Foreclosure and Short Sale Properties
Las Vegas residential real estate is on sale! Banks don't want to hold onto foreclosed homes, so they're pricing them to sell quickly at low prices. The number of Las Vegas foreclosures has led the nation since the economic downturn began. These homes go by many names: REO homes, bank owned and foreclosures. Before the lender forecloses, many homes are offered as short sales (See our short sale tips for buyers). No matter what name, they're all good opportunities to buy real estate either for your personal home or as an investment home.
Congress has passed laws to protect the buyer and seller of these homes so it is very important to have representation by a Realtor during either the buying process or selling process. These laws are revised and changed often so make sure that you understand your rights and options.
REO homes or bank owned homes are foreclosures that are now owned by the lender. The term "REO" comes from the banks listing these properties on their reports as REO (real estate owned). This term came into the language during the 80's when so many banks and savings and loans failed and the Resolution Trust Organization (RTC) came into do the workouts. When properties were offered for sale, the banks referenced them as REOs.
Short Sale is the term used for a home which is being sold by the owner for less than what is owed on the mortgage(s) hence the term "short sale" because the lien holder is short getting back all that was lent on the property. This type of sale requires a buyer to make an offer which is then submitted to the lender along with an explanation of hardship as to why the property must be sold for less than the loan amount. Just owing more on the home than it can be sold for does not constitute a hardship. Your Realty Executives Realtor can guide you through this process and assist you in presenting your hardship to the lender.
It is critical to get a preliminary title report at the opening of escrow and be sure to read it entirely. If you do not understand the report, you need to ask the escrow officer to explain any questions you have. You should be checking to verify how many loans and other liens are recorded against the property and how they will be handled during the closing process. In southern Nevada, homeowners associations are a very important topic addressed in the preliminary title report. You are also entitled to get specific documents related to the homeowners association during escrow. Even if you are buying "As Is", it is important to know if the association is current, do they have the appropriate reserves and what issues have they been discussing at their last homeowners association meeting.
Realty Executives Realtors sell foreclosed homes throughout Clark County: Las Vegas foreclosures, Henderson foreclosures, Pahrump REO properties, North Las Vegas foreclosures. You can search Las Vegas foreclosure listings right here on Realty Executives website.
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What is a Foreclosure?
Foreclosed homes, REO Homes - Real Estate Owned, otherwise known as Bank Owned Homes are homes owned by a bank after an unsuccessful sale at a foreclosure auction. A bank will set the opening bid at a real estate foreclosure auction for at least the amount owed to them on the loan. If no one bids on the real estate property, then the bank will repossess the real estate. As soon as the bank repossess the home, it is listed on their books as REO – Real Estate Owned which is not performing. Banks want to put these up as homes for sale to get them "performing" again. At Realty Executives, we have a way for you to search for Foreclosed homes for sale.
The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Notice of Default. The foreclosure process can end one of four ways:
- The borrower/owner reinstates the loan by paying off the default amount during a grace period determined by state law. This grace period is also known as pre-foreclosure.
- The borrower/owner sells the property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.
- A third party buys the property at a public auction at the end of the pre-foreclosure period.
- The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction. These are also known as bank-owned or REO Properties(Real Estate Owned by the lender).
Nevada foreclosures are primarily accomplished out of court. An out-of-court foreclosure in Nevada can be completed in about four months.
This process allows for three opportunities for finding bargains on foreclosure homes.
Pre-Foreclosure Homes (NOD, LIS):
Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property outright. The borrower/owner can walk away with something to show for any equity in the property and avoid a bad mark on his or her credit history. The buyer has time to research the title and condition of the property and can realize discounts below market value.
In Nevada, many mortgages allow lenders to sell a property once an owner defaults without having to file a lawsuit. A lender begins the foreclosure process by recording a notice of default with the county recorder and mailing the notice to the borrower. A borrower or any secondary lender has 35 days from the date the default notice is recorded to pay off the default and stop the foreclosure.
At least three months after recording the notice of default, the lender can schedule a foreclosure sale if the borrower has not paid off the default amount.
Auction Homes (NTS, NFS):
If the loan is not reinstated by the end of the pre-foreclosure period, potential buyers can bid on the property at a public auction. Buyers often are required to pay in cash at the auction and may not have much time to research the title and condition of the property beforehand; however, a public auction often offers some of the best bargains and avoids the unpredictability of dealing directly with the borrower/owner.
A trustee (third party named in the deed of trust) carries out the public sale. A notice of sale is posted at least 20 days before the trustee sale date in three public places and published in a local newspaper once a week for three weeks. The notice of sale is also mailed to the affected parties.
The sale may be at the trustee's office, and anyone may bid. Except for the lender, the winning bidder has to pay the full bid amount in cash or cashier's check to the trustee. If the sale is postponed, a public announcement is made at the time and place of the sale. After the sale, the trustee transfers ownership to the winning bidder.
An out-of-court foreclosure provides the winning bidder with clear title, and there is no redemption period for the borrower after an out-of-court foreclosure sale. Although court foreclosures are uncommon in Nevada, there is a one-year redemption period for this type of foreclosure.
Bank-owned Homes (REO):
If the lender takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender will usually want to re-sell the property to recover the unpaid loan amount. The lender will then typically clear the title and perform needed maintenance and repair; however, the potential bargain for these REO Homes is typically less than a pre-foreclosure or auction property.
Bank Foreclosures can become Government foreclosures if the loan is backed by a government agency such as the Department of Housing and Urban Development (HUD) or the Department of Veterans Affairs (VA). In that case the government agency would be responsible for selling the property.
Before you buy a home
You'll need to make sure you're armed with the foreclosure data you'll need to find and buy foreclosure homes.
