up, potentially costing you thousands of dollars.

The bottom of page 1 shows you where the most homes are being sold by zip code. On page 2, each zip code is broken down to show exactly how many homes were sold, postponed or cancelled.

If you want to pursue a trustee sale, here's an overview of the process. First, identify a property that you believe has great potential for resale, preferably one that is listed as a short sale and is nearing its trustee's sale date. With your Realtor's assistance, you'll gain access to inspect the property so that you're not taken by surprise due to the home's condition. I suggest bringing a renovation company along to get an estimate for the work you'll want to have performed.

Some buyers prefer to wait for the actual notice of trustee's sale to be published, as it lists the sale price of the home. This gives you a much smaller window of opportunity, as you'll only have 3 weeks to do your homework until the sale. Remember, the sale can still be cancelled or postponed (currently at 80%.)

Next, you need to search the public records to see what other liens are on the property. You'll be responsible for back property taxes, delinquent HOA fees and fines, mechanic's liens, if any, and if there are IRS liens, you'll have to wait 120 days before they can be removed and you can resell the property. This is the most treacherous part of the transaction, and you don't want any expensive surprises. I highly recommend utilizing the services of a real estate attorney who will do all your due diligence for you.

On the day of the sale, you'll go down (or your Realtor will) to the courthouse steps and hope you're the only person bidding on the property you want. If so, you can purchase it with a cashier's check for the amount being asked. You can draw the check for a greater amount (up to your highest bid) and you'll be refunded the difference.

The best case scenario is to purchase a vacant property. If, for some reason, you buy an occupied home, now you're dealing with an eviction and possible additional damage to the home upon their leaving. If there are tenants, due to recent changes in our laws, you will have to honor the tenant's existing lease or you can "buy them out" which is an additional expense.

Once you have possession of the property, now you can do your renovations and prepare the home for resale. This is your best chance of making the highest profit in today's market.

Sounds exciting, right? It can be. It's a lot of work, but if you're prepared for the worst and do your due diligence, you may be pleasantly surprised at the outcome. If this is something you'd like to pursue, please contact me so that we can discuss your parameters and how to begin.

As always, if you're looking to buy or sell a home anywhere in Las Vegas we appreciate the opportunity to represent you in a smooth, stress-free sale or purchase. We love referrals, too.

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