I had a call this morning about an online foreclosure listing for here in Henderson, NV. This single family 4BR home was supposedly listed in the $40,000 range, and had the street address. I immediately knew this wasn't possible. I wish there were homes priced like that, I'd be out buying as many as I could. I still pulled the listings for the area, and the correct prices. Sadly I had to explain this to the caller, but I'm really glad they called. It opened my eyes to a problem that I knew required some research, and an explanation.
I searched the entire Las Vegas Multilist for any property under $40,000, and 4 turned up. Two were manufactured homes, one a locally listed vacation condo in Thailand, and the last one a condo built in 2005 in the north end of the valley. The listing on that last condo mentions it is in need of heavy refurbish, including no kitchen and needing drywall, to name a few. From the description, and the price, it leads me to believe the property is gutted. The only photo is a building exterior.
After that I found another online foreclosure listing for Henderson, listed as "new", of an REO (Bank Owned) 3BR 2 Bath almost 1300 sf home for under $30,000. That's INCREDIBLE! I'll take a dozen, please! My research showed that this home sold for $260,000 in 2006.
Could this be true? Well this home IS an REO and it is listed on the market. It is 3BR, 2 bath and almost 1300 sf. The last transfer price recorded was under $30,000. So far, so good, right?
Ahh, but there's more to the story. Now let me fill in the gaps. This home is not exactly a new listing, it's been on the market for 264 days. It was originally at $269,900, and dropped several times to $229,900. After being foreclosed, it was then relisted in early Feb for $169,900. It is also due to close tomorrow, so it must have went quick.
The actual sales price isn't given until closing, and could be above or below list, but a home listed at $90,000 under it's last sale in 2006 seems like it has the potential to offer a good value. Looking further, during the past year the average sales price of similar sized 3br 2 bath homes within a mile of this one are $233,000, and that same sales amount holds for the past 6 months.
That $30,000 price? As I mentioned that was the "last recorded transfer price", from a title service company to a bank. The actual foreclosed amount prior to that? $267,363.
It appears that some of these foreclosure listings only contain very raw data harvested from public information. I noticed that there are also more "foreclosure actions" often listed, against a smaller total number of properties. It seems to be that ANY recorded action against a property, such as a lien for not paying a garbage bill or HOA dues, comes up listed with them as a "foreclosure action". Obviously, just using this raw data can cause some misconceptions.
I hope that this post will help some buyers understand what can happen, and give other agents an explanation when a buyer calls looking for these unbelievable bargains that don't actually exist. I felt awful having to break the bad news to the caller this morning. I also don't like these less than accurate listings creating the impression that I'm The Bad Guy, somehow keeping these "deals" from them. Nothing could be further from the truth.
There are some incredible values out there, and that 3BR list price example I gave is more realistic of what you'll actually find. These foreclosure sales are also driving market prices down, so there is always the chance to buy a normal resale that's also a tremendous value and in the same general range.
Can a foreclosure save you money? Yes it's possible, and I should know...my own home is an REO. I was moving to Las Vegas from across the country, and this home had slipped through the cracks. After a 6 month search and just missing so many resales, I stumbled into it online, even when foreclosures were rare during the housing boom. There were no pictures, and all I had to go on was the online description that didn't even mention the REO status. Thankfully I also had a real estate agent in Las Vegas to do the legwork on it, as I had to buy quickly or risk missing it as well, and made my offer sight unseen that day.
That foreclosure listing on the under $30k 3BR house in Henderson... that was actually listed for $169,900? It closed and as of last week was recorded as sold for $174,525. There are more details about it in my blog.
No problem. I think Las Vegas has a little bigger issue with this than most, as adding Vegas to a headline draws attention. More often than not a story on foreclosures will be featuring Las Vegas, and they'll generalize for other areas, like states of CA, FL, TX, etc. You'll see in these stories, just like a post here at Trulia, that "Las Vegas has the most foreclosures". That's not exactly true. It has the highest rate of foreclosures, not total numbers, and most often using these skewed figures.
Since I've blogged about it, I've just got word that Yahoo real estate also uses this same source for their foreclosure feeds. 20973 "listed" at the moment. Just doing a fast look you can see they have many duplicates. I saw some vacant lots there that I'm familiar with. They list these REO .42 - .44 acre lots for $4,590,325 EACH.
They are REOs, but the true price of these lots is $248k - $288K. These were multiple parcels all foreclosed by the construction lender, with those millions being a total price for all the parcels combined. Again, this info is raw data and often wrong, and on both ends of the price scale. I believe most would pass on less than Â½ acre residential lot at $4.59 M, so having it listed this way would be chasing away a potential buyer.
I should have done this with my original post. My site on the Las Vegas MLS servers has a very simple search function. It would work fairly well for trying to find individual properties. It's on my tab, and I pay for it whether it's just my clients, or anyone else using it. Buyers / lookers feel free to check it against any Las Vegas foreclosure listing you may find here at Trulia or anywhere else.
Select the property type. From there you can input exact price range instead of the pre-selected drop down ranges on my other searches, that are designed more for finding multiple properties within a general price range. Also enter street name, with or without street #, and a variety of other info to help narrow your search. Find out for yourself if a foreclosure actually exists on the MLS, and at what price it's really listed at on the market.
I don't believe in doing business like a late night used car salesman. I only contact those that request more information. I feel it's better to focus my time on my client's needs rather than growing a huge email farm.
thank you roberta! for taking the time to lay it out so clearlly.
This is one of the foreclosure information sources often quoted by the media. I just did a blog on Las Vegas foreclosure auctions that also includes information about it, feel free to check it out, you may find it surprising.
With it being used so often by the media, it makes it appear to be a reliable source. There's a link to an article reposted from the Atlanta Journal Constitution that appears to think otherwise.
I don't think anyone enjoys being put into uncomfortable situatuations like this.
Keep it up and thanks!