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.

1: Las Vegas short sale home seller DOESN’T have to be behind in paying their mortgage.

2: No offer is needed to start the short sale process, listing a home or condo is enough. This will prevent ridiculously low asking prices so the listing agent would get an offer on the home before starting the short sale process.

3: The listing agent doesn’t have to waste a great deal of time trying to locate and open communication with an asset manager.

4: A short sale manager will contact the seller if necessary, the Realtor can be present when the short sale manger is interviewing the seller. This is awfully cool since the Realtor should be familiar with and bring up the issue of specific performance and try to get the seller out of hot water, if at all possible.

While I am on the specific performance issue, the asset manager said that he is not aware of anyone going after the short sale home seller for the first mortgage, but if a second mortgage is involved, it is sold to the type of people who have no conscience and would barbeque their own mother and eat her if there was any money in it. I am not kidding you.

5: If an offer is made on the property, the listing agent will e-mail the contract to the short sale manager which will review the contract and order and order an appraisal, NOT a BPO (broker price opinion). Unfortunately we run into low appraisals since if a home really appraises for $20,000 over the sale price the appraisal will come in at $1,000 over. Banks can obtain an appraisal from 150 mile radius of the property. Some appraisals in Las Vegas are done by appraisers in Bakersfield, California who are clueless. Wachovia will negotiate differences between their own appraisal and buyer’s appraisal that is mandated if the buyer has to obtain a loan.

6: It should take 6-10 days to obtain a bank approval for the short sale.

7: The Wachovia Short sale seller DOESN’T have to be an owner occupier. Las Vegas real estate investors are eligible to take advantage of the short sale process

8: If there is a second mortgage involved, Wachovia will try to settle the second mortgage with the lender. If a second mortgage can be settled they can close the deal in 45 days or less.

Related blog posts:

Foreclosure, Short Sale or Deed in Lieu? Which one will do less harm to your credit?

Foreclosure, Short Sale or Deed in Lieu? Which one will do less harm to your credit history? Part 2, Las Vegas short sales

Foreclosure, Short Sale or Deed in Lieu? Which one will do less harm to your credit?

Related Web-Site links:

Las Vegas short sale homes or condos for sale

 Las Vegas foreclosed homes or condos for sale

 Las Vegas homes or condos for sale

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.

Our buddies at Neighborhood Housing Services of Southern Nevada have located other sources of funding for Wish Funds that is administered by the Nevada, HUD. Wish Fund is the 3 to 1 matching down payment program for Nevada first time home buyers.  I will reproduce Michelle Villero’s e-mail below, she is Homeownership Director.

Good Morning Partnering Agents,

GREAT NEWS!  We just received additional WISH Funds.  The catch with these funds is that it is Lender Specific.  If you have clients who are interested in going through the program for WISH please let us know and we will give you the specifics on who to contact. 

Please keep in mind that funds are first come, first serve basis.  Remind your clients that the only way to reserve these funds is to have a fully executed contract.  Clients will still have to attend an (8) hour Homebuyer Class with a HUD certified housing counseling agency and also meet with one of our housing counselors to determine eligibility.

Well, Las Vegas, Henderson and North Las Vegas, Nevada first time home buyers call us before it before it runs out.

I received an e-mail from the charismatic Michelle Villero, home ownership director for Neighborhood Housing Services of Southern Nevada that states they are out of money for the Wish Funds program until they receive additional funding, and believe me these people would look as hard as any.

So, if you are a first time home buyer and were planning on using the Wish Funds for you down payment, you have to wait.

I have explained Nevada first time home buyer down payment and mortgage assistance in the web-site so you can look for other resources to help you with your home deal.

By the way, in order to get the assistance, you have to be represented by a Las Vegas Realtor and mortgage loan officer who has been approved to do these deals and we are.

While Las Vegas home or condominium sellers no longer accept an offer that is not accompanied by a pre-approval, getting  pre-approved is easy as the borrower doesn’t have to prove income or taxes which they have to prove when getting a loan.

The days of no doc loans are over and the lenders check on everything, if there is a discrepancy between the tax return and information submitted by the borrower, the deal is as good as dead. We have lost a deal and are in process of losing another one, while our clients have perfect credit. Saving real estate deals when problems as this arise is very difficult, we have exchanged four hundred e-mails in an attempt to save this deal however the odds are not good. Escrow problems are the best reason to have a Las Vegas Realtor involved in your deal. If it wasn’t for Realtors trying to keep this deal alive on both sides, this deal was dead long ago.

I have repeatedly written about getting under-written approved before buying a home or condo and have never met a buyer who has actually done this, doing so would avoid all financing problems and get the borrower the advantages that a cash buyer has.

If you, like everyone else will not get underwritten approved, at least make sure you tax returns match the information in your mortgage application before buying a home or condo in Las Vegas.

Another issue that is affecting borrowers is, believe it or not, pregnant borrowers. National news sites are reporting that banks are inquiring about the pregnancy of couples, given that it may influence their ability to pay the loan back.

Social networking: Las Vegas homes, condos and commercial real estate page on Facebook, Web-Site: Las Vegas homes, condominiums, land and commercial real estate for sale.

By the way, lenders are checking on homes or condominiums to make sure they are owner occupied when you get the loan as an owner occupied loan. A couple of clients who purchased homes at Seven Hills in Henderson told me that someone knocked on their doors and verified that the home was owner occupied.

Here is where home or condo buyers have to do their due diligence, find a good real estate agent and loan officer and then stand back and let these people do their thing while asking questions at all times. Good Realtors and loan officers are not afraid of questions, they thrive on them since they can show off their knowledge. Las Vegas real estate buyers should search the internet for a good and knowledgeable real estate agent and lenders, Google their name and ask questions to test their knowledge. The same should be done with a loan officer, however diligence in shopping for a good interest rate and loan origination costs have to be exercised.

This is the second time that our clients who have impeccable credit and meet all requirements to get a loan from any lending institution in the country have run into complications due to an incompetent mortgage officer. Let me tell you how they picked their mortgage officer. They went to their bank to get a mortgage; the bank does not issue mortgages in Las Vegas, so their bank branch referred them to a former employee who now works part time as a lender to do their mortgage and this guy has no idea what he is doing. This is NOT the way to pick a loan officer. We did not find this out until we started having problems with getting things done. We always offer to send you several lenders contacts for you to check with that we have had good success with.

We have nothing to do with getting a mortgage, however if we see warning signs, we talk to our clients about it. If it takes more than 3 weeks to obtain an appraisal, something is wrong. If your mortgage officer takes 4 weeks to inform you of under writer requirements, something is wrong. We repeatedly warned our clients about this guy, but you can’t change horses in the middle of the race and we are stuck with the guy. The close of escrow is coming up and we are nowhere, our clients are distressed and unhappy. We have done everything in our power to rectify the problems, and they keep coming because I think the mortgage officer is learning on the job.

All these problems are due to our clients not doing their due diligence to pick their mortgage officer.  The reason that I keep writing that you should get your finances straight before you look at a single home or condo for sale in Las Vegas is to save you much unneeded headaches, when all chips are down and close of escrow is coming.

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

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.

So far I have explained HomePath financing that Fannie Mae allows for their foreclosed homes, condos and high rise condominiums for owner occupied home and condo buyers, but this is not all you can do.

The best way for an owner occupied Las Vegas home or condo buyer to make money to help with the mortgage is to buy a Las Vegas duplex or fourplex, live in one condo unit and rent the remaining condos. The other way is to buy a Las Vegas home with a casita and rent the casita or renting individual rooms or some older homes have guest quarters which can be rented but these are more expensive and not the subject of our discussion.. Most fourplexes and duplexes in Las Vegas are in older neighborhoods and need repairs done. These condo buildings will not qualify for a mortgage since they will not appraise before repairs are completed, thus cash buyers are the only candidates to buy them. NO MORE.

Buying  Las Vegas Fourplexes or Duplexes as owner occupied home and investment property

Las Vegas, Henderson and North Las Vegas condominium buildings with up to 4 condo units is considered a single family residence and can be financed as such. Now owner occupied home or condo buyers can buy more than a one unit home or condo, they can buy a duplex or fourplex in Las Vegas as owner occupied homes and rent one or three condos to gain cash flow to help with the mortgage. This is not cheating and is permitted by the State of Nevada.  

Buying a duplex or four-plex in Las Vegas allows for the low down payment that is specific to owner occupiers which is 3.5% for HomePath Loans for Fannie Mae owned properties.  If repairs are needed then the buyer can finance through the FHA Purchase and Rehab All in One Loan (203K loan) to finance their deal.

Four-plexes can be purchased for as low as $100,000 and the owner can rent three condo units for $500 plus per unit.

Having your renters pay your mortgage for Las Vegas fourplex and put few hundred dollars in your pocket.

EXAMPLE:

This is a hypothetical example and I have used numbers that simplify the example in order to make a point. Repair costs can be $5,000 or $25,000. Let’s say an owner occupied Las Vegas home buyer chooses a fourplex and obtains:

$120,000 mortgage loan from Fannie Mae at 6% interest rate

Spends $11,600 to fix the condominium units, Repair costs =$11,600

Pays 7% for mortgage origination and closing costs = $8400

Total out of pocket cost to buy and repair a Las Vegas fourplex= $20,000

Mortgage interest payment and $500 per month for other costs (taxes, vacancy, etc)= $720+$500=$1120 monthly payments.

Condos in the areas that these duplexes and fourplexes are located rent for $550-$750 and $600 per month is a conservative estimate. Renting three condos in a fourplex provides the owner with $1800 in gross income;

($1800-$1220=$580) net profit and you live in your own home for free. Cash on cash return for this fourplex is $580×12=6960/20,000=35% Cash on Cash return on investment .

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

In the next post I will explain financing Las Vegas real estate investments for Las Vegas real estate investors.

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.

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

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.

Las Vegas short sale home and condo buyers and sellers along with their Realtors can sleep easy tonight since the US senate passed a 90 day extension of the tax credit for short sale deals that have opened escrow by May 31, 2010. Although this bill covers regular sales and foreclosure sales, short sale buyers and sellers are the main beneficiaries due to delays in closing short sale deals. I published a blog post about Horror Stories about closing short sale deals in Las Vegas before tax credit runs out and wrote that an extension may be coming.  Well it is here and I hope that it will help a significant number of Las Vegas short sale buyers and sellers who can close their deal by the new deadline, however I don’t think so.

You have to understand that these deals still have to clear short sale hurdles and get approved by the banks and many will not, as buying a short sale or getting approval to sell one is still full of uncertainties and has not been effectively regulated and I don’t think it will ever be. I guess we will find out what percentage of these deals will be close and it will be way under 50%.

Google Rankings for:

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

The reason for the rise in my blogging activity is that I am making another run at the search engine ranking now that I am coming back to life a bit. Losing my father after a long illness and my own injuries acting up in the last 9 months has kicked the tar out of me. It reflects in my lack of blogging activity and a great drop in Google ranking. All I did was taking care of our clients. You can’t pretty much drop off the face of the earth and win search engine wars. Any ways check this out:

Google ranking for Las Vegas Trustee Sale Auction, 4 links first page

Google ranking for Las Vegas home inventory, 2 links first page

I am doing pretty well in all types of Las Vegas commercial property searches but have a long way to go in Las Vegas homes and condos searches. But watch out in a couple of months.

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

Above short sale definition is different from what Las Vegas real estate investors erroneously ask for, what they mean by buying short sales is getting a good discount on their investment properties and short sale homes or condos are the last thing these investors have in mind.

Many short sale homes deals in Las Vegas, Henderson and North Las Vegas are not closing escrow before June-30^th, when the tax credit runs out and this is taking a toll on the Realtors who are involved. There are many pitfalls in an unapproved short sale transaction and if one arises, the closing of escrow will be delayed.  Some of these problems can be issues which a Las Vegas Realtor may have no control over or be outside of the Realtor’s duties or expertise.

This is a true story;

 When a real estate agent or Las Vegas Realtor lists a home for sale, they ask for a preliminary title that shows all the liens that affect the home such as First Trust Deed (First mortgage), second or any other liens which affect the title on the home. A Las Vegas Realtor made an offer on a home which was listed in October-2009 and reviewed the preliminary title and passed it to the buyer for approval.  Meanwhile other entities that had work done on the home became aware that the seller is in financial trouble and in order to protect themselves, put liens on the home which were recorded after the preliminary title was done. Come closing time, a significant lien shows up and screws up the deal which is NOT going to close by June-30^th, no tax credit for the buyer and the poor Realtor which is absolutely not at fault seems to have been hit by a 16 wheeler.

Other problems arise from the short sale home seller backing out of the deal in last minute since the bank rejected his proposal to forgo deficiency Judgment, forcing the seller into bankruptcy and foreclosure. Unapproved short sales are like going to Everest, STUFF happens on Everest; you don’t want to deal with it, don’t go there.

No headaches here. We discouraged our customers from making an offer on Las Vegas short sale homes or condos which are not approved short sales. When we had to make offers on short sales due to customer’s insistence, I told them to make the offer and forget that they ever made an offer on this short sale home and pursue other properties, both ended up buying bank owned home long before we heard from the bank on their short sale offers.

 We don’t do what we can’t do well and would refer these cases to agents that excel in that particular field.  I didn’t pursue listing short sale homes or condos in Las Vegas for sale due to my dislike of banks which I blame for the crash. Instead I found Las Vegas Realtors who specialize and excel in listing and selling short sales and refer those who call me to them.

At any rate, I hear that people are discussing a three month extension of tax credit for those buyers who opened escrow by May 31, 2010, however failed to close by the deadline.

I believe that the Federal Government and Congress made a big mistake by not extending the tax credit which was costing 10-15 billion dollars when they borrow 1000 billion dollars a year.  As a serious drop in the number of Las Vegas homes and condos which enter and close escrow is coming.

Related Website pages: buy Las Vegas homes for sale, sell Las Vegas, Henderson homes, Sell Las Vegas, North Las Vegas or Henderson condos

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

Lastly; doing a short sale deal in Las Vegas is not easier or less complicated now than it was a year ago, however I hear that banks are trying hard to streamline the process. I will believe it when I see it.

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.

There is a disconnect between the asking prices for Las Vegas homes, condominiums, land and commercial properties for sale and sold Comps, which is our current reality.

Much of Las Vegas real estate is divided into master planned communities, such as Summerlin, Anthem, Aliante, in North Las Vegas, or Desert Shores. These master planned communities contain many subdivisions which in turn contain many different home and condominium models with varying lot size and square footages. Some of the homes that are built in these Las Vegas communities are custom built homes.

I tell my customers to only look at price per square foot while looking at homes or condominiums in Las Vegas, as this is the only number that all homes and condominiums have in common.

Price per square foot tells the buyer how much bang for the buck they get. As a rule for track homes, the bigger the square footage, the lower price per square foot, however this rule doesn’t work for highly upgraded, luxurious custom homes in Las Vegas.

I am starting to see asking prices that are $50 or more than the highest price per square foot that have been sold in the whole community in the last year and these homes are NOT the best or highly upgraded homes which sold last year.

I am often bewildered about what people think. If you want to sell your Las Vegas home, why price it so unrealistically to make a deal impossible. If the seller doesn’t want to sell the home, why list it?

Any Las Vegas Realtor who is not a waste of oxygen can figure out that these homes are severely overpriced. Why list them when other fellow Las Vegas Realtors would not even show the listing. I afraid that the Realtors motivation is selfish, he wants to show other sellers how many listings he/she has in order to impress the seller so the Realtor can get other listings. At this point the Las Vegas Realtor is no longer working for the seller. He/she is serving themselves.

Pitfalls of unrealistic pricing for Las Vegas homes and condos for sale

Now let’s go a step forward and assume that an unrepresented home buyer is foolish enough to make an offer on these overpriced home. Then we have one of two cases.

1: The buyer wants to finance his Las Vegas home deal. In this case the bank would require an appraisal, and given our current trouble with low appraisals, the appraisal will come tens of thousands of dollars short of the agreed amount. In this case the deal will go down for sure and all parties involved in the deal have wasted time and money.

2: The buyer is a cash buyer. Well, no appraisal is needed now. However those who would buy a home for hundreds of thousands of dollars will comparison shop and as a result avoid these overpriced homes or if making an offer, will have an appraisal as a contingency.

The measure of Realtors is not how many listing he/she has; it is how quick they sell the listing.

I will explain this through an example in the next blog post.

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.

I didn’t blame the banks a bit either, since Murphy’s Law rules apply and things that should not be there to go wrong appear from nowhere and kill the deal during the escrow.

One good example is stupid appraisals and I have seen many. On one of my deals the inept appraiser actually picked a zero lot home(homes that are separated by 5 feet from the neighboring home) that was backing to the highway as a comp for my listing which had a large yard and unequalled views of Las Vegas. This appraiser who had over a decade of experience doing appraisals in Las Vegas could not answer the following question from me. “In what universe is this zero lot home a comp for my listing?” However the bank relies on the same stupid appraisal and the deal nearly got killed. Stuff happens.

The exception to this rule was Fannie Mae. They started giving owner occupiers the “First Look” at their foreclosures. This means that investors could not bid on Fannie Mae properties for the first 15 days.  Additionally, Fannie Mae started to crack down on their REO agents. The head of Fannie Mae in Las Vegas has given us his cell phone number and e-mail so if we don’t get an acknowledgment for the receipt of our offer and quick action on good offers, we could contact him directly and this is a very refreshing change from the wild, wild west of foreclosures from other banks.

At any rate beginning May 3, Fannie Mae will extend the waiting time investors in Nevada must wait before offering a bid on an REO property from 15 days to 30. If the home doesn’t sell, they will withdraw it and re-list it for 15 days. This will effectively remove Fannie Mae owned homes from the homes that are available for investors to bid on.

Since more than 60% of homes that were listed in Las Vegas sold in less than 30 days and 40% have been bought with cash; Fannie Mae’s action should help increase the price for bank owned investor homes and level the playing field for owner occupied buyers in Las Vegas.

All-cash, owner-occupant purchases will require certification as an addition to the Fannie Mae purchase addendum.

How much effect will Fannie Mae’s action will have on the real estate market in Las Vegas at this time is unknown as we only have about 1234 bank owned homes that have not gone under contract yet. And 1234 bank owned homes have negligible effect in our current market as many are priced like regular sales.

The amounts of Mortgage Backed Securities the Fed is purchasing are slowly dwindling and should   end by March 31st, and they are clearly trying to ration out the remaining portion.

Last week, the Fed bought $11 Billion in Mortgage Backed Securities, which leaves them with $66 Billion to spend out of their original $1.25 Trillion allotment.

 As you can see 95% of the $1,250,000,000,000 (zeros eventually add up) has already been spent. This means that The Fed purchased the mortgage for about 3 out of every 4 home loans during the past year. When such a large buyer leaves the market, it is very likely that prices will worsen.

It is all about risk management and the banks which sold these mortgages had virtually no risk since they bundled their loans and sold it to the Fed. Banks made free money, however now they have to sell their mortgages to investors or keep it and the banks are not in the business of keeping mortgages themselves any longer. You want proof, one of our clients who had about a large sum of money in an IRA account and flawless credit who wanted to get a mortgage on his purchase precisely because of inflation could not get a loan to buy a condo in Las Vegas because his loan could not be sold to the Fed. He eventually got the loan when he threatened to sue the bank where he had his IRA money for denying his loan.

Given that the Fed has less money to last through the remaining months of the program, their ability to keep home loan rates low via their purchasing power, will wane.

 Those who can take advantage of currently low home loan rates should not wait, since the clock on these historically low rates is ticking.

Those who need to finance their Las Vegas home or condominium purchase while foolishly waiting for the bottom, are missing the freight train of high interest rate which will negate any further price decline.

I would love it if you let me know who you are by adding my Las Vegas real estate page on Face Book or Masoud’s My Space Page as a friend.

Las Vegas Real Estate Market Report 2009-2010, regular sales, short sales and foreclosure sales Part Two

The total number of residential real estate properties which have sold through the Las Vegas MLS in Clark County was 46,879 in 2009. and despite all of the false warnings about the tsunami of foreclosure real estate (both commercial and residential and vacant land) the total number of foreclosed properties that were foreclosed and went back to the bank was 30,788 in 2009, while the total number of foreclosures homes, townhomes and condominiums sold through the Las Vegas MLS was 31,445. Over 4000 properties were sold to a third party in a  Las Vegas foreclosure auction.

I have also repeatedly written that price stability for residential real estate in the Greater Las Vegas Valley is directly proportional to the number foreclosed residences that go back to the bank and end up in the Las Vegas MLS, minus the number of foreclosed residential real estate sold through Las Vegas MLS. This number is (-645) and you see the effect of this negative number on our current inventory of homes, town homes and condominiums in the Las Vegas MLS. And as for pricing, we have not seen any price drops for similar properties (COMPS), this is due to lack of excess foreclosure inventory that put downward pressure on the pricing for the market. I don’t care what the meaningless median sales numbers are.

Future residential real estate pricing in 2010 is not only dependent on the number of future foreclosures, it is dependent on the US Governments policy. Currently, the Federal Government is buying mortgages from the banks, this has kept interest rates down, and the tax credit has had a positive effect on our real estate market. Any predictions of future pricing have to take these factors into account and changes in these policies would negate any predictions.

I do not have a crystal ball. If I had, I would win a few million dollars and do a really nice good bye blog for you. However, I have explained how I analyze the Las Vegas real estate market and these numbers tell me the pricing will be flat in the current year, at least no significant price declines in the horizon.

We probably have about 50,000-75,000 which will be foreclosed in the future, however don’t look for more than 25,000 foreclosures to hit Las Vegas MLS per year, and as I have shown in this series of blogs, 25,000 foreclosures per year will not force large price drops. All I see this year is flat pricing and in 3-5 years the number of foreclosed properties in Las Vegas should become nominal and no longer affect the Las Vegas real estate market.

I would love it if you let me know who you are by adding my Masoud’s Face Book or Masoud’s My Space Page as a friend.

I am only discussing the real estate market in the Greater Las Vegas Valley and not all of Clark County which most of the MLS numbers are based on and will only discuss deals that involved the Las Vegas MLS and not for sale by owner or auction numbers.

I am reproducing the table below so we can analyze it a bit further.

Greater Las Vegas (Las Vegas, Henderson, North Las Vegas, Boulder City and Unincorporated Clark County Homes, condominiums and Townhomes sold in 2009 by price range and type

As you can see the bulk of residential real estate deals in Las Vegas have been for properties that have sold for less than $200,000 (79.5%) and homes, condos and townhomes which sold for $100,000-$200,000 (43.5%) dominate other price ranges.

Las Vegas, Henderson and North Las Vegas short sales transactions 2009-2010

1932 reo, 4851 short sale and 3793 regular sales residences are currently listed in Las Vegas MLS. Throughout the year, the number of short sale homes, condos and townhomes in Las Vegas fluctuates around 2-4 times the number of the REOS or bank owned homes. The percentage of short sale transactions to foreclosures is almost 16% or 1/6. If one multiplies the two numbers, 1/6×1/2=1/12 or 8.5% is the chance of making an offer and successfully closing on a short sale deal as compared to a foreclosure. This is precisely why we don’t usually show short sales unless they are approved (the bank has already accepted a price to sell the property).

The reason for short sales not closing escrow is that it may take more than 6 months to get a short sale approved and most buyers are not willing to wait so long to get an uncertain answer from the bank. The second reason is that the short sale process starts with an offer and some Las Vegas Realtors put an unreasonably low price on their listings in order to procure an offer to get the negotiations started and lastly doing a short sale transaction is a specialized field which requires a special type of Realtor to see the deal through.

We have referred two listings to a competent short sale agent who is the best at listing Las Vegas short sale homes and condos. One closed after 7 months and she is still working on the other deal and she has been working on it for about 10 months.

The other reason that we don’t do short sales is that I know an agent who is far better at it than we would ever be and we refer short sell home sellers to her, as it is in the best interest of our customers to get their deals done by the best.

The other point is that the percentage of closed short sales in Las Vegas goes up when the prices increase. The percentage of Las Vegas short sales homes and condos which sold for $1,000-$50,000 is 5.75% and for homes and condos and townhomes that sold for $500,000-$750,000 increases to 14.78%.

Las Vegas Foreclosure homes, condominiums and townhomes transactions and Regular sales

 The percentage of foreclosed properties goes down as properties become more expensive. Only 218 bank-owned homes, condos and townhomes have sold for more than $500,000 in 2009, while the number of short sales that sold is 100 and regular sales have been 466. The reason is that those who have previously purchased these homes can’t prove hardship which is a requirement for doing a short sale or foreclosures will seriously affect an owner’s credit.

I believe that the table above is self explanatory and those who plan to buy a home, condominium or townhome should take a look at these numbers in order to gain an understanding about what type of home is available in their price range and their chances of getting an offer accepted.

I will discuss Greater Las Vegas real estate market conditions by type next.

I would love it if you let me know who you are by adding my Masoud’s Face Book or Masoud’s My Space Page as a friend.