Las Vegas Homes, Condos, Land and Commercial Real Estate Blog

Buying a Las Vegas foreclosed home or condominium is well worth the hassle, don’t lose patience part one

I have explained the way banks only counter the top bidder, or in rare cases the top two bidders, when they offer some of their properties so cheap that they will get multiple offers on it and the benefit that the bank gains by conducting their sales this way.

The problem that arises from banks preferred sales method is that the buyer’s agents (Realtors) have to guess at what the winning bid at a silent auction will be. Not easy, because a buyer’s agent (Realtor) has no control over other buyers and their valuation methods. A buyer’s agent has to decide what is the least amount of money that he/she should offer on behalf of the buyer in order to give the buyer a good shot at having the winning bid.

These offers have nothing to do with the house value; it has to do with how cheap one can buy them for which happens in today’s extraordinary circumstances. The bigger the difference between the final price of the house and the appraised value, the better the buyer is insulated from further price drops. The appraisal decides the present value of the home or condo based on the previous sold prices that in this market should be 30-90 days old and taking into account the market direction. So if one buys a home for $105,000 and the appraisal comes at $137,000 the buyer is protected if the home prices drop another 20%-35%. This is not a hypothetical example, we actually represented a disabled Marine who bought a home for $105,000 and the appraisal came at $137,000. Naturally, he being represented by us had something to do with this excellent outcome and the same outcome can’t be expected to occur frequently. However this is why if you want to buy a home or condo in Las Vegas you should buy foreclosures. By the way our offer was $2,000 higher than the asking (listing) price for this Northwest Las Vegas home. So you can see that the purchase price offer has nothing to do with the present value of the property.

So guessing at the amount of other offers obviously is not an exact science and due to having multiple offers, the hit percentages are less than baseball. The best home run hitters in baseball strike out the most, but when they hit a home run, they have done their job well and so will buyers when they get their long awaited home or condo. You don’t hit a ball if you don’t swing at it and you will not get a great buy on a home or condo if you don’t make an offer on it.

I usually don’t go far above the asking price and will tell my buyers that money saved per hour while looking at and making offers on their desired home or condo will be more than most of the buyers will make while working. So the return on the investment in time and effort is excellent. Imagine a buyer spends 10 hours to look at for sale listings and two hours on signing offers when they can save $12,000 on their purchase (and this is a minimum when the buyer follows our instruction). The saving is $1,000 per hour, not bad. How many hours do they have to work to make $12,000.

One can’t increase the purchase price offer to unreasonable levels to insure having the winning bid. For example a 1933 square foot foreclosed home at Ridge Gate was listed for $199,900 and sold for $225,000 on 6/27/08, it was on the market for 14 days. The problem is the person that bid $25,000 over the asking price can never know if he/she could have purchased the same house if they offered $10,000 or $15,000 over the asking price. That would be $10,000-$15,000 that they have to work to pay for while the house could still be a great value. I hope that you can see the problem.

So do we tell our buyers that they should offer $25,000 over the listing price in MLS so they surely are winners? NO. Depending on the conditions that are specific to each home or condo and how much interest we think that the property generates, we recommend the absolute minimum price that we think will give the buyer a reasonable shot at being the high bidder and tell our client that if this bid doesn’t win there are and will be many similar homes and condos that they can bid on and win.

It is possible to lose on three or more consecutive offers before arriving at the winning offer but when the goal is achieved it no longer matters how many homes the buyer visited or how many offers they made that failed.

More on buying foreclosed homes and condos in Las Vegas in the next post.

PS: I have concluded the work on the web-site a while ago and have turned all my attention on real estate and am very happy about it, I will blog with greater frequency, so start reading.

Related web-site links: Las Vegas, Nevada Homes and Condos for Sale, Short Sales, Foreclosures, HUD Homes and Fixer-uppers,  Getting the best deal for your Las Vegas home or condo, Buying Las Vegas resale homes for sale