Real estate auctions remain active, draw eclectic clientele
On a recent Thursday morning, John Farah stood in a crowded parking lot on South Fourth Street in Las Vegas with a pocketful of cashier's checks and a look of nervous agitation.
Finally, the moment came for him to pounce. He called out a dollar figure and a few moments later plunked down $29,000 for a condominium near the Meadows Mall, a property purchased a few years ago for seven times that much.
Every week, the scenario plays out hundreds of times outside the Nevada Legal News building, where dozens of wheeler-dealers look to snap up bank-owned properties on the brink of foreclosure.
With relatively few distressed homeowners getting loan modifications from lenders, the number of foreclosures in Southern Nevada remains high, making the daily trustee's sale a popular event that draws bidders of all stripes, from self-funded entrepreneurs such as Farah to representatives of multinational corporations.
Seated on collapsible chairs in the parking lot, most attendees create miniature war rooms with laptops that allow real-time viewing of properties and hands-free cell phones that connect them with associates off site.
The auctioneer knows nearly all the bidders -- some in T-shirts, others in three-piece suits -- on a first-name basis.
In order to bid in the auction, prospective buyers must first show they have enough cash and cashier's checks on hand to pay for a property. The properties are sold as-is, leaving it up to the new buyers to make necessary repairs, and in some cases, to evict current occupants.
About 3,000 sales took place at the auction in the last five months of last year, evidence of its impact on the local housing market. Still, only a small percentage of homes up for auction actually got sold.
In February, a total of 3,800 homes went on the block in Clark County, but only about 550 were bought by third parties, according to Sean O'Toole of ForeclosureRadar.com. The rest were either canceled or postponed as a result of negotiations between a lender and a homeowner or went back to banks to sell on the traditional real estate market.
Todd Miller, a Las Vegas real estate agent who advises investors on the best bidding opportunities, said the auction offers careful investors a chance to make money.
"There are some deals to be had," he said. "Investors are trying to get properties that no one knows about yet."
O'Toole, whose Web site tracks housing trends, said he has mixed feelings about the event.
"The problem with trustee's sales is that they exclude the Average Joe," he said. "Most of the investors who buy there are flippers who buy properties and put them back on the market with title insurance and at current market prices. They buy the properties at wholesale because they buy them at some risk."
Farah, who has picked up several properties at the auction in the past year, said he sees the condo he recently acquired there as a longer-term investment.
"I normally buy and flip, but I'm going to sit on this one for a while," Farah said a few moments after an auction manager came around to collect his money.
In between making bids, Zolt Szorenyi, owner of Developers Marketing Solutions, a Las Vegas real estate investment company, reflected on the increasing popularity of the auction.
"Two years ago, there were six of us here, sitting in the lobby of the building," he said. "Look around and see how many people there are now."
Szorenyi said he bought nearly 300 homes at the auction last year. This year, he expects that number to rise to 400.
To assist him, he employs drivers, title people, and researchers to improve his chances of getting the right home at the right price.
The danger of the auction, he said, is bidding on a property without doing adequate research. That has resulted in winning bidders ending up with decrepit homes, second mortgages, or homeowners association liens.
"If you come here trying to figure this out on your own, you can lose your life savings," he said.
Contact reporter Alan Maimon
at amaimon@reviewjournal.com or 702-383-0404.
