Jennene Knerr-Shanholtz

Answers to Common Questions Regarding Bank Owned (REO) Property

Why are there so many foreclosures in Nevada?

• High number of previous Buyers that were investors and non-owner occupied
• High number of Adjustable Rate Mortgages with increasing mortgage payments
• High number of mortgages with 100% financing and no equity in the property

What is a foreclosed property?

• The true term is REO, “Real Estate Owned”
• Owned by the bank who is the seller 
• No mortgage on the property
• List price is determined by market value for current condition with a 30-90 day sell   

Nevada Foreclosure Process - Steps, Timeframes and Resources

The Foreclosure Process in the state of Nevada typically takes about 6 months from the time the Notice of Default is filed to the Eviction of the homeowner. 

1. Notice of Default starts the foreclosure process - it is prepared, recorded, mailed, posted, published and a copy sent to all parties (owner, all lenders, IRS, local, state, and federal tax agencies) who have an interest in the property.
2. Reinstatement Period (month 1) - starts on the first day the notice of default is recorded.  This is a 35 day period in which the homeowner can reinstate the loan by making any back payments, foreclosure fees and other allowable expenses.
3. Redemption Period (months 2-3) - starts on day 36 from the recorded date of the Notice of Default.  Now the homeowner is now responsible for paying the remaining loan balance along with all foreclosure fees and other allowable expenses.  It should also be noted that approximately 10 days before the end of the redemption period, the trustee will notify the lender for permission to prepare the Notice of Trustee Sale for publication.
4. Publication Period (month 4) means the Notice of Sale must be published once a week for three consecutive weeks (21 days) prior to the Trustee Sale.
5. Trustee Sale (month 5) is the final step in the foreclosure process and it is extremely important to remember the homeowner has no right of redemption after the sale is finalized.  If there is a successful bidder at the sale, the new owner will purchase the property in "as is" condition with no warranties.  If there are no bidders at the sale, the lender becomes the sole owner as an REO (Real Estate Owned).
6. Eviction (month 6) process starts after the Trustee Sale is finalized.  The eviction process is initiated by posting a 3 day Notice to Quit on the property.  If there is no response, the new owner will file a 5 day Eviction Notice with the court.  If there is no response by 5pm on the 5th day, the Constable will evict the resident.

Additional Resources:

• Nevada Foreclosure Help  Useful resources and info from Nevada Department of Business & Industry
• Nevada Revised Statutes - Chapter 107 - Deeds of Trust
• Nevada Foreclosure Law Summary

What are some things I should put in my offer?

• Insert the following:  “Seller to complete lender/appraisal required repairs not to exceed $__________.”   
• Write your offer contingent upon a home inspection.
• Buyer can back out based on due diligence clause and receive earnest money back
• Seller's Choice of title
• No assumptions or owner will carry
• The bank may pay for a home warranty and/or the appraisal (request it)
• Seller can close quickly
• Seller will not pay for C,C & R’s unless agreed in offer

What should I submit with my offer?

• Pre-qualify letter or verification of funds
• A copy of the earnest money check – make payable to “title” if escrow unknown
• A prequal letter with lenders bank (if required)

When can I expect a response?

• Generally offers are responded to within 3 – 5 business days, but may take up to 3 weeks. 

How does the bank respond?

• Initial offers need to be presented in writing, preferably on the GLVAR form.  The bank negotiates verbally, so future negotiations will be verbal.
• Multiple offers on the property? Buyers to submit the highest and best offer.   
• Submit highest offer – may be over list price

When is acceptance?

• Once the Buyer signs all documents and provides copies of required paperwork, the property may be put in pending status. 
• Acceptance is only upon Seller signature and generally contingent upon investor approval.

What disclosures and paperwork does the bank provide?

• The Buyer must waive Sellers completion of the Sellers real Property Disclosure statement and other disclosures. 
• Banks do not provide the CC&R’s or certificate of resale packet
• AS IS Purchase Addendum