Category Archives: Reno Real Estate

Washoe County Tax Sale and the Belvedere

Washoe County recently conducted the sale of tax delinquent properties.  According to Nevada statutes the properties are placed for sale if the taxes have not been paid for at least three years.

The RGJ reported on the purchase of 92 condominiums by David Lonich, the attorney representing Bijan Madjlessi of Belvedere LLC.  Madjlessi planned to market the condos in the Sundowner’s north tower, but the economy and the real estate market soured and he was unable to sell as planned.

The lawyer for the developer of downtown Reno condominiums — converted from rooms in the former Sundowner Hotel and Casino — on Wednesday purchased 92 of the condos for nearly $2 million at auction, after his client was delinquent in paying nearly $800,000 in taxes to the county.

But, here is the part that the RGJ, for whatever reason, did not tell.

The story was related to me by people that had attended the Washoe County Tax sale last week.

Lonich bought all 92 units and experienced little or no competition.  Others bid on some of the properties, but were all out bid.

The nature of the tax lien is that it is superior to all other liens. Consequently, when a tax sale is conducted, all other liens are wiped out.

So, what else was wiped out?  Since the taxes take precedence over all else, any financing, or mortgage loans were eliminated. According to notices of default totalling approximately $47.9 million, debt in that amount was eliminated, completely.  The RGJ reported that the property was purchased for $7.89 million.  I’m not clear how debt could grow to 47.9 million.  Nevertheless, it would appear the banks lost, big time.

Likewise, public records showed a total of 359 liens had been filed against Belvedere LLC and the property.  Some of these liens may have been satisfied, but this has not been verified.  A total of 771 documents have been recorded associated with Belvedere LLC and I have not reviewed all of them.  These liens have all been completely wiped out by the tax foreclosure.  Each of these liens represents someone that Belvedere LLC owed money, and each was left holding the bag.

Contractors didn’t get paid.  Vendors didn’t get paid. The HOA didn’t get paid. and even the City of Reno didn’t get paid.

Now, I believe that some of these liens may have been satisfied because some of the units may have been sold but this has not been verified.  Therefore the total numbers may vary a bit, but this is still close.

And what did Madjlessi lose?  You may be surprised to learn that he fared a bit better than his associates, the banks and the contractors and vendors.  He was able to eliminate $47.9 million
in debt for a mere $2 million and he got a lot of his building upgrades for free.

It’s nice work if you can get it.

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Nevada Tops the U.S. in Foreclosures for 52nd Month in a Row

According to RealtyTrac, Nevada led the U.S. in foreclosures for 52 months in a row.  Foreclosures jumped by 23% to an all time high.

One out of 97 homes received a foreclosure notice in the month of April. 

The Las Vegas area was number one or the nation’s cities with one out of 82 homes.

And even though the foreclosures were up, the number of filings has decreased significantly.

Reno-Sparks was ranked No. 9 in the nation with one filing for every 183 households. 

Read here for more foreclosure information.

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The Tenant From Hell

Landlords, do you have any stories about tenants from Hell?

One story I want to relate: a friend experienced this one, not me.

The apartment was a beach front condo in San Diego. The owner had placed the unit with an agency for short term rentals for the summer. The unit was fully furnished, including kitchen utensils.

The occupant (I would call him a tenant but, tenants usually pay rent) moved in paying with a check. The management company accepted a personal check and what do you know, the check bounced. Can you guess who was on the hook for the bad check? Hint, it wasn’t the management company.

So, now, where short term rentals on the beach could possibly pay for the unit for the entire year, we actually find a long drawn out legal battle to get the interloper out of the unit. And instead of receiving rent the owner received substantial legal bills for the eviction.

And furthermore, when the perpetrator finally moved out of the unit, he took with a lot of the personal property.

Since this happened a long time ago, my recollection of all the details have become a bit sketchy.

I realize that Nevada landlord/tenant law differs greatly from that in California, and that this story probably would not happen here, at least to the same degree.

But, one lesson that I learned from this story was to always insist on cash, or cash equivalent before allowing a tenant to move into a property

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Peter Padilla and Leslie Henderson on Short Sales

Here’s a podcast with peter Padilla and Leslie Henderson discussing short sales.

Henderson & Padilla: Ease The Pain of Short Sales & zero down on the VA Mortgage! May 15, 2011 by NevadaRealEstateRadio

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Couple Battles Wells Fargo Bank

Here’s an interesting story about a couple taking on Wells Fargo.  The accused Wells Fargo of funding a home here in Reno based on a fraudulent appraisal which inflated the value of the home by $200,000.

From my vantage point the story is loaded with too many inconsistencies and sounds much like someone playing the victim card too loud and too often.

According to the Vieiras, the mortgage loan they took out in 2005 with Wells Fargo was based on a fraudulent appraisal that inflated the property’s value by more than $200,000. The appraisal was ordered by the bank and determined the couple’s mortgage, which they were eventually unable to pay, like tens of thousands of other homeowners across the country.

I’m not aware of any cases where appraisals are used to determine anyone’s mortgage.  They are used to determine the value of the property, supposedly to protect the bank’s interest.

The Vieiras said they were first late for their mortgage payment in September, 2009; Wells Fargo foreclosed on the home in June, 2010. Nuno, who is an appraiser himself, said the original home appraisal set him and his wife up for an unwieldy mortgage, and even though it was ruled fraudulent, the couple had no legal recourse.

Notice that even though Nuno is and appraiser himself, he was willing to complete the purchase without disputing the price.  He apparently agreed with the appraisal ath that time.

The Vieiras claim that they have been fighting this battle for the last 6 years.   They purchased a home in Reno, Nevada in 2005.  Coincidentally, that happens to be about 6 years ago.  That would suggest that they had been fighting Wells since the day they closed their escrow.  The home was foreclosed in June of 2010.

I must admit that I’m not always a fan of the banks, but this time I side with Wells.

Read the rest:

http://sanleandro.patch.com/articles/local-couple-takes-on-wells-fargo-bank

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Strategic Defaulters: Fair Isaac Has Your Number

The further along we get int this foreclosure debacle, and the lower we see the home prices fall, the more likely we will encounter a strategic default.

A strategic default is when a homeowner can afford to make the payments on a  home in foreclosure, but strictly for financial reasons chooses to default.

Fair Isaac, the credit rating agency, thinks that they have learned the profile of the strategic defaulter.

The strategic defaulter has a significantly different credit profile from someone that’s a distressed owner.

The credit assessment firm FICO says it’s developed a method, using consumer behavior analytics, that will allow lenders to identify borrowers who are a risk for strategic default.

Read more about strategic  defaults.

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Use your Smart Phone to Shop for Your New Home

This Wall Street Journal video discussed the myriad of new apps for smart phones and how they are changing the process of shopping for a new home.

It’s happening here in Reno too.

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Home Prices Continue to Drop in Reno/Sparks

The Median price for homes in the Reno/Sparks area is now $5000 below 2009.

The RGJ reports that Reno home prices continue to fall. Buyers are sensitive to price (is that a surprise?). Both home prices and the number of homes sold were lower than last year.

Incline Village was the exception with the sale of 36 condos.

I try to link to any story, but I was not able to find this on line. This story appeared in the Sunday print edition. The RGJ seems to want to have some of its content “Only In Print.” Are they ashamed of their product?

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Nevada Imposes New Paperwork Burden on Home Sellers

The State of Nevada has imposed an additional paperwork burden on all home sellers, effective January 1, 2001.  The regulation, issued by the Nevada Energy Commissioner is intended to evaluate the energy consumption of residential property.
A four page form gathers information about energy consumption of the home, type of construction, and energy Star ratings of appliances, among other things.  I suspect it won’t take nearly as long as filling out a form 1040, but a revised version may be on the way.  The form must be filled out by the seller, or a “certified” home energy inspector and provided to the buyer.  The form may be waived if agreed by both the seller and the buyer, but the waiver is on page 4 of the form.

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Las Vegas Rated as Most Under Valued City: Reno Not on List

Las Vegas was rated as the most undervalued real estate market in the nation.  The rating was made by Local Market Monitor.  Las Vegas was also rated as the worst housing buy.  How could that be?  I would assume that Las Vegas, like much of Nevada is still facing a massive number of foreclosures.
The list contains 15 under valued cities and 8 over valued cities.  The Reno-Sparks area was not on either list.
I don’t know all of their criteria, partly because I was not willing to pay for the information.
For more about Nevada real estate values.

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