New families find the houses lost in foreclosure

It's easy to feel sorry for the multitudes losing their houses. However, each loss is someone else's gain.

Home Address … 6820 ROLLING OAKS CT, LAS VEGAS, 89131

Resale Home Price …… $239,900

Like a roller in the ocean,

life is motion

Move on

Like a wind that's always blowing,

life is flowing

Move on

Like the sunrise in the morning,

life is dawning

Move on

ABBA — Move On

People get caught up in their empathy with those losing their family homes to foreclosure. Its easy to get sucked in to the emotional stories of victimhood and believe that perhaps we should stop foreclosures.

We all forget that the distressed debtor who rented money from the bank to occupy the house and appear on title will turn over the property to a new buyer who is not as indebted. This new buyer will be able to sustain ownership under stable, government-backed financing terms.

Pain for Some Families Presents Possibilities for Others

By Doug McKelway — Published February 24, 2011

As much as the bursting of the real estate bubble devastated the economy, destroyed hopes, and caused untold pain, there is a silver lining for would-be home buyers in today's market. All that pain presents the potential for great bargains for the right buyer.

In most American cities, the cost of real estate is lower than it’s been in decades. On average, home prices in the U.S. have fallen more than 27 percent below their peak prices. But even that figure is deceiving, because it doesn't take into account the desperation of some hard-pressed sellers to ditch their homes.

Often faced with the hard realities of pay-cuts, lay-offs, and neighborhoods devalued by short-sells and foreclosures, sellers have less negotiating power.

“If I have a foreclosure on a house six houses away, I'm going to lose value in my house. If I have another foreclosure ten blocks away down the street I'm going to lose additional value. And then it compounds itself,” said John Taylor of the National Community Reinvestment Coalition.

But this loss in value is the buyers gain. Amy Bohutinsky of real estate Web site, which tracks prices closely across the nation, sees a pattern in some depressed markets.

“If a home is listed at one price, ultimately it sells for 10 or 15 thousand dollars less,” Bohutinsky said. “That means buyers have negotiation power.”

Buyers have enormous power when there is excessive supply, particularly in a declining market. In a declining market smart sellers are extra motivated because another buyer willing to pay that price really isn't going to come along. In an appreciating market, sellers can always trade money for time. If sellers want more money, they simply have to wait for the market to come to them. In a declining market, sellers do not have that luxury.

And where are those markets with the best real estate deals? Lawrence Yun, chief economist for the National Association of Realtors, said the best buys often tend to be in those areas where the race to build was greatest in the boom years, and where foreclosures are common.

“In places like Miami, one can pick up a nice condo for about $60,000. Same situation in Las Vegas because of so much abundant foreclosed inventory, the banks are just releasing property at deep discounted prices,” Yun said. “We are seeing the transaction increase once the prices are drastically reduced.”

Bohutinsky says three metropolitan areas in Florida, in particular, offer extraordinary bargains: Orlando, Tampa, and Sarasota. But Yun adds many other metropolitan areas offer prime buys.

“In middle America between the mountains — the Appalachian Mountains and Rocky Mountains — the median prices are about $120,000,” Yun said. “Anyone with a stable decent job would be able to buy a home.”'s figures also suggest that Minneapolis, Chicago and San Luis Obispo, Calif. have seen precipitous declines in housing prices at some income levels and leaving bargains for would-be-buyers.

But if those people with stable jobs are not yet clamoring to pick up distressed properties, there's a good reason. Experts believe that the market may not yet have hit bottom.

The market hasn't hit bottom. It doesn't take a genius to read a chart and see that we are making new lows.

Buyers should be skittish, but there is a price point where the savings versus rentiing is great enough to lure buyers to the market. Very few people are renting by choice in Las Vegas despite the dropping prices. Moving from renting to home ownership with either get you 40% more home or cost you 40% less money. That incentive pushes most off the fence, and Las Vegas's sales volumes have been above peak levels for quite some time.

“We know that home values are still falling across much of the U.S., and that they probably will continue to fall throughout this year,” Bohutinsky said. “At, our economists are saying that the bottom is likely be somewhere between the mid and latter half of the year, and from there, home values will probably stay at the bottom for the next year or two.”

And the prospect of flipping homes? Buying and selling for a quick profit? Those days may be gone for all but the most seasoned investors.

“Mortgages are harder to come by,” Bohutinsky said.”Your average Joe is not going to go be able to go and obtain multiple mortgages on all of these homes and be able to hold out for a decade for home prices to recoup and actually make some money on this.”

Most experts agree that values will increase at a much more modest pace, once the market bottoms out. That may be a welcome change after the rollercoaster that home owners have ridden the last few years.

It won't be welcome at all by the legions of appreciation buyers in Orange County.

Merry Christmas and happy new foreclosure

I bought this house on December 7, 2010. The above was the actual picture of the property I used to evaluate it as a potential flip taken the morning of the auction.

Do you see the carefully groomed landscape and the Christmas reindeer in the front?

These people liked this house, and they didn't want to lose it. I was buying it eight days before December 15th when the local constables who handle evictions stop all activities for the holidays.

Was I going to be Grinch this year?


I always prefer a negotiated settlement to eviction. It takes too much time to evict, and the occupants aren't too careful on their way out with their belongings.

These former owners have few tenant holdover rights. If i want them out, I can have them forcibly removed in short order. In Nevada, they get a 5-day notice to get out followed by a 3-day notice before the constable arrives to remove them by force if necessary. This is dangerous work, and they do carry weapons.

Technically, the former owners owe me rent from the day of the foreclosure sale. The typical negotiation is to offer free rent for three weeks with cash incentives if they move out quicker. The cost of money dictates that i can offer up to $500 per week if they are out early, and it improves overall revenues and profits.

I wasn't about to expedite an eviction to see if I could kick this family out two weeks before Christmas. We negotiated a deal where they could stay until January 10th if they agreed to leave certain appliances, be careful when moving furniture, leave the fixtures and fans, basically leave the place undamaged so we can do preparations for sale quickly and with limited expense.

Sue for unlawful foreclosure

We needed to exchange written documents, and they avoided meetings until it became apparent to us that these occupants did not intend to follow through on their agreement. Just before Christmas, we received a lawsuit notification, and with the justice system basically shut down the last two weeks of the year, we had no options, and the holdover owner got one last peaceful Christmas in their former dream home. I truly hope they enjoyed it. Denial has its rewards.

On the 3rd of January, we filed suit to get them removed, and after some legal finagling, we got a 30-day notice filed with a calendar set to expire in early March. These owners genuinely believed they were somehow going to keep this house. After more than two years with no payments, their house was called to auction, and now they are no longer on title. Only their bodies and their possessions remain.

As the eviction clock is winding down, we get a communication from the owners asking us if our original cash-for-keys offer was still on the table. They would get out that weekend if I gave them $1,500. Of course, my first thought is, screw you, your willing to take my money after lying to me, suing me, and generally pissing me off. Go to hell! After a few moments to think rationally, I sent Jacki over with a big smile on her face to agree to their demands.

They got out in a weekend, I got the house in immaculate condition — I knew any loan owner in foreclosure who bothers to put out decorations and maintains their yard that well probably maintained the inside well. They did. We got the house on the market the next weekend (last weekend) with minimal fix up expense.

A bitter pill to swallow

These former owners loved this home. Jacki told me they were very bitter about the entire situation, the failed appreciation, the failed dodgy loan, the failed loan modification, the failed attorney savior. Despite the anger and bitterness, after telling their story, they were polite to Jacki when she inspected the property and paid them off.

When I think about borrowers like these, I do wish it had turned out differently for them. This particular family were peak buyers. They paid $399,991 for a property I bought 5 years later at auction for $170,000. The comps have weakened since I bought this property, and I will likely have to discount it to move it. These owners owed double what this property is worth today. What were they supposed to do?

The new family that buys here will enjoy a substantially lower cost of ownership. instead of the $2,500+ monthly cost the former owners had, the new buyer will spend less than $1,200 a month to live in this place. These people won't have HELOC riches any time soon, but they will have a cost-of-living that leaves them enough spending money that the HELOCs aren't necessary.

What is the best resolution for properties like this one? Do we give every existing loan owner principal reduction to keep them in place? Forgive the Ponzis their debts at my expense? I wouldn't feel very good about that one. Would you?

Do we allow them to squat forever and deny the new family their home? Perhaps foreclosure is a good solution after all.

Silverstone Ranch

This property is in a real estate development known today as Silverstone Ranch. The golf course in this project was developed by Meadowbrook Golf Group from 1999-2000. As a young, single project manager, I was making periodic trips to Las Vegas to oversee the design and construction of the golf course and clubhouse. I used to time my trips to inspect on Thursdays and Fridays and stay through Sunday night and take the red-eye home. You have to imagine I had a good time….

Home Address … 6820 ROLLING OAKS CT, LAS VEGAS, 89131

Resale Home Price … $239,900

Home Purchase Price … $170,000

Home Purchase Date …. 12/17/2010

Cost of Ownership


$239,900 ………. Asking Price

$8,397 ………. 3.5% Down FHA Financing

4.23% …………… Mortgage Interest Rate

$231,504 ………. 30-Year Mortgage

$45,412 ………. Income Requirement

$1,136 ………. Monthly Mortgage Payment

$208 ………. Property Tax

$20 ………. Homeowners Insurance

$280 ………. Homeowners Association Fees


$1,644 ………. Monthly Cash Outlays

-$102 ………. Tax Savings (% of Interest and Property Tax)

-$320 ………. Equity Hidden in Payment

$13 ………. Lost Income to Down Payment (net of taxes)

$30 ………. Maintenance and Replacement Reserves


$1,264 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$2,399 ………. Furnishing and Move In @1%

$2,399 ………. Closing Costs @1%

$2,315 ………… Interest Points @1% of Loan

$8,397 ………. Down Payment


$15,510 ………. Total Cash Costs

$19,300 ………… Emergency Cash Reserves


$34,810 ………. Total Savings Needed

Property Details for 6820 ROLLING OAKS CT, LAS VEGAS, 89131


Beds: 4

Baths: 2.5

Sq. Ft.: 2,551

$/Sq. Ft.: $94

Lot Size: 5,663 Sq. Ft.

Property Type: Single Family Residential, Detached

Year Built: 2005

Community: Centennial Hills

County: Clark

MLS#: 1123306

Source: GLVAR

Status: Exclusive Right

On Redfin: 6 days

Cumulative: 7 days


MOVE IN READY! Not a Short Sale or REO. Quick Response from Seller. 2-Story Home, 4 Bedroom, 2-1/2 Bath in a Golf Course Community, open floorplan, large kitchen with center island and breakfast bar.

BTW, as an update to the post where I featured 622 WOOD ROSE CT, HENDERSON, 89015. After that post, we lowered the price to $118,900. The property is in escrow at full asking price to a VA buyer.

21 thoughts on “New families find the houses lost in foreclosure

  1. Terry

    “Moving from renting to home ownership will either get you 40% more home or cost you 40% less money.”

    So if I can’t buy, I gotta pay 40% more or get 40% less? What’s up with that?

    1. IrvineRenter

      “So if I can’t buy, I gotta pay 40% more or get 40% less? What’s up with that?”

      That is how far out of balance the rent-versus-own calculation has become. Rents in much of Las Vegas are around $1,000 per month. A property that rents for that much only costs about $600 per month to own.

      In Orange County if you can’t buy a home, you can generally find a nicer place you can rent for less money than it costs you to own, so bad credit is actually a benefit here. In Las Vegas if you can’t buy a home, you pay a huge premium to a landlord. Nobody in their right mind is buying in Las Vegas because they believe in rapid appreciation, but many want to buy in order to cut their housing costs 40%.

      1. winstongator

        Actually, if you’re going from $600/mo to $1000/mo, the increase is not 40%, but 67%.

        That renters benefit in one area and are hurt in another, and for the most part the decision to buy/rent is made by other parties represents a huge inefficiency in pricing. Built into the price of homes is a massive options contract for the future sale. You see problems when the value of that contract becomes larger than the inherent cost to build and rent savings of the home.

    2. Vincenzo

      Rents in Las Vegas are all over the price range.
      Check yourself:
      You can find a condo for $400, 1-bedroom for $600, etc.

      It’s wise to rent in Las Vegas because the job market is very unstable.

      The Nobel Peace Prize winner has plans to start another oil war in Libya. Will it hurt the city in the middle of nowhere to which you have to drive or fly from everywhere? It’s 600 miles from OC, 20-30 gallons, for $5 a gallon…

  2. mofa

    I know I’m not in Irvine or Las Vegas (the main areas discussed here), but I’ve just gone through the various mental shifts necessary to decide to make a backup offer of $550K on a house in south Redondo Beach that I would not mind being stuck in for the rest of my life. The main issue is that I’ll implicitly be committing myself to not quit my job for the next seven years.

    I can’t believe how difficult it is to find out about distressed properties, but a two weeks ago I found out about this property on realtytrac, with an auction scheduled for yesterday. However, a week ago it went on the MLS for the amount that had been listed as the auction minimum bid, and by the next day, when I viewed it, it had already gone pending.

    My take-away? First of all, though I was looking for a townhouse in the low $400K range, I’m apparently willing to go up to $550K for an actual house in a good neighborhood. Second, they do not make this process easy — the auction date was probably part of some brinksmanship by the bank, and I have to start thinking outside the box, possibly approaching people in pre-foreclosure and winning them over with my winning smile and smooth communications skills. (that’s a joke; I’m an engineer).

    IAC, even though the Las Vegas ventures are not my cup of tea, things that I read in this blog are relevant to me. So, thanks for that.

    1. IrvineRenter

      Foreclosure auctions have always been a threat lenders use to compel borrower compliance. In all likelihood, the last-minute activity was part of a negotiation between the delinquent borrowers and the lender — pay us or we boot you out.

      It’s nearly impossible to find and obtain a specific property at auction. Prior to 2007, when a foreclosure was scheduled, it occurred on schedule. No longer. Now, they postpone about 90% of them, and they will do so multiple times.

      For instance, I have my eye on a special property in Sun City Anthem I want to buy for my parents. It was scheduled for auction back in December when I first saw it. It was postponed to January, then February, and now March 10. It is very likely it will be postponed yet again.

    2. Vincenzo

      It’s relatively easy to find foreclosed properties
      on the websites of special foreclosure divisions of the US banks. They usually have meaningless names.

      For example, you can check the foreclosed properties of Bank of America here:

      I’ve been watching a property. First, the homeowner sued the bank by the help of a shady attorney; each month the date of the auction was changed to the next month. Now, he goes directly to the bank, and the bank charmingly postpones the auction. He told me that he was promised that he would live in the house for at least a year.

      1. hoocoodanode

        Wow, that is a cool site. There is one property listed that IrvineRenter has profiled a couple of times:

        65 Grandview

        Scheduled for foreclosure:

        65 GRANDVIEW
        IRVINE , CA 92603
        Orange County
        TS # : 2009-143076
        Bid Not Available At the North front entrance to the County Courthouse, 700 Civic Center Drive West, Santa Ana, CA 92701 3/28/2011 12:00:00 PM RECONTRUST COMPANY

    3. wheresthebeef

      Mofa, I’m also in S. Redondo and keep a track of listings here. Prices are definitely coming down, but like you mentioned anything decent under 600K that is priced to sell is gone quick. I saw a cool little house on Avenue D (a block or two east of PCH) for 699K a few months back, that went quick.

      South Redondo is realy unique and definitely commands a premium. It’s not very freeway accessible, which is either good or bad depending on where you work. I’m presonally waiting another year or two before we bottom out and then I may pull the trigger. If possible I would like to get a SFR on one of the Avenue streets in the low 600K range. I imagine the land will always hold a premium in this area. Good luck.

      1. Planet Reality

        If you get into a SFR in S redondo at $600k you are going to do very well long term. Good luck. Most people need a flux capacitor to buy in palos verdes a few decades ago. Palos Verdes is a good example of the evolution of a prime area. A good middle class job could buy there in the early 80s now it takes being a director or actor on a successful show, or own your own company.

  3. Jk

    Only one picture on Redfin for the house? As a buyer when I see only one picture I think because the place is crap inside. Cmon IR- your people can do better if you want to sell it.

    1. IrvineRenter

      You’re right. We should have more pictures of the inside on the web, particularly on this house when the inside is nice.

        1. IrvineRenter

          I don’t know of a source for those in Las Vegas. We may obtain the ones for Irvine and find a way to organize them.

  4. scottinnj

    What would have been the rental yield on the Vegas property if you had held instead of flipping it?

    1. IrvineRenter

      For this property, it isn’t very good. Anything above the median in Las Vegas is probably still cashflow positive, but not to the degree the below-median properties are.

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