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Apr. 22, 2008
Copyright © Las Vegas Review-Journal Going, going ... not gone Home buyers find banks holding tight on prices at foreclosure auctions 
Like many Las Vegas residents in search of a sweet deal on a foreclosed home, Mike Simpson walked away disheartened and discouraged after wasting his time at a recent foreclosure auction at Cashman Center. He'd been looking at a house two blocks from his children's school that had been sitting empty for two years and was being auctioned by REDC, one of several auctioneers that have blown through Las Vegas with increasing frequency, unloading hundreds of bank-owned homes at a time. The starting bid for the six-bedroom house on half an acre near Alta Drive and Valley View Boulevard was $219,000. Simpson was prepared to offer $375,000. To his surprise and without prior notice, the home was pulled off the auction block. "Come to find out somebody made a deal with the bank and the deal fell through," Simpson said. "I spent 21/2 hours there on a Saturday. Why didn't they put it on the deletion list when I first walked in?" He's not the first to feel frustrated by home auctions. "I have yet to actually meet anyone who was successful in closing escrow on an auction home," Robin Camacho of American Realty & Property Management said. "Agents are sending REOs (real estate-owned homes) that didn't sell to these auctions. With all the great REOs on the market, why stand around at an auction hoping that the deal will close when you are the high bidder? When the closing ratio of these auctions improve, I'll seriously consider taking my clients." Dave Webb, chief executive officer of Dallas-based Hudson & Marshall, said he had a "full house" for Sunday's auction of 160 foreclosed homes at JW Marriott. The banks approved 60 percent of the sales on the spot and Webb expects another 20 percent to be approved. "The banks are ready to rock and roll," he said. "If it's a reasonable offer, they're ready to take it. Now, they're not idiots. They're not going to take 40 cents on the dollar. If they've got a property on the market for 200 days, it's costing the bank money to hold it every day for taxes and upkeep. So the longer these properties stay on the market, the more motivated they are." Webb said Las Vegas has plenty of foreclosure inventory and it's going to last a while. The latest foreclosure statistics from Sacramento, Calif.-based Foreclosures.com showed 6,152 preforeclosure filings for Clark County in March, more than double the 2,813 filings in the same month a year ago. One buyer who requested anonymity said real estate agents are biased in their assessment of auctions because buyers don't need their services. She was able to buy a Pulte home in Southern Highlands at a Hudson & Marshall auction last year for $278,000, or about $102 a square foot. The bank was cooperative and did not try to "jack up the price," she said. Her second-choice home also closed escrow at the auction price of $283,500. It had sold a year earlier for about $500,000. "This house was a gorgeous, huge single-story house on a cul-de-sac with big rooms, pristine high-end cabinets and carpets, a fully landscaped backyard with spa and big covered patio," she said. "It was our second choice only because it was a farther walk to the plaza than the one we bought." There's more going on at foreclosure auctions than what's seen on the surface, said Ron Clark, chief executive officer of Rainbow Equity Investments in Oceanside, Calif. Banks that have properties for sale sometimes place "shills" in the audience to bid the price up, he said. "Auctions can be a very treacherous place for a novice with a full-time job," Clark said. "You walk into an arena where you've got some slick, sharp operators. There's all kinds of ways to fleece the guy who's a novice and thinks all those banks are in trouble." With foreclosures mounting and the housing market reeling, banks should be "humbled" and welcoming people with open doors, Clark said. "They're not there yet. They will be in six months or a year," he said. Susan Byerley of Durango Mortgage said she likes that banks are holding tight on prices and not having any "fire sales." It's going to be a slow movement to bring home prices down to where they need to be, she said. "I don't want something goofy like we had in 2004 and 2005. I just want consistency," she said. "For many years, Las Vegas was the golden child. Everything we touch turns to gold. Now we're seen as the stepchild." Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491. 
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