Some Las Vegas homes or condo buyers are NOT aware of the fact that a home or condominium seller only looks at the offers in terms of NET gain and pay no attention to the offer amount. To explain this I will discuss a hypothetical situation below:

A Las Vegas home for sale is priced at $200,000 and needs about $5,000 in repairs done, Las Vegas Realtors commissions are 6% and the buyer’s maximum amount allowed towards closing costs is 3.5%. Now the seller gets the following two offers:

Offer one: Is from a buyer who needs to finance his deal and offers $215,000, the buyer asks for the maximum $7,525 towards his closing costs and $5,000 seller contribution toward repairs. The net to the seller for this after deducting buyer closing costs and repairs and Realtors commission is $189,575. I am not including sellers closing costs as it remains constant for both offers.

Offer two: Is from a Las Vegas real estate cash investor at $202,000. Given that it doesn’t make sense to ask for closing costs or repair costs in a cash deal, the investor doesn’t ask for any. In this case the net to the seller is $189,880 and the seller will take the second cash offer in a heartbeat while the offer amount is $13,000 less than the first. The net for this offer is a bit more than the other but we have found that even if a cash offer nets less than the loan offer the banks will sometimes accept the cash offer over the loan because they can close a cash deal quicker and with less chance of falling out of escrow. If both offers needed financing the highest net would win.

Las Vegas homes or condominium buyers who have to finance their deal ask for seller contribution towards closing costs or repairs because they don’t have enough money to comfortably pay for them, this is not true for cash investors.

It doesn’t make sense for cash buyers to ask for closing costs or repairs because all that has to be done is to lower the offer amount by the desired number and submit a clean contract which has a much better chance of acceptance.

The 25,000-35,000 unsold foreclosure or Bank Owned homes in Las Vegas that banks are holding back from the Las Vegas real estate market for fear of price reductions, have been the talk of town until I CRUSHED it through 4 blog posts.

I put forth the mathematical formula for calculating the number of shadow inventory homes in Las Vegas and explained how it should be calculated. I can because I have aced many PHD level mathematics courses while in Graduate School.

In the concluding blog post in the series I stated that this number has to be less than 10,000 and the only reason that I don’t have an exact number is that I don’t pretend to be a Las Vegas real estate analyst and don’t tabulate for example, the number of homes sold in real estate auctions or in bulk sales of land to the Las Vegas new homes builders which I have explained in posts, but true real estate analysts should.

 When Las Vegas real estate analyst Dennis Smith kept repeating there are 25,000-35,000 shadow inventory homes in Las Vegas, I did a blog post titled

Real estate analyst Mr. Smith GUESSES the wrong number of Las Vegas unsold foreclosed homes

In this blog I wrote “The best analyst is Larry Murphy, the real estate analyst that I pay no attention to is Dennis Smith and unfortunately others do”. And the reason is that I know for a fact that Larry Murphy tabulates sales transactions in Las Vegas by type and would have access to all of the data that is necessary to calculate the number of shadow home inventory in Vegas.  BEHOLD – The conformation for my assertions came from Larry Murphy.

This is from The Las Vegas Review Journal article today.

“Murphy estimated a “shadow inventory” of 6,500 homes owned by the bank that have yet to be released on the market, plus 18,500 pre-foreclosure filings that may or may not go to foreclosure.”

He also said “Even a shadow inventory of 25,000 homes is not that many, he said. Las Vegas had 24,067 foreclosures in 2008 and 20,426 in 2009”.

See my blog post about the effect of foreclosures on Las Vegas real estate market.

Las Vegas real estate, the effect of foreclosures (bank owned homes) on the Las Vegas homes market

I also used Mr. Dennis Smith’s name in the blog title, I have never used a name in a negative blog, because I have power and have to use it judicially. My blog post will show up in the Goggle first page when searching for the name of the person that I wrote about and if it is negative, it will negatively affect that person’s life and he would have no recourse. Google, (Dennis Smith Las Vegas) and you will understand, and keep in mind that he is very popular. The reason is that all he had to do is to Google (shadow inventory homes in Las Vegas) and would have found my blog posts that disprove the numbers that he kept using after I published my series of blog posts. I am not here to hurt anyone, but his bull that is published by broke newspapers which need sensational stories to sell papers is seriously effecting the lives of my fellow Realtors and real estate agents by falsely scaring away home and condo buyers in Las Vegas, I know more than a few starving Realtors.

In case you think that I am over reacting, see national so called “real estate analysts” predicting 20% drop in Las Vegas residential real estate prices in the coming year that can be easily explained if we have 35,000 shadow inventory homes in Las Vegas and impossible to prove if unsold bank owned homes inventory is 6,500. I will explain this in the next blog post.

Comparing Las Vegas new homes for sale and resale homes in the same community

A gentleman called me buying a high rise condominium in Las Vegas; while we were talking he told me that he is losing tens of thousands of dollars on a home that he purchased about a year and half ago. I told him that it is impossible to lose that much money unless you try, and it turns out that he ordered a brand new home from scratch and paid for upgrades in the Whitney area of Henderson. As soon as he moved into his home, it became a used home and other resale homes, including foreclosure homes and short sales become COMPS for his home and thus the loss.

I wrote about the two brand new Summerlin model homes for sale and now will discuss two similar one story homes that listed in the Las Vegas MLS. One is a resale which is in very good condition, one is a foreclosed home which has failed to sell through the Las Vegas MLS and is going to be auctioned off, and the last one is a short sale home in very good condition.

I will reproduce the table here

Price per square foot for Las Vegas new homes for sale in Summerlin, traditional sale, bank owned home that will be auctioned off and short sale

Although the resale homes are older than the new homes, homes up to five years old are considered new homes; the difference is upgrades and maybe an Energy Star package.

Custom paint, flooring, cabinets of Las Vegas brand new model homes for sale

Price comparison for new homes, foreclosed auction home, a traditional sale and short sale home

As you can see the new model homes are priced more than $50,000 higher than the resale homes, but the new model home buyer will have one of the most upgraded homes in the community, and pay for it too. The best deals would be the 2002 home which failed to sell through Las Vegas MLS and will NOT bring anything close to the asking price at the Las Vegas foreclosure real estate auction. The auction home has to have some work done; at the minimum the carpets got to go. Replacing carpet with carpet doesn’t add value to the home, but installing laminated wood flooring would and it costs about $10-$15K.

Living room of foreclosed (bank owned) Summerlin, Las Vegas home which is scheduled to run in a Las Vegas real estate auction

Two reasons contributed to the failure of the auction home to sell through the Las Vegas MLS while it was listed:

1: Inappropriate pricing: the auction home was listed at $124 per square foot, while the COMPS are at $110-$118 per square foot and the condition of the home didn’t warrant the discrepancy, this home should have been priced at the lower range.

2: The house was not upgraded enough for the location and price range.

Carpet is the first thing that needs changed in the Las Vegas auction home

Upgrading the resales will not be cheap and those who want to live in a highly upgraded home are better off buying the new model homes.

Even though the short sale home is nice and upgraded, it doesn’t give enough incentive to the buyer to go through the long and uncertain short sale process as this home is not an approved short sale. Even if the short sale is approved at the offer price, the seller may back out and they frequently do over specific performance demand from the lender which allows the lender to go after the borrower’s other assets to satisfy the difference between the net money to the bank and the mortgage amount.

I will not know what will happen to these homes immediately; but when I do, it will make for a cool follow up blog. But I believe that I got the point across and it is: New home buyers should do their due diligence and research their other options before buying a new home or condo in Las Vegas.

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 Don’t tell me that there are enough wealthy people who can easily buy these condominiums and pay the HOA fees and taxes without feeling a pinch, there are only 670 luxury condos and CityCenter has sold about 100. Residential condominiums at CityCenter are a good way to obtain residency in Nevada which can be used for tax breaks. Buyers are weary of further price cuts, however I think that the lower priced condominiums at Veer to be the least likely candidates for further price cuts, but that is an educated guess. If I help a buyer at CityCenter I would ask for price guarantees or walk.

If you got the money and have been educated on City Center by me and can afford condominiums at Veer, it is not a bad buy and this comes from sincerely yours who has been advising against buying at CityCenter until now.

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Related blog posts: CityCenter, Las Vegas -Veer luxury condos for sale at City Center Part-one

History of price cuts at Veer luxury condos at CityCenter, Las Vegas

The following floor models are available at Veer luxury condo towers at City Center; I have also included the price history for these condominiums. One of my predictions for 2009 was price cuts for all City Center condominiums long before they announced it. As you can see price cuts are not uniform and the highest price cut is for the 3 bedroom Penthouse condominiums at 51%-53% and lowest for the 2 bedroom luxury condos.

Price history for Veer luxury high rise condominiums (lofts) At CityCenter, Las Vegas

Inevitable price cuts were the reason that I had recommended against buying City Center luxury condos, however now we see how much Veer Condos have sold for keeping in mind that the data for Penthouse condos at Veer will not be available until City Center finishes the interior of the 27-37 story condominiums and obtains certificate of occupancy.

View from an interior Luxury condo at Veer Towers at City Center, Interior condominiums are located between the two towers however the view is not bad as you can see

I got to see two bedroom, one bedroom and studios. Given that Veer Tower’s condos are residential condominiums, there is ample closet storage and the units are bright and have full length windows. Even the interior condominiums that are between the two towers get a lot of sun light and the views are not bad. CityCenter has furniture packages for these condominiums for about $17,500 that can be purchased with the condo; however they are throwing in the furniture for the interior condominiums.

Ultra Luxury at Veer Penthouse Living Room

HOA (Condo) Fees and taxes for Veer luxury high rise condos at CityCenter, Las Vegas

Veer condominiums are highly upgraded and slanted toward oriental taste. HOA fees arebit expensive for residential Las Vegas high rise condos and are about one dollar per square foot and yearly taxes run about 1% of the purchase price. Several condominiums at Veer are currently listed in the Las Vegas MLS. The reason that builders do this is to give a prospective buyer the opportunity to make a lower offer on these condominiums. If the offer is accepted then the CityCenter or Veer condominiums sales contract will substitute the original offer, just like foreclosure sales in Las Vegas.  It is not clear to me if further price cuts will come or not, but if it comes Veer is the least likely candidate, Vdara is more likely.

Today I got a chance to attend an open house for Realtors at Veer High Rise Condominium Towers in CityCenter, Las Vegas. Veer Towers are the twin high rise leaning towers, each has 325 luxury condominiums and it is all residential, no condo hotels here. Veer towers have 37 floors each and the top 10 floors are under construction for the interior improvements, no Penthouse units can be visited at the moment.

 City Center paid out 12 million dollars to Las Vegas Realtors in commissions, nothing for me. Because I advised Las Vegas luxury condominium for sale buyers who called me about the CityCenter Condos that it is not smart to buy condos at CityCenter until we see how many condominiums have been sold and for how much, this information can be found at the Clark County Recorder site.  We have an idea about pricing and unsold inventory at City Center now and that is essential data to make an educated offer on its properties.

What minimalist design gets you, the lobby at Veer luxury condos at City Center, Las Vegas. Nothing minimalist inside of these luxury condos condominiums

CityCenter has many problems such as lacking an iconic attraction like the Fountains at Bellagio and the signage is pathetic, however they are working on the signage.  The other deal is the minimalist look that CityCenter has strived to achieve and I believe it to be a fundamental mistake, if tourists were attracted to the minimalist look, they would flock to one of Las Vegas many industrial parks and not the magnificent attractions like the Mirage Volcano. CityCenter has also spent serious money on one of the worst web-site I have seen. All flash and not much content and hard to navigate.  This not a Realtor’s opinion, I am knowledgeable in the field.

Arriving at Veer Towers at Las Vegas CityCenter

Veer Towers have their own private entrance and parking is done by Valet only. This is cool, since it gives the residents the option of parking more than a couple of cars which would be the number of cars you could park if it were assigned. No wait, since Valet guys are lightning fast as well as nice, tip them well. Upon entering the lobby  you see a couple of tall, UUUUUGLY unpainted cement columns, but the rest is not bad, as you can see, I don’t like minimalist looks, but some may. 

Awesome views at entrance to Veer Towers at City Center; Veer Towers are connected to Crystal Luxury Shops and within walking distance of Aria Casino, Cosmopolitan, Bellagio and Cesar’s palace

Upon arriving at Veer Towers as well as other CityCenter properties, you are going to be greeted warmly by the staff who go out of their way to make you feel like a VIP.  Excellent service doesn’t show in prices and comparables.

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More about residential Veer, Las Vegas High rise condos for sale at City Center later.

Las Vegas CityCenter is an 8.5 billion-dollar urban metropolis consisting of  residential luxury condominium towers and condo hotel  high rise towers that has been built on 67 acres on the world famous Las Vegas Strip (Las Vegas Boulevard). City Center is located between the Cosmopolitan High Rise Condo Project and the Monte Carlo Casino. 

One must remember that CityCenter was conceived during the great real estate boom in Las Vegas and when the economy crashed the MGM was too involved to pull out. City Center is owned by Dubai Port World and MGM and both are highly leveraged and heavily in debt.  MGM was close to declaring bankruptcy at one point during the construction of CityCenter. 

MGM City Center, Las Vegas

City Center has failed to sell a significant percentage of its luxury condominiums due to the bad economy and mistakes made in building the CityCenter. One issue is bad signage which makes navigating through City Center difficult; the other is the heavy use of the minimalist concept throughout CityCenter which makes it cold and without personality. People don’t come to Las Vegas to look at bare walls or unpainted cement columns.

On the other hand CityCenter has put a heavy emphasis on unparalleled service and its condominiums are hands down the most luxurious condominiums on the Las Vegas Strip. Those who own a residential high rise condo at City Center or those who visit it get to live like a king.

Ultra expensive Crystal Shops at CityCenter, Las Vegas

CityCenter luxury high rise condo towers

The HARMON is not yet open and has struggled with a construction defect that resulted in cutting 20 stories which were designated as residential luxury condominiums. The Harmon will bean exclusive non-gaming boutique hotel when finished. 

The 5-star Residence at MANDARIN ORIENTAL at CityCenter luxury hotel/residence is split between hotel condos and residences. The 277 residential condos are located from the 23^rd floor up and are priced from $1000 per square foot. 

The VDARA high-rise condo-hotel is located west of CityCenter. This tower is curved and features 57 stories and 1543 units. Sales at Vdara have been slow and only 120 condo hotels have been sold so far. Condominiums measure from 500 to 1750 square feet. Condo-hotels can be enrolled in the MGM rental pool and would be rented on behalf of the owners by MGM for a percentage of the revenues. 

The VEER towers consist of two towers of 335 residential luxury high rise condos. These 37 story towers are built at a 5 degree incline and seem like they are dancing with each other. Condos measure from 500 to 1800 square feet and are priced at about $600 per square foot. The top ten floors at Veer Towers are not finished yet. 

Las Vegas view from City Center Manderin Oriental Hotel

I have discouraged Las Vegas high rise condo for sale buyers from buying at CityCenter until we find out how many luxury condominiums have sold at City Center and for how much. I also predicted the 30% price cut at CityCenter long before they implemented it. I am not sure about Vdara, however Veer residential condos seem to be a good buy if you have your eyes wide open.

Financing is the major obstacle for real estate investors who want to invest in Las Vegas real estate and can’t pay in cash.  Depending on the type of real estate, down payments of 20%-50% are required and interest rates are higher for buying investment properties.

Fannie Mae Guidelines to buy foreclosed (REO) homes and condos and high rise condominiums:

• Minimum 3.5% down for primary residence.
• 10% down payment investment property which is good for Las Vegas single family homes or duplexes, 25% on triplexes and fourplexes.
• Borrower can finance up to ten properties, but the down payment is 25% for properties 5-10.
• Mortgage insurance and appraisal are waived.  This is the reason the Fannie Mae buyers can finance condominiums and luxury high rise condos for sale in Las Vegas.
• For owner occupied Las Vegas homes and condos, HomePath Loan by Fannie Mae is more expensive than counter parts like FHA loans. Buying discount points is an option to lower the interest rate and monthly mortgage payments. Discount points and upfront loan origination costs can run 1%-4.85%. Buying discount points is an option to lower the interest rate and monthly mortgage payments and upfront loan origination costs can run 1%-4.85%. Buyers can ask for closing cost contribution from Fannie Mae to cover these costs. This is due to the lower costs to the borrowers since Private Mortgage Insurance (PMI) is waived. The seller can contribute up to 6% for closing costs.  One can just opt for the higher rate in lieu of the discount points.
• For the investors, the interest rate adjustment for the property being used as an investment property is 2.5 points vs. normal 3 points. However, if the investor puts down less than 20% down payment and doesn’t want to pay for PMI there is an additional 1.75 points for a total of 4.25 points.
• Same basic underwriting requirements of a conforming loan, but without the property issues (appliances missing – no problem).

This program is very effective for seasoned investors as well as first time investors. I discussed in detail how an owner occupied condominium buyer can have his/her renters pay for his mortgage and make double digit cash on cash profit in Generating cash flow from owner occupied Las Vegas condos or homes.

 Las Vegas real estate investors are well aware of severely tightened guidelines for financing investment properties. Now, investors have the opportunity to buy very reasonably priced Las Vegas homes condominium or high rise condos with as little as 10% down with fantastic interest rates and NO PMI. I repeat, Fannie Mae doesn’t allow investors to bid on their home or condo for the first 30 days.

Today, I met with Melinda Escobido who works for Prospect Mortgage, which along with Wells Fargo is currently the only two lenders who are approved to do HomePath loans to get the latest news and below is what she had to say:

HomePath Financing by Fannie Mae for owner occupied home or condo buyers in Las Vegas

Fannie Mae just made financing their foreclosed homes or condos easier by requiring only 3% for down payment on their REOS and does not require private mortgage insurance (PMI) or appraisals which are included in the closing costs for a buyer.  Not requiring an appraisal removes the danger of complications arising from the low appraisals which is a big problem in Las Vegas now. An appraisal is a onetime cost, however (PMI) has to paid on a monthly basis and this saves the borrower money, except that the interest rate for a HomePath loan is currently 5.875 which is about .6% higher than an FHA loan.

Las Vegas single family home for sale buyers have many options to finance their deals, however owner occupied buyers being able to finance a condo or high rise condo through HomePath is new.

The other issue that Melinda discussed was:

FHA Purchase and Rehab All in One Loan to buy Las Vegas fixer uppers, the 203K loan

This is an FHA loan that can be used for buying fixer upper homes and condos. This loan can be used to buy a home or to refinance one, 3.5% down payment is required and here is the way it works.

The buyer finds and makes an offer on a Las Vegas home or condo that requires repairs in order to appraise for a mortgage loan and submits a mortgage application along with the repair cost estimates from Nevada licensed contractors. The bank will get an appraisal for the home as if all the repairs have been done and funds an FHA Purchase and Rehab All in One Loan in two parts, one portion goes towards the purchase of the home and the other portion which is called a construction loan is deposited with an escrow company in Las Vegas.  When contractors get done with the repairs, they get paid through the escrow company.

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In the next post I will explain how investors can use HomePath or FHA construction loans to their advantage. This is the reason I go to all kinds of presentations and meetings.

1: The reason that luxury high rise condominiums are not selling well is the cash flow generated by these residential or condo hotels.  HOA fess for $1.30/ square foot at Mandarin Oriental, about $1/SF in Veer Towers at City Center and Signature at MGM Grand. When you add HOA fees to annual taxes and other fees, it can run from hundreds to thousands of dollars per month and income gained from renting a residential condo or condo hotel may not generate cash flows that some investors are looking for. Unfortunately, this issue has overshadowed the value gained from buying a high rise condominium in Las Vegas as you are buying luxury condos that cannot be built at the selling prices and I don’t see any high rise condo being built in Las Vegas for at least a decade.

2: The other reason is that potential investors in CityCenter or other high rise towers don’t want to buy when future price cuts in their desired condo tower are probable.  We have had 30% price cuts for City Center condominiums, and Trump Las Vegas condominiums on sale are selling for 60%-70% off original prices. What happens if City Center cuts prices further as they have only sold 8% of their inventory?

I am not sure what will happen with CityCenter, however if I wanted to buy a condo there, I would ask for a price guarantee. As for other high rise condo towers, good deals can be found right now, but you have to know what you are doing.

CityCenter, Las Vegas is closing deals on about 200 out of 2400 luxury residential condominiums at Residence at Mandarin Oriental Las Vegas and Veer Towers and condo hotels that are for sale in Vdara at City Center.

Here are the sales numbers at City Center Las Vegas.

Number of luxury high rise condos for sale at CityCenter Las Vegas, and Luxury condos sold so far

As you can see CityCenter has a long way to go to sell out their luxury condos.

Las Vegas luxury high rise condos for sale are purchased for several reasons:

1: Value; Brick and mortars. You get to own a luxury high rise condo in the best location in Las Vegas, in the middle of the best and most expensive shopping and dining places on earth. Our wealthy brothers and sisters don’t have to exert themselves too much to spend their money on $2000 Louis Vuitton shoes and purses.

2: Cash flow: City Center, Las Vegas condos will disappoint when coming to cash flow. The reason that Residences MGM Grand Signature condos has had such a big foreclosure problem is that buyers who paid $900 or more per square foot found out the cash flow originated by MGM Grand condos did not come close to paying the mortgage on them. Foreclosed or bank owned MGM Grand condos are selling for 25 cents on the dollar now. I believe that CityCenter condo buyers who buy for cash flow will be disappointed.

3: Gaining tax advantage by becoming a Las Vegas, Nevada resident: I am not a CPA or Tax attorney and can’t discuss tax advantages of buying a residence in Nevada, but our wealthy brothers and sisters have the potential to save more than the price of a condo and all expenses involved through savings on their taxes.

Those who want buy at CityCenter should take a look at competition like MGM Grand Signature condos and Trump Las Vegas condos  which are selling for less than ½ the price per square foot as the cheapest price per square foot of City Center condos.

A competent Las Vegas real estate analyst should possess, categorize and know how to use the necessary data that I have discussed in the last 2.75 blog posts. I will not repeat them here but take a look at part 2.75 of the series.

About Las Vegas Trustee Sale Auction and Las Vegas shadow home inventory Part-2.75 of 3

 About Las Vegas Trustee Sale Auction and Las Vegas shadow home inventory Part-2 of 3

About Las Vegas Trustee Sale Auction and Las Vegas shadow home inventory Part-1 of 3

So far I have discussed different types of foreclosed properties that sell through the Las Vegas Trustee Sale Foreclosure auction and explained that the Trustee Sale Auctions cover Clark County which includes Las Vegas, Henderson, and North Las Vegas.

I have also explained that the carryover of homes that are sold back to the bank in the Greater Las Vegas area are about 75% of the total foreclosed real estate that have sold in the Trustee Sale Auction. The total carryover of unsold bank owned or REO homes that carry over to the present day would be 2,000-8,000 homes since 1/1/2009.

Now, those national real estate experts who repeat 30,000-50,000 shadow inventory homes have to explain how they have calculated 22,000-42,000 homes that remain unsold by banks from late 2006 through the end of 2008 and they can’t.

Just take a look at the total number of bank owned homes that are listed in Las Vegas Valley MLS, it is about 1590. In the last 30 days, 61% of the bank owned homes that were listed in the Las Vegas MLS and were priced less than 250,000, closed escrow (sold) in less than 30 days and sold to mostly cash buyers. This number goes up to 76% for foreclosed homes that sold in less than 60 days and average sold price/ asking price is about 102%.

Even though Las Vegas residential real estate activity has come down appreciably, most of these foreclosed homes that are priced right get multiple offers in a couple of days. Three months ago, bank owned homes and condos would get 40 offers in a couple of days. Any bank repo home that hit the market sold.

I have written a blog post about the  effect of foreclosures (bank owned homes) on the Las Vegas homes market and have given days on market for listings by price range. We could use a couple of thousand more foreclosures and they would not have an appreciable effect on the real estate market.

So I ask again: Why banks would hold back homes for more than 1.5-3 years and risk further declining prices when all they had to do is to list the home in the Las Vegas MLS, and sell it automatically. Banks are not that stupid. It just takes a few months to prepare a home that has been just foreclosed for the retail market. Banks have to change the title of the foreclosed home, list it with a Las Vegas Realtor or real estate auction and in many cases do major repairs before listing it in the MLS and that is the reason we have probably about 8,000-10,000 unsold bank repo homes.

In the last 2.75 blog posts I have explained that given the right data, it is easy to calculate the number of Las Vegas shadow inventory homes and I have given the formula for it too. I am not a Las Vegas Real Estate Analyst, although more than half my time is spent researching Las Vegas real estate market.

A competent real estate analyst should keep track of what type of properties sell at the Trustee Sale Auction for example, homes, condominiums, land or commercial real estate and keep track of how many of these foreclosed properties are disposed of through Las Vegas MLS or real estate auctions from 2006-present Just like I have showed. And only then can they give a good estimate for the shadow home inventory in Las Vegas. If these real estate analysts have done their homework they can provide a good estimate with a margin of error of 1000.

If these national real estate analysts who drop doom and gloom about our real estate have not done their job, then any number about Las Vegas real estate that they give the public is baseless allegations.

The next time one of these guys give an interview and says we have 30,000 – 50,000 shadow home inventory in Greater Las Vegas, ask them to prove it, I can’t wait for them to do so.

I am writing this blog post while waiting in Nellis Air Force Base Hospital in North Las Vegas for my buddy Frank’s heart procedure. It is not dangerous and we will take him back home shortly. Even though I am allergic to hospitals because I have had 14 surgeries in them, this one seems to be nice and orderly.

About Las Vegas Trustee Sale Auction and Las Vegas shadow home inventory Part-2 of 3

About Las Vegas Trustee Sale Auction and Las Vegas shadow home inventory Part-1 of 3

So far I have explained and given the formula for calculating the number of shadow inventory of homes in Las Vegas and how “national NOT experts” may not make a distinction between the number of homes that are foreclosed and sold back to the bank, which banks market as bank owned, REO homes for sale in the Las Vegas MLS or other public real estate auctions like REDC or Hudson Marshall. I am reproducing the formula below.

 (The number of shadow inventory homes in Las Vegas, Henderson and North Las Vegas) = (Number of homes that have been foreclosed and sold back to the bank) – [(number of bank owned homes that have been sold through Las Vegas MLS) + (Number of homes that have been wholesaled or sold through various real estate auctions in Las Vegas)]

To calculate this formula one has to take a look at the Las Vegas real estate market history. In 2003-2005 anything that hit the market sold, New home builders could not sell Las Vegas homes any faster than they could build them, Foreclosure real estate troubles started in late 2006 and is ongoing.

Total number of foreclosed properties sold through Trustee Sale Auction in Clark County for 2009 and 2010 and bank owned (REO) real estate that have been sold through Las Vegas  MLS

Again:

1:  The total number of foreclosed properties includes all types of residential and commercial real estate in Clark County, not only homes. I am using Clark County numbers since Trustee Sale Auction numbers are for all Clark County and not Greater Las Vegas only.

2: 10,673 bank repo properties did not sell through Las Vegas MLS. Many of these are individually mapped parcels of residential land which were sold to Las Vegas new home builders in bulk sales, residential properties that have been sold through increasingly infrequent public real estate auctions in Las Vegas.  Commercial properties sell through commercial real estate agents in Las Vegas or get auctioned. I do not know what these numbers are, but Las Vegas real estate analysts should.

3: In 2010, 11,104 properties have been sold back to the beneficiary (another name for foreclosing lender). On the other hand 11,102 bank owned (REO) properties have either sold or are currently listed in the Las Vegas MLS (8948+2154=11,102) and I am not including other sources of selling bank repo properties. No shadow home inventory carry over here.

4: So far I have been discussing properties, or real estate as general terms and not the number of foreclosed homes and have been using Clark County numbers and not Greater Las Vegas Valley which includes Las Vegas, Henderson and North Las Vegas plus unincorporated Clark County. Interestingly all the big Casinos, including City Center are located in Unincorporated Clark County.

May the Good Creator bless you all and thanks for the prayers, even though I am not great but I feel much better than yesterday I can actually move around. THANKS.

A word about comments and trackbacks: I have started to allow trackbacks for my blog posts, but I usually wait a couple days to see if the page is there or not as many evaporate overnight. But as far putting the trackback in comments, it is not cool and no one would click your link because you have published my blog, if you have something to say then comment, otherwise use trackback as I will NOT allow them in future.

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I will finish the series about shadow inventory homes next, I promise.

About Las Vegas Trustee Sale Auction and Las Vegas shadow home inventory Part-1 of 3

So far I have explained that all distressed properties that are foreclosed on by the first mortgage, second mortgage or in rare cases for HOA fees have to be sold through the Las Vegas Trustee Sale Auction with delinquent tax auctions being the exception.

Not all of the properties that are sold through Trustee Sale Auction are single family homes, a significant number of these foreclosed properties are condos, town homes and lofts in addition to vacant land, industrial properties and retail and office buildings.

2: Two types of foreclosed properties are sold through the Trustee Sale Auction in Las Vegas and herein may lay the discrepancy.

A: Properties like Las Vegas homes or condos that sell back to the bank at the Trustee Sale Auction. Most of the homes that are foreclosed on and sold back to the bank are listed with Las Vegas, Henderson or North Las Vegas Realtors and sold through Las Vegas MLS; commercial properties in Las Vegas are listed with commercial real estate agents.

B: Foreclosed properties that are sold to a third party. These can’t be included in the shadow inventory of Las Vegas bank owned properties since the title will be changed to the new buyer’s name and the bank just gets the money. No headaches for the bank. The bank saves on two or three closing costs since the bank has to pay once to put the Las Vegas property in their name and pay the closing costs again when they sell it. Banks often pay the closing costs for the buyer too. Don’t forget the Las Vegas Realtors commission either. The minimum saving for the bank is 10% if they get rid of the foreclosed property at the auction.

This is the reason that the best deals are purchased at the Trustee Sales Auction, savings of 20% or more over properties that are sold through Las Vegas MLS. The trustee sale auction is by far and away the best way to get a bargain for Las Vegas real estate. However do not attempt to buy if you don’t know exactly what you are doing, even professionals make mistakes like buying the second loan and being stuck with the first mortgage, the bidder lost $40 grand.

Only those homes that have been sold to the bank and have not sold yet should be included in the total number of shadow inventory of Las Vegas homes which the banks are sitting on in order to protect the market from big price drops.

The formula to calculate the number of shadow inventory homes is:

(The number of shadow inventory homes in Las Vegas, Henderson and North Las Vegas) = (Number of homes that have been foreclosed and sold back to the bank) – [(number of bank owned homes that have been sold through Las Vegas MLS) + (Number of homes that have been wholesaled or sold through various real estate auctions in Las Vegas)]

Related Website pages: buy Las Vegas homes for sale, buying Las Vegas bank repo homes, short sale homes or fixer upper HUD homes, buying from Las Vegas foreclosure real estate auctions

Social networking: Las Vegas homes, condos and commercial real estate page on Facebook

Even though I feel selfish for asking for prayer in today’s disastrous environment, I am a shameless beggar for prayers and would appreciate some since I have been having a lot of trouble with my back and neck lately.

I will finish the series about shadow inventory homes in Las Vegas next.

About 280-290 of 1228 of luxury hotel condos at Trump international, Las Vegas have been sold so far and even though Las Vegas high rise condo for sale market has shown some sign of improvement in sales by 7 percentage points in the third quarter, Trump Hotel condo tower has had little activity last quarter.

 So far Trump Towers was competing with resale Signature at MGM Grand Residence condos and Palm Place, addition of CityCenter Hotel Condos has put additional pressure on Trump’s pricing. Las Vegas MLS pricing for resale Trump International condos were tens of thousands of dollars cheaper than the builder’s pricing and this contributed to slow sales activity.

Trump International Hotel Condo Tower is located by Fashion Show Mall on the Las Vegas Strip

Well, Trump reacted by cutting prices and doing a condo sale.

Price cuts at Trump International Hotel in Las Vegas

While original pricings belonged to a mirage economy which did not exist, current pricing and especially sales prices should help Trump Hotel in Las Vegas sell a few more condominiums.

Trump International Hotel Condo Tower Lobby in Las Vegas, Trump condos are for sale at 60%-70% off original prices

I am revamping the web-site Las Vegas homes, condos, land and commercial real estate and the blog posts which I am doing lately are designed to be incorporated in the web-site. This blog post will be included in a series of blog posts that I am going to do about Trump Tower condos for sale in Las Vegas.

By the way, in the web-site page for Las Vegas high rise condos, I have put a big “Don’t Buy” for hotel condos, NO LONGER and the reason is evident, look at the original pricing, I knew today will come and believe that these luxury hotel condos are a good buy if you know what you are doing.

Currently there aren’t any bank-owned (foreclosed) homes that can be purchased directly from the banks in bulk at wholesale prices in the Las Vegas Valley. However, some investors who have previously purchased homes or condominiums from the Trustee sale auction do have a few homes which they have bundled together for sale to investors. Some of the wholesale homes have been fixed and rented and they are selling them as investment properties, which is fine and good. Except for:

These are not the bulk sales which investors call us about. When Las Vegas real estate investors call about bulk sales, they are asking for 15%-30% or more discounts which these do not provide.

The reason is lack of foreclosure (bank owned) homes or condominiums inventory. Currently we have 10132 homes, condominiums and townhomes which are listed in Las Vegas, Henderson and North Las Vegas, only 1927 of these are bank owned.

The table above shows why we don’t have any homes for sale sales in bulk in Las Vegas at wholesale prices. Just look at the numbers above and notice the fact that these homes closed escrow or recorded in less than 30 days since most are cash deals. Bulk sale buyers usually look for homes or condos that are priced below $100,000 and most prefer properties that are priced below $50,000 and there they run into the most competitive real estate segment of the market.

Now why would banks wholesale properties that sell for cash at 109% of the asking price? A quick look at homes and condos that are sold for $50,000-$100,000 tells the same story.

At this time the only way to get wholesale prices for Las Vegas homes and condos, as well as land and commercial properties is to buy them from the Trustee sale auction or foreclosure auction one by one.

Some new home builders have gone bankrupt and have lost the improved parcels which they were planning to build. This makes it possible to buy these individual parcels in the same subdivision in bulk.

Related Website pages: Las Vegas residential real estate for sale, Las Vegas real estate auctions

Please visit my Facebook page for the Las Vegas homes, condos, land and commercial real estate and also a Masoud’s MySpace and feel free to add me as a friend.

The most important duty of a Las Vegas Realtor or real estate agent is to put a correct selling price on the Las Vegas real estate for sale. If the property is priced too low, the market will correct this, there are many examples of homes or condominiums which have sold for tens of thousands above asking price. If the property is priced unreasonably high, the property will not sell because it will NOT be shown by other real estate agents.

Pricing a property correctly is different from hoping for a sucker to show up and buy their home, condo or commercial property; as these suckers lost all they had in the last crash, they are not showing up.

Before putting an asking price on a property the Realtor or real estate agent should look at COMPS. COMPS are calculated based on similar properties which are located in immediate area and have sold within 1month to one year depending on the market conditions. In Las Vegas residential properties, 3-6 month is good for lower price homes or condominiums since pricing have been flat lately.

Asking prices in your area are NOT COMPS, only selling prices are.

The other factor is the important momentum or market trends, if prices are dropping like a rock, then the asking price should be lower than COMPS.

Those who want to sell their Las Vegas homes should make their real estate agent explain about how they have arrived at the asking price, the same goes for those who want to sell their Las Vegas condos.

Finding a home for the Rabbi who is relocating to Las Vegas

A New York Rabbi who wanted to relocate to Las Vegas called me and told me that he is working with a well known Realtor in Las Vegas and was thinking about making an offer on the same Realtor’s listing.

The Rabbi was smart enough to know that the same Realtor should NOT do both sides of the real estate deal (Dual agency) since the same Realtor would make two commissions while representing no one.

The Rabbi, being a man of faith, warned me about wanting to go on with the same Realtor and that he wanted my help for this one home only. The home in question was a custom home in one of the Las Vegas master planned communities. Custom homes are more difficult to do comps for than tract homes since tract homes look pretty much alike except for a variation in lot size and upgrades which can be easily calculated to figure comps. This is not true with custom built homes.

I am very familiar with the master planned community in question, and the home that our Rabbi was thinking about making an offer on, is NOT one of the best or highly upgraded homes in the community. I pulled all the homes in the community that have sold in the last 360 days prior and the highest price per square foot was $170 per square foot. The asking price for the home the Rabbi was considering to buy was $45-$50 more than the highest sold price per square foot.

Absolute upper limit on the Rabbi’s desired home

I multiplied the square footage of the home with $170 per square foot and told Rabbi the same thing that this is the absolute highest of a price range, depending how badly he wanted this house.

The absolute upper limit on the price of the home was more than $150,000 below the asking price and at the low end, which was far more reasonable, was $220,000 lower than asking price.

Needless to say the deal never worked, however about a few weeks I heard back from the Rabbi and he wanted to switch Realtors and we are helping him at the moment.

This is 2010, not 2007 and we are in our third year of price corrections. You would think that some sellers and their real estate agents have come to understand this, NOT.

Listing Las Vegas for NOT selling them never made sense to me. The Realtor can show prospective clients how many listings they have, but the seller gets nothing out of his/her effort.

Las Vegas, Henderson and North Las Vegas real estate sellers should ask their Realtor how quick he/she sells his/her listings, rather than how many listings they have. Except that these Realtors often re-list their listings in order to cut down on their time on the market. I have found a very good blog post that discusses this issue from another point of view Unscrupulous Listing Practice?

Related Website pages: Sell Las Vegas homes, sell Las Vegas condos, sell Las Vegas commercial real estate

 Visit my Face Book page for the Las Vegas homes, condos, land and commercial real estate and also a Masoud’s My Space. Although these pages are a work in progress, please feel free to add me as a friend.

Make sure that invite a veteran to your home for Memorial Day. We are having my very good friend and ex-customer Chief Master Sergeant Frank and his family over today.

On the other hand, 9640 residential and commercial properties have been foreclosed on in the same period and 2527 properties were sold to the third in the trustee sale for the total of 12167. The total number of foreclosed properties in the same period in 2009 was 13,100.

Given that the total number of bank owned homes, condominiums and townhomes which are currently listed in the Greater Las Vegas MLS and not under contract is 1929, the number of foreclosed homes this year should not affect or change our housing market drastically. The total number of listings which are not under contract is 10120.

Total inventory of homes for sale in Las Vegas is 8040, 1450 are Repos, 3335 are short sales and 3255 are regular arm length listings.

 The number of condominiums that are not under contract is 1312, only 339 are foreclosures, 589 are short sales and 414 are regular sale listings.

We currently have 719 town home listings in Las Vegas which are not under contract, 141 are bank owned, 309 are short sales and 269 are regular sales.

The vast majority of bank owned condos, homes and townhomes are priced under $300,000. Only 84 bank owned residential properties are priced above $300,000, while the total inventory for this segment is 1832. As you can see the effect of 84 foreclosures on 1832 listings would be negligible.

Despite Federal Governments programs such as HAFA and others, the short sale market has not changed.  Nothing has become stream lined and making an offer on short sales which we seem to be moving toward is fraught with long waits and uncertainty.

 I have also set up a Face Book page for the Las Vegas homes, condos, land and commercial real estate and also a Masoud’s My Space. Although these pages are a work in progress, please feel free to add me as a friend.

Related web site links: Las Vegas homes, condos and commercial properties, Las Vegas homes for sale, Las Vegas condos for sale, Las Vegas residential real estate news

The following is Case-Shiller® Housing Price Index: January 1987 to May 2009 and shows the median price for homes in Las Vegas, a ten city composite of other major cities in US, and the flat line is the median price of homes if things would have progressed normally. The composite city graph has stayed above the normal median price while Las Vegas home prices have overcorrected and is about $20,000 or about 18% undervalued.

For those who wonder what happened after April-2009 which is shown in the graph, the graph would show a near flat line with a little spike at the end as Las Vegas median prices have gone up.

Now, Las Vegas homes that are purchased correctly can return 7% plus cash on cash return on the investors money, plus future appreciation.

However, the biggest number is that;

while only 11% of Las Vegas residents could afford to buy a home at the median price in 2006, 70% of Las Vegans could afford a home at the median price now.

Las Vegas is the most affordable city in United States again and a retirement heaven since retirees who relocate here don’t have to look for a job in Las Vegas.

Now let’s go over the investors other choices.

1: Stock market. The darn thing is starting to jump up and down like a beheaded hen. If you like to gamble, stocks are for you.

2: Gold prices at record highs. Again, these act Sinusoidally and the valley is coming after the peaks.

3: CD’s at 1.5% interest doesn’t cover inflation.

Now you see why investing in Las Vegas homes and condos is a sound and low risk investment that will return far more than buying a “Safe CD”.

Case closed.

Let me know who you are by becoming my friend on my Las Vegas real estate  page on Facebook or Masoud’s MySpace page.

MGM Grand Signature condos for sale in Las Vegas, MLS pricing VS foreclosure auction pricing part one

Signature at MGM Grand condos, invest in the Las Vegas high rise condominiums, part last

I have discussed MLS pricing in Las Vegas for one bedroom condos at MGM Grand, here is the blog post about studios or junior suites. MGM Grand studios sleep four people, but in one room and the kitchens are much smaller than in the one bedroom suites.

MGM Grand Signature studio condos pricing

Studio condominiums at MGM Grand have been selling through Las Vegas MLS for $130,000-$201,000. Again, higher floor units with the Las Vegas Boulevard views sell for more than lower floor condominiums. However, whoever paid $210,000 for the penthouse unit has overpaid about $30,000, the asking price for this condo was $137,000. Lower mountain view condominiums sell for $130,000-$150,000 and the Strip view condos sell for $150,000-$201,000.

Similar condos in the foreclosure auction have sold for about $20,000-$35,000 less than MLS prices. There will not be much of a saving for lower floor mountain view condos but a 32^nd floor Strip view condo has sold for $145,000 in the foreclosure auction while a 33^rd floor condo sold for $175,000 and another on the 36^th floor for $201,000.

How a Las Vegas real estate investor wants to buy a MGM Grand Residence condo depends on their preference as there are all the good things about a MLS transaction like escrow and title insurance and inspecting the property before one closes escrow, but real savings can be gained through buying these condos through Trustee sale auction (Foreclosure auction) in Las Vegas.

I would love it if you would let me know who you are by becoming my friend on my Las Vegas real estate  page on Facebook or Masoud’s MySpace.