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Last night at the In Business Who’s Who in Real Estate and Development event our little group was approached by an energetic young man. He handed out his business card which prominently communicated that he is a “residential” Realtor. The self promotion he subsequently provided was reminiscent of the pitch everyone seemed to have during the beginning of the housing bubble bust.

“I work with a group of investors out of (fill in the blank with a State or foreign Country) that is buying distressed property and/or distressed notes.”

Not to take anything away from the above mentioned individual, because this was the Who’s Who event after all, and he very well could have been someone. However, there are an increased amount of real estate agents out there “working with a group of investors.” On the same token, there seems to be tremendous amount of inquiry from investors looking for a “good deal.”

Last night our new friend was regaling our group with a complex deal that his “buyers” were going to be bidding for the following day. This morning we received an email from said residential Realtor with a summary packet of the note asking if we were interested in placing a bid. Coincidentally, our team received a full packet on this transaction two weeks ago from the auction company that was hired by the bank to disposition the note. Today was the last day to place a bid.

From a practical point of view, how in the world could this residential Realtor even think it was possible to procure and close the transaction of a note that is securitized by two properties with a tenant in bankruptcy and borrower in good standing with less than 24 hours for due diligence?  

The next several months are going to produce more of these ridiculous “opportunities.” There is no question that fortunes could be made in this down market. But you have to ask…

As a real estate professional how can you tell if the investors looking for a good deal are real?

As an investor how can you be certain that your real estate agent is providing you with reliable information rather than regurgitating second hand information from third party sources that haven’t be vetted?

Real estate professionals – Find out up front from investors what properties they currently own, have recently purchased and a verification of funds to purchase. Also, avoid the seduction of the daisy chain… I know a guy, who knows a gal, who has xyz. Seek to control the transaction or move on to another deal.

Investors – You should first know that in Nevada a Real Estate License does not permit the licensee to procure or broker note sales. You should also seek out professionals who are reputable, specialists, and/or list bank owned property.

For more up to date market information contact Hayim Mizrachi 702-853-4257 hayim@prucre.com.

Written by Hayim Mizrachi, Sr. Commercial Advisor hayim@prucre.com

Prudential | IPG announced the Commercial REO Division in the first quarter of 2009 as a response to what we anticipate to be a 24 – 36 month commercial foreclosure market.

While we are not the only agents in our office working on banked owned property, our team has been designed to work in conjunction with financial institutions Chief Credit Officer and/or Special Asset Managers to service a property inclusively from Default-to-Disposition.

We identified the need for this hands-on approach early in 2008 when we noticed a growing number of monthly default filings. That February we surveyed all of the NV State Chartered banks and received the same reply across the board, “We don’t have any bad notes. Thank you for your call.” That reply modified slightly as recent as five months ago to, “Thank you for your call, we have it under control.” Today there are a small amount of advertisements popping up from local commercial brokerage houses, (including Prudential | IPG) headlined with “Bank Owned.”

For a more in depth report please contact Hayim Mizrachi at 702-853-4257 or hayimm@prucres.com.