Las Vegas Area Seller or Transaction Category (#6 in a series): The Trustee's Sale
A Trustee's Sale is a type of Sale.
A Trustee's Sale is technically the "foreclosure sale". This is the final action in a foreclosure where the home goes "back to the bank."
OR DOES IT?
Not necessarily as the public has a crack at the "auction" type of atmosphere. Many investors are picking up some fantastic bargains during these trustee's sales. These sales are all cash sales. Investors have been "flipping" these homes, using them as rentals or even using them for their own personal residences.
What happens before the Trustee's Sale?
- The homeowner goes in default (quits making their payment)
- The homeowner is sent a "notice of default" (NOD) typically around 3-4 months after they stopped making their payments
- A "sale date" is set. This is what is known as the "Trustee's Sale". The sale date is typically set 2-4 months after the NOD is sent out. This sometimes gets postponed if the homeowner is making a valiant effort to keep their home.
How do I find out about Trustee's Sales?
- They are held almost every day at 930 S 4th St, Las Vegas.
- You can subscribe to the Nevada Legal News for the Sale Dates & Addresses
What is involved?
- DUE DILIGENCE prior to the sale - lots of due diligence.
- Bring your money! The trustee will define (in their legal notice) what they need in the sale. Generally this is cash, cashier's checkds drawn by a state or federal credit union, savings and loan association, savings association or savings bank specified in Section 5102 of the Financial Code and authorized to do business in Nevada.
What Is Some of the Due Diligence Involved?
- An appraisal, BPO or some sort of comparative market analysis to get some sort of an idea of pricing so you don't pay too much at the sale. You can also search solds on my MLS/IDX website with no registration if you know what you are doing!
- A comprensive title search as the liens more than likely convey with the property. You will need a good and solid connection with a title company.
- An occupancy check. To see if the property is occupied. Once it is determined that it is occupied you will need to find out if it is occupied by a tenant!
- Approaching the owner to see if the occupant will let you in to take a peek at the property condition. This will help you determine property condition. Many times property condition will not matter to the seasoned investor if the numbers make sense for rehab.
The Pitfalls of purchasing a Trustee's Sale:
- Many times you are buying a property sight unseen. This could cause problems if the property is trashed so bad or has incurable health hazards (such as mold) that it needs to be "gutted".
- Liens liens liens to satisfy. Will the starting bid offset those costs?
- Is it occupied? If it is occupied then you will be dealing with an eviction.
- Is this tenant occupied? There are new laws protecting tenants in foreclosure & evictions..Make sure you know those laws so you are not in violation of the law if you seek eviction! This could hinder you from rehabbing or using your property for some time after the sale!
THIS TYPE OF SALE IS NOT RECOMMENDED FOR A NOVICE INVESTOR. Novice investors who seek these types of transactions shall hire an attorney with experience in this type of Law and do LOTS AND LOTS AND LOTS of research and not pass go and collect their $200 until they fully understand the Trustee's sale.
© 2009 Renee Burrows AHWD - SRES - SRS - Las Vegas Real Estate Market Report Blog