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

To understand where the pricing for Las Vegas homes and condominiums will go one has to have an understanding of the process by which these Las Vegas bank owned homes and condominiums are sold to the public.

How far will homes and condos pricing fall in Las Vegas?

My answer is;

Can you answer the following question?

 Is there a limit to the banks stupidity indifference to how much money they lose?

When things go bad and a business has to liquidate its inventory, the owner hires companies that specialize in disposing their inventory for the highest price. One of the essential points in disposing inventory is to make it easy for the buyers to buy the inventory quickly and efficiently.

Remember the REDC foreclosure auctions in Las Vegas, they dispose homes and condos in Las Vegas that have failed to be sold through Greater Las Vegas Multiple Listing Service (Las Vegas MLS). REDC informs potential buyers through advertising the auction, gathering the bidders so they can compete against each other, thus guaranteeing the highest bid (with some help from the auctioneers) and have financing readily available for those who win the properties. These guys are masters of their domain and get paid very well. Still they sell no more than 25% of their inventory.  

Compare this to how banks sell their properties that are listed in the Las Vegas MLS.

Although there are more than a couple of thousand Realtors in Las Vegas that are fully qualified to market bank owned homes and condos in Las Vegas, the number of agents that have listed more than a few foreclosure listings is few. Below is an excerpt from an article in the Las Vegas Review Journal:

“REO specialist of X Real Estate said he took on 60 new foreclosure listings in the past week and now has 350, up from 250 a month ago. He has two properties in foreclosure at more than $1.5 million.

“What happened is Fannie Mae’s moratorium is over and they flooded the market,” Kearns said. “I know some guys who got slammed who are handling Fannie Mae properties and they hadn’t done anything for two months. Watch February and March take off.”

Note: there is still a moratorium on foreclosing by banks, as of today.

See, the few REO agents that have hundreds of listings just added 100 listings last week, only how can they manage all these listings? They can’t. Why these banks have chosen to “slam” a few REO agents in Las Vegas with hundreds of listings instead of giving a few hundred Realtors a few listings so they could do it well is beyond me.

I have never looked for a bank listing nor will I ever accept one, thankfully I don’t have to and can chose who I work with.

Many Foreclosure properties, especially those priced under $100,000 are no longer updated for status. When a property goes under contract the listing agent is supposed to inform other Realtors that the listing is under contract by changing the property status to C (contingent sale). This is not done any longer in many cases.

It is so bad that we have to call for the status of every property that we show before showing it. At least 50% are under contract while the listing shows available for sale (ER).

This weekend I was showing condos in Manhattan, Park Avenue and Meridian condos to an investor from Canada and when he narrowed his choices to one bedroom condos in Meridian and wanted to see a few,  I couldn’t confirm the status of the condos because many of these agents don’t answer their calls on weekend. Two of the top three choices of the Canadian investor were under contract; actually one will be pending sale by tomorrow.

Many of these REO properties have the wrong direction or gate code and many more have the wrong lock box combination or there is no key in the lock box. Good agents provide an electronic lock box so they can find out who visited their listing and when, mechanical lock boxes don’t do that and if someone trashes the property or just takes the key, there is no way to find out who it was. These REO properties are NOT easy to show.

It is a fact of life that we write offers on the best real estate deals in Las Vegas only, and guess what? These properties usually get multiple offers, so we have to guess at the correct offer which is often over asking price. Why? Because these homes and condos come at thousands if not tens of thousands of dollars below comps, which are homes or condos of similar floor plan and square footage in the immediate area of the subject home or condominium that have sold in the last 6 months. Actually, we only look at the last 3 months.

One of the offers we made last week was a 5 bedroom, one story home in North Las Vegas that had at least $120,000 in upgrades including in-ground heated pool and spa that was listed in the $270,000 range and the latest comp for it sold for $30,000 more than the asking price. None of the comps even came close to this home in terms of elevation or upgrades and it had multiple offers on it. We offered $7,000 net over the asking price and haven’t heard from the bank yet.

What happens is that this sale will bring down the prices for the future comps and this way a much larger than 3%-5% decline in the Las Vegas homes and condominiums prices that have been predicted by “experts” is imminent; however it is already worked in to the current pricing.

For example the future price statistics for like similar homes as the one we made an offer on has to drop by an additional 12% for our buyer to be even.

The problem with the bank owned properties that are listed in Las Vegas MLS is that they are not easy to show, make an offer on or close escrow with. The selling bank and by extension their REO agent that has listed hundreds of homes and condos in Las Vegas did not make an appraisal contingent repair on a property that I am supposed to close on today until last Friday. We have filed an extension because it is impossible to record a sale in a few hours.

Compare what banks do with how REDC auction staffs handle the disposition of homes and condos in Las Vegas and you see that these banks are doing everything wrong. Their marketing plan sucks rotten eggs. Banks have made

1: Showing Las Vegas homes and condos for sale that are bank owned

2: Making an offer on Las Vegas homes and condos

3: Closing escrow on Las Vegas homes and condos

as frustrating and difficult for buyer’s agents as they possibly could. Nothing has changed for the better in the last year and nothing will. So when buyers fail to do their duty and buy these bank owned properties for a while, the bank lowers the price and cuts its own neck a bit deeper since the sale will bring down the comps for the banks other properties; but they don’t care because you either have paid for it through TARP legislation or you will. One way or another they are made whole and you will not be.

So while Las Vegas home and condo pricing is reaching vulgar levels there is no telling how much it will go down further because of the indifference of the banks to their losses.

Another way the homes and condos market in Las Vegas would stabilize is for the banks to write down the interest rate and principal for underwater home owners. I attended a class for Neighborhood Housing Services of Southern Nevada a couple of weeks ago. They had not heard of any cases where the bank agreed to write down the principal of the loan.