Trustee Sales and The Foreclosure Process

April 11, 2010 - PRLog -- Trustee Sales are the final step in the foreclosure process. When a homeowner is not able to make their mortgage payments and falls behind, the beneficiary may then start the foreclosure process. The first step occurs when the lien holder records a Notice of Default with the county and sends that same notice to the borrower. From this point, the homeowner has 90 days to reinstate the mortgage according to the terms of the lender or they may receive a Notice of Sale. The Notice of Sale is recorded at the County Recorder's Office and is also posted on the property. This notice sets the date for the Trustee Sale. There are approximately 30 days from the date the Notice of Sale is issued to the Trustee Sale. During those 30 days, the homeowner still has a chance to reinstate their mortgage.

For Clark County properties, the Trustee Sale takes place downtown. The auctioneer will list what properties are expected to come up for sale and what the starting bid will be. The potential buyer is responsible for performing all due diligence on a property before the Sale. If there are no third party bidders for the property at the Trustee Sale, or if the minimum reserve amount is not met, the property will usually revert back to the bank and become an REO. This REO will then be marked up and placed for sale through a real estate broker contracted by the bank.

Trustee Sales can be a great opportunity for investors to purchase properties for prices well below market value, without the hassle of dealing with short sales or REO's, however, most investors may not know where to begin to make an informed purchase at the trustee auction. Several potential pitfalls could hurt investor profits if not enough due diligence is performed. First and foremost it is important to ensure that the foreclosing lien is a first deed of trust and not a junior lien. The lender will not disclose the seniority of the lien and many novice investors have been left holding a worthless junior lien while having thrown tens, if not hundreds, of thousands down the drain. Secondly, what is referred to as involuntary liens, may not be wiped out in the foreclosure process. These include property taxes, HOA liens and SIDs (Special Improvement District) fees. Finally, it's important to understand the condition of the asset and prices within that neighborhood and sub-market.

One company that has been very succesful representing bidders down at the auction is well respected, local investment brokerage Fortis Commercial Advisors. Fortis' track record within the commercial real estate world and the Las Vegas community were a natural draw to investor Noah Grassi who has been purchasing at the auction since mid 2009. Grassi believes other representatives he talked to at the auction simply did not have the technology capability or manpower to effectively cover the whole Las Vegas market and opportunities would certainly be missed. Grassi says "I interviewed one rep prior to Fortis who intended to not only handle all the title due diligence but also visit all the houses by himself in his Toyota pickup. There's no way this can reasonably be done when you're trying to cover a thousand miles in one day. Either you're going to miss a key title issue or you won't make it to a great opportunity."

Fortis' success comes from employing a team of drivers, a seasoned research staff and staying in constant communication with title personel. According to one of the company's founders, Dean Jalili "every single opportunity is considered and reviewed before being discarded or visited. That's a tall order for others to compete when you consider that on any given day, as many as 1,000 properies could be scheduled for auction with several hundred actually being sold."

Fortis has consistently hit double digit returns on their trustee acquisition program while never losing a penny. It helps that the team has an extensive analytical background in investment real estate. Company founders Dean and Frank Jalili both worked with national investment brokerage Sperry Van Ness prior to starting Fortis in 2007. The brothers and partners have combined for over a billion dollars in real estate transactions in Las Vegas and other markets. "Our investors come to us because they know we'll tell them not to buy a property far more often than we'll tell them to actually buy one" says Jalili.

Investors interested in learning more about Fortis Commercial Advisors should visit their website at http://www.FortisRE.com or send information requests to 702.982.8968 x101.