The next table shows available inventory in the market as of today and the story is tight inventory in the lower price ranges. The third table shows available inventory of Las Vegas homes for sale and foreclosed (bank owned) inventory per month. As you can see the inventory for the homes that are priced less than $250,000 is less than 4 month and foreclosure inventory is less than 1.3 month.

Las Vegas, North Las Vegas, Henderson and Clark County homes sold January, 1st 2010-February 28th, 2010

Current inventory of Las Vegas, North Las Vegas and Henderson homes for sale

 Inventory of Las Vegas, North Las Vegas, Henderson and Clark County homes for sale and foreclosed homes for sale per month

As you can see, one can’t discuss Las Vegas homes market without paying attention to the price range or type of home.  Additionally now perspective Las Vegas home buyers can understand that the lower the price, the harder it is to get an offer accepted. For example for the price range of $50,000-$100,000 which is attractive to Las Vegas real estate investors, there is about 2 month worth of inventory; however, the foreclosure inventory is about 15 days. This is the reason that these bank owned homes get multiple offers and buying them through Las Vegas MLS will requires multiple offers.

On the other hand for the price range of $1,000,000-$2,000,000 there is 41 month worth of inventory and 8 month worth foreclosure inventory. Buying one of these homes is not difficult and one can lowball the initial offer and hope to get the home.

In conclusion, I hope that you understand that Las Vegas is not awash in foreclosures and about one month worth of bank owned homes in Las Vegas do not exert significant downward pressure on the pricing. Additionally in some cases, bank owned homes are priced higher than regular sales, thus, flat pricing this year.

The average price after reduction was $331,589 as of Feb. 1, compared with $393,365 before the reduction, the online real estate firm showed.”

Above is from Las Vegas Review Journal Wednesday, Feb. 21, 2010

Average asking prices for homes for sale in Las Vegas is not and has not been anywhere around $393,000 and has not dropped by $61,000. I believe these may be San Francisco numbers.

I also strongly agree with a couple real estate analysts Dennis Smith and Larry Murphy that we have not seen any price drop for homes that are priced below $250,000 in the last 6 months.

Here is what Mr. Smith says in the same article:

“All I can tell you is look at price per square foot of homes that closed escrow. It’s been consistent for both new and resale for the last seven months,” Smith said. “I don’t know about San Francisco and Indianapolis. I just look at Vegas.”

Same here!

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.

Las Vegas MLS shows 46,879 residences have sold in Clark County in 2009. However, I will only discuss homes, condominiums and townhomes which were sold in the Greater Las Vegas Valley, which includes Las Vegas, Henderson, North Las Vegas, Boulder City and Unincorporated Clark County, which were sold through the Las Vegas MLS. That is, a Las Vegas Realtor was involved in the deal. I have excluded properties which were sold through various auctions or for sale by owner, since the sales through the Las Vegas MLS is the engine that drives the residential real estate market in Las Vegas.

Greater Las Vegas homes, condominiums and townhomes sold in 2009

44,868 homes, condominiums and townhomes sold through the MLS in 2009 in the Greater Las Vegas Valley, of these 32,159 or 71% residences were foreclosures or REOS (real estate owned or bank owned), 5,253 or 12% were short sales and 7,456 or 17% were regular sales.

Clark County home sales numbers are the second highest in history, 18,555 sold in 2007 and 28,618 sold in 2008.

Realtors sold 3,472 single-family homes in Las Vegas in December, a 36.9 percent increase from December 2008, the GLVAR reported. So far Jan-2010 sales numbers are 1648, 949 REO, 350 Short Sales, and 349 regular sales so far. Keep in mind that December-2009 sale numbers were homes that went into escrow in October and November, 2009.

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

Now, we have not seen any price drops for Comps in the last 6 months and there have been about 2680 foreclosed homes, condo and town homes per month sold in the Greater Las Vegas per month. Our current inventory of foreclosed homes is 2,000, which means that we have less than a one month inventory of foreclosed homes at this time.

 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.

More on Las Vegas real estate market in the next blog.

“Two reports showed that more than half of home mortgages are underwater, meaning the owner owes more than the property is worth, according to two reports.”

“Zillow.com reported that 81.8 percent of Las Vegas home borrowers are underwater”

These lines scare the heck out of prospective buyers and make those who were SMART ENOUGH to buy feel bad. So I have decided to go back a few months and see how these predictions and fear mongering worked out by now.

Below are a few headlines from March and May 2009

“REAL ESTATE: Loan delinquencies soar for Nevadans, Nevadans behind on mortgage payments push state to top of national list

About one in eight Nevadans is now behind on their residential mortgage, new data from the Mortgage Bankers Association show. It’s probably an indication that more foreclosures are on the way for Nevada, which ranks first nationally in mortgage delinquencies and first in foreclosures started in the first quarter.

RealtyTrac showed Nevada foreclosure activity was down 18 percent in April from the previous month, but increased 111 percent from a year ago.” Las Vegas Review Journal May 29, 09

“The first-quarter total of 13,642 is on pace to shatter last year’s record 31,416 foreclosures for 2008 in Clark County, Sacramento, Calif.-based Foreclosures.com reported.” LVRJ April 17^th, 2009

What would a reader expect to happen by now, a big increase in the number of homes that are foreclosed and put on the market by the lender? Well this is not what happened in reality.

Actually the number of properties that have been foreclosed by the lender in Las Vegas Valley which went to the bank is lower in 2009 than 2008.

2008 Foreclosed properties that went to the lender 31,146

2009 Foreclosed properties that went to the lender by Dec-7^th 28,189

The most important factor in Las Vegas residential real estate market,

I will repeat one more time. The most important factor in Las Vegas residential real estate market is:

The number of properties that are foreclosed by the bank that go back to the bank versus the number bank owned properties which are sold through Las Vegas MLS every month.

If the number of monthly foreclosures is greater than the number of bank owned properties sold through MLS then prices will go down. If they are nearly equal, we have stable pricing and if more sell on MLS than are foreclosed then we will have rising prices.

No more, no less.

Now let’s look at these numbers for the last month and last three months.

As you can see, 8165 Residential properties have sold through Las Vegas MLS while 6417 have been foreclosed and went back to the bank.

It is easy to scare people to gain publicity or sell newspapers, however if one looks back six or nine months, it is easy to see that a 110% increase in number of foreclosures not only did not materialize, it actually went down. However, the biggest asset a stupid analyst or a site like forclosure.com has is a short memory.

In conclusion, I have been doing a bit of fear mongering myself about the impending tsunami of commercial real estate foreclosures which should have been well underway by now, it is not materializing either, but more on this later.

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

Now real estate news articles only discuss the median price and I keep writing that median price does not provide any useful information about the market. Below is why.

Median is a mathematical term that indicates that one half of a set of numbers is higher and one half lower. For example if 101 homes sell in a given area and we order the price in ascending order, then the price of the 50^th home would be the median price since 50 homes are priced higher and 50 homes priced lower.

Average price is different and is calculated by totaling the sales prices of all houses sold in an area and dividing that number by the number of homes. To explain this a bit better, let’s say that we have sold 11 homes that are priced at:

$10,000, $30,000, $30,000, $40,000, $45,000, $70,000, $75,000, $76,000, $90,000, $100,000, $100,000

The median price for these homes would be $70,000 since five homes have sold for more and five homes have sold for less.

Now imagine that the prices above have increased by $5,000 for each home. However instead of selling a $70,000 property we sold one for $55,000. The new sale prices are:

$15,000, 35,000, 35,000, 45,000, 45,000, 55,000, 80,000, 81,000, 85,000, 95,000,105,000, $105,000

Even though we have increased prices by $5,000, the median price has decreased by $15,000. Now this is an extreme example due to the small sampling of numbers but it proves how useless median numbers are when discussing real estate market or direction.

Related web site pages: Las Vegas real estate for sale, Las Vega real estate market report

As for the real estate market here, the mad rush to buy a home for the $8,000 tax credit has subsided and the market has cooled down some. We have even low balled the banks for a couple of homes for sale for $340,000 in Seven Hills in Henderson and it worked, we are getting a lot of offers in all price ranges accepted and I am happy about this. We tried very hard to protect our customers from making unreasonable offers and succeeded, all our offers have appraised so far. I have repeatedly written that the best time to buy real estate in Las Vegas will be mid November to January 1^st. Here is why:

1: The rush on homes or condos that will satisfy the new tax credit extension will intensify as we get closer to the June deadline and by that time we will have more than 9 months of stable pricing which will bring more conservative investors to the market.

2: A big part of getting a good deal is timing and I am not talking about timing the bottom of the market, I am taking about buying when others are busy planning for Thanksgiving and Christmas, November and December are traditionally slow times in real estate.

As for me, last month was one to forget and I am recovering from severe back and neck problems. I am starting to feel better now and hopefully will blog more frequently.

I repeat again, now is the time to buy real estate in Las Vegas.

I told our California ladies that they should pay particular attention to the price per square foot while looking at the homes that we showed them in Henderson, Green Valley and Seven Hills since this is the only way to compare between several different homes with varying square footage, lot size and locations.

The largest home was a 4100 square foot, 2005, highly upgraded two story home in South East Las Vegas around Boulder Highway that was selling for about $77 per square foot and the smallest was a 2547 square foot, 1998 built home at $110 per square foot in Seven Hills. I have used these two properties to show that when one gets away from the green and mature areas like Anthem Country Club or Seven Hills and goes inside the town, the homes get newer, more upgraded and larger.

We showed these ladies all kind of homes with different levels of upgrades and floor plans and one chose a home in Seven Hills that we made an offer on; we are still looking for the other lady.

Investors have to understand that newer homes in choice locations are hard to come by and homes that are built after 2003 on should be considered as newer homes as we have not had a lot of new home construction in Las Vegas or Henderson. Actually this month was one of the best months and the new home builders in Greater Las Vegas have sold only 400 homes.

One last note; these ladies wanted to go much higher in price and I talked them out of it. The reason was that my buyers can buy really nice homes for less than $400,000 anywhere in Las Vegas. These homes used to sell for twice as much only 2-4 years ago. The other issue is that a buyer makes or loses money when she/he buys a home and not when they want to sell it.

One should think about how many high paying jobs will be added in Las Vegas or Henderson in order to produce future buyers for an expensive home and there will be many. Additionally the more expensive a home, the harder it is to rent, the less the cash flow and longer time on the market.

NOBLE PEACE PRIZE FOR THE GREAT MAHATMA GANDHI

Many of these Southern California home buyers prefer more mature and green areas like Seven Hills, Anthem Country Club, Green Valley, Summerlin or golf communities like Rhode’s Ranch, Tuscany or Summerlin Village and have the money to pay for the more expensive homes. An issue that comes up frequently with out of town buyers is that even if they have visited Las Vegas multiple times for vacation, all they see is the Strip (Las Vegas Boulevard) or downtown Las Vegas. These buyers are not familiar with pricing versus location in different areas so we take it upon ourselves to show them homes that we think match them criteria in different areas so they can see all their choices.

We looked at about 14 homes in Seven Hills, Anthem, Green Valley and Mission Hills in Henderson and I was surprised by the quality of homes that can be purchased for $250,000-$375,000 since I personally have not looked at homes for this price range in Henderson for a while. Homes that are selling for this price range had sold for about twice the asking prices 2-3 years ago.

A few notes about the homes that are available for sale in the areas that I mentioned.

1: This price range in Henderson is dominated by the short sales and then regular sales, foreclosures are hard to come by.

2: There is wide discrepancy between the sold prices or COMPS, (same model homes in the same subdivision) and the asking prices. To combat this we will look at the price per square foot for the COMPS before picking homes to show them. For example if the COMPS are $85-$100 per square foot and the asking price is at $140-$150 per square foot, then we look at the history of the home and see what happened. If the listing is a flip (bought and sold quickly for profit), then we don’t show it. One of the listings that we didn’t show was a flip that was bought at $130 per square foot and the asking price was $152 per square foot in a subdivision that the COMPS were at $90-$100.

While I am on the flipping subject, I am starting to see many flips that have gone wrong. These properties were purchased by investors that had no idea what they were doing and will be losing thousands of dollars if not tens of thousands of dollars on their blind speculation. These investors would have saved much trouble and heart ache by following the advice that I have provided in the Las Vegas homes, condos and commercial real estate web-site and this blog.

3: The action on Henderson homes that are priced at $250,000-$375,000 is not nearly as much as homes that are priced less than $200,000 and the more one goes up in the price, the less action on these homes.

More about homes in Henderson that we looked at in the next blog.

Unrelated note: I was floored when I learned that Mahatma GANDHI, one of the greatest generals of all time (as defined by Sun Tzu) and peace makers of the last century has not won a Nobel Peace prize, even though he was nominated four times. This is BULL and this organization should know better, as long as Mr. GANDHI is not given this prize, I give it no value. The Nobel Peace prize, in many instances has been given to candles, while ignoring the sun. Although the Noble Peace prize is not given posthumously, an exception should be made in this in order to correct an ERROR. So get used to this, I will have it at the end of each blog post.

NOBLE PEACE PRIZE FOR THE GREAT MAHATMA GANDHI

The White House is also signaling that it sees the tax credit program which is currently set to expire by December 1st as an important element in stimulating new jobs next year.

After an economic policy strategy meeting last week between President Obama, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, congressional aides said Democrats generally support an extension of the housing credit.

Senator Reid already has made clear that he is supportive of an extension and is co-sponsoring a Senate bill that would extend the tax credit for six months.

Congressman Charles Rangel, chairman of the House Ways and Means Committee, has sponsored the one-year extension of the tax credit for military and other government personnel serving overseas, and is favoring an extension for the entire program. Although the White House has not publicly committed to an extension, it is reported that the President is seriously examining that option.

An unexpected development that emerged following last week’s White House meeting was the possibility of expanding the tax credit to a broader group of buyers next year, such as people who sell their current homes and buy a replacement home.

Though details were scanty, Capitol Hill sources said one option on the table would be to provide a tax credit, most likely at the $8,000 level to replacement home buyers whose incomes do not exceed some limit.

The current credit phases out for single taxpayers with incomes above $75,000, and married purchasers earning $150,000.

A politically sensitive issue, the sticking point is how to manage the cost of extending the housing tax credit and how much it would add to the federal budgetary deficit.

Mark Zandi, chief economist of Moody’s estimates that widening the credit to all buyers through next August could cost the government upwards of $30 billion.

Rangel’s 12-month extension of the credit for service personnel is estimated to cost more than $30 billion, but it’s mainly being paid for through an increase in penalties levied by the IRS on taxpayers who fail to file corporate or partnership returns.

This article is an edited version of an article by Kenneth R. Harney from Washington

While we can write an offer for a regular sale any way that we want, this doesn’t work while making an offer on an REO home or condominium in Las Vegas.

1: The home or condo that you buy as a regular sale does not have to be sold to you AS IS. Unless the buyer waives his right to the property disclosures, the buyer can and should ask for disclosures and a CLUE report  The CLUE report is like Car Fax and will show the history of any insurance claims for the home or condo.

Foreclosure sales are (as is-where is) and for good reasons, the lender who has foreclosed on a home has not lived in the property and doesn’t know the history of the property. The bank will sell the property as is but this doesn’t mean that the buyer has to buy the home or condo as is and has the right to and should inspect the property by a licensed Nevada inspector. What happens now depends on who the buyer is.

A: Owner occupied homes or homes that have to be financed. In this case the lender may fix appraisal contingent repairs. For example a home that is purchased by a buyer who is financing through a VA loan has to meet certain requirements by the lender such as having an oven, if the home doesn’t have an oven, the lender has to put one in as an appraisal contingency.

B: Cash investors: the bank will often refuse to do any repairs on the home or condo. They also will refuse to contribute anything to the closing costs.

2: Appliances or personal property: these can be sold in a regular sale through a bill of sale however the bank doesn’t do this. Any appliances that are in the home or condo at the time of the offer may or may not be there at the time of closing. There is no bill of sale; however I have not had a deal that the appliances went missing before close of escrow yet.

3: Writing the offer; we can write an offer on a regular sale any which way we want, not bank foreclosures.

Banks look at two factors when reviewing offers written for bank owned homes or condos, one is the price and the other one is the terms. Offers should be as simple as possible with the easiest possible terms. The initial offer on the bank owned home will be replaced by a bank addendum that negates the initial offer and replaces it with the bank contract and is often take it or leave it. This is the reason that banks call it an addendum and not a counter offer.

The above was so Las Vegas real estate investors would adjust their expectation when buying a Las Vegas bank owned home or condo and not to scare them. We make offers on foreclosures all the time and close the deals while protecting our clients. Foreclosure deals in Las Vegas may be a bit harder to close than regular sales, but they are often more than worth the trouble due to the big savings that they offer the investors.

1: What is the total amount of money that an investor would like to invest in Las Vegas homes or condos?

2: Is the investor going to pay cash or finance the property?

3: What does the investor expect from his/her investment?

1: What is the total amount of money that an investor would like to invest in Las Vegas homes or condos?

The reason is that those who have enough money for several properties have to know how they want to invest the money. For example an investor who wants to invest $500,000 in Las Vegas real estate can buy one $500,000 home or condo, two homes or condos for $250,000 each or 4 homes or condominiums at $125,000 each, etc.

Needless to say, the cheaper the price for a home or condo, the fiercer the competition and an investor who makes an offer on a home with 25 offers on it will not get a bargain. The two most important factors that a real estate investor has to pay attention to is vacancy and repair costs. Older homes or condominiums have a bigger probability of future breakdowns and longer vacancy rates than newer homes.

 Some investors are still wetting their toes but are trying to time the bottom of the bottom of the Las Vegas real estate market. I spend a great deal of time tracking the real estate market and even I don’t claim that I know when we will reach the bottom for Las Vegas real estate. We will know that the real estate bottomed out at least 3-4 months after the fact. Additionally the Las Vegas real estate market is too general to discuss. Even Las Vegas home or condo market is too general.

Las Vegas homes or condo market should be analyzed block by block and based on square footage, price VS rental income and days on the market before a home or condo is leased. For example, in many areas in Las Vegas homes that are bigger than for example 3000 are not leasing quickly and 1400 square foot homes do much better.

The rental income for a $500,000 home may be $25,000 a year while someone who buys 4 homes at $125,000 each may earn $35,000 for the same amount of investment.

2: Is the investor going to pay cash or finance the property?

This makes a big difference in what the investor can purchase. For example other than a few exceptions, those investors who want to finance their purchase cannot buy a hotel condo like the Signature at MGM Grand or most condo communities in Las Vegas.

Foreign investors will have a hard time financing their deal in the United States to my knowledge; however I am not in the mortgage business. Foreign investors should research financing themselves. I have had investors from Canada who used a line of credit or a home equity loan in order to buy for cash in Las Vegas. It is best for a foreign investor to obtain financing in their own country and buy for cash in Las Vegas.

3: What does the investor expect from his/her investment?

Is it cash flow, a shot at future appreciation or both? Properties with better cash flow could appreciate less in the future and nicer properties with a shot a future appreciation do not offer great cash flows. Bear in mind that no one can guaranty future appreciation; however one can take an educated guess.

3: What is investor’s timeline to buy?

Timing is important in making a real estate investment; the rule is to buy when others aren’t and that can’t be generalized. Homes that are priced below $250,000 and are priced right are getting multiple offers at this time and I have advised my investors to be patient until the rush on the properties calms down a bit. If the investor wants to buy a one bedroom condo at MGM Grand or Meridian, try to do it now.

It also affects how often we would contact the investor. If the investor wants to buy in three months, we will not contact them often until they are ready to buy. Instead we will try to educate them by e-mailing them different products in different locations in order for the customer to get an idea about pricing versus location. When the customer is ready to buy, we will interact with them more frequently.

I hope that I gave an explanation about why we ask the questions that we do and why correct answers will help both of us in the search for a great real estate investment that will make the investor happy.

The problem is that REO agents have learned from Las Vegas real estate auctions and put an unrealistic asking price on their listing in order to attract buyers or buyer’s agent’s attention in order to get multiple offers. They know well that offers are based on COMPS and not asking price, buyer’s agents know this too, but buyers who look themselves don’t know this.

This problem is magnified with short sales;

Banks don’t negotiate with short sale agents unless they have an offer in hand. So short sale agents sometimes put an unrealistic price on their listings in order to get the required offer. I have heard of cases that the owner’s cousin has made an offer on his/her cousin’s property so the agent can open the negotiation process. This is all good, except that after the receipt of the offer, short sale agents start negotiation with the lender and it takes time to reach an uncertain conclusion. In order to do a short sale, the owner has to prove hardship and the bank has to agree to the short sale.

The buyer needs to know this, or they can make tens of offers on ridiculously priced properties and get none, while wasting valuable time in an appreciating market which we have at the moment in Las Vegas.

Short Sales, Foreclosures and regular listings at the Signature at MGM Grand

A good example is short sale condominiums in the Signature at MGM Grand.

The Signature at MGM Grand listings=117

• Short Sale listings at the Signature at MGM Grand listings=64, sold in September=6, Price range=$175,000-$250,000
• Foreclosures or bank owned listings at The Signature at MGM Grand listings=14, sold in September=3, Price range= $125,000-$290,000
• Regular sale listings at the Signature at MGM Grand listings=40, sold in September=3, Price range= $170,000-$415,000

Now, when a perspective buyer contacts me in order to buy a short sale listing at MGM Grand priced at $100,000, what do think I should tell them?

By the way, the rush that alerted interested buyers at The Signature at MGM Grand condos have started and perspective buyers should raise their offer by 25% or more from a couple of months ago. Las Vegas high rise condo market has come to life.

Even a first grader can decipher what is selling at MGM Grand at it is foreclosures, they control pricing at MGM Grand.

Now multiply what I wrote about MGM Grand by a hundred and expand it to all homes or condo listings and you can see that doing something so basic as searching real estate data bases on your own could be misleading.

Masoud and Karen Saberzadeh, (702)-478-7800

I do not like to list Las Vegas properties that I can’t sell, and that is why I have only listed one home to sell in 2009. In today’s Las Vegas home and condo market, regular listings should be able to compete with bank owned or REO homes or condominiums. There are not too many listings that can compete with foreclosures and still leave the seller some kind money after deducting all expenses. Most of the homes or condos are short sales and I don’t list short sales or foreclosures. Regular sale (not short sales or bank owned) homes WILL bring more money than foreclosures due to the ease of doing the transaction and also the home is not sold as is and often is in better condition than foreclosures.

The home belonged to a California investor who wanted to go overseas and didn’t want to deal with tenants. However a tenant was already in the home and he was hostile. Hostile tenants do make it hard for the listing agent to show the house, even with 24 hours notice. The first time that I listed this home we would get a lot of requests to show the home, but the tenant would not allow us. So I called the owner and told him exactly what I wrote above, I don’t list a home or condominium in Las Vegas that I can’t sell and dropped the listing.

Three months passed and I got a call from the owner that the tenant was gone and he wanted to list the home again with me. No problems this time and we got a great offer which the seller accepted in less than a day. We will close the deal later this month.

The reason is that most investors who rent the home themselves usually use a standard rental contract that gives the tenant 24 hours notice before being able to access the home or condo. This will bite the investor when they want to sell a home or condo as other Realtors or buyers do not want to wait 24 hours to see the home. They either skip it completely, or in a competitive market, the buyer may see other homes first and if he/she likes one, they will not be motivated to see the home 24 hours later.

The Las Vegas real estate investors who may want to sell their home while under a lease agreement should think of this issue before signing a lease agreement. They should contact a real estate attorney about inserting a clause in the contract that gives the owner the right to put a lock box on the tenets door and be able to show the home within 2 hours after notifying the tenant.

Our brothers and sisters in American Samoa, Indonesia and the Philippines are dealing with disaster after disaster and lost families and properties. I am praying for the Good Lord to give them infinite patience to overcome the sadness and hopelessness that arise from these disasters as you should.

I was notified today that my beloved aunt, Saltanat Mojthed-Soleimani passed away. I loved her deeply and am even sadder for my mom who has to bear losing a sister. My condolences to Soleimani and Mostofi families, plus many others.

I always tell people that when you were born, you cried. Live in a way that when you die, the world cries for you and she did. There are crying eyes in at least three continents that I know of.

Masoud and Karen Saberzadeh, 702-478-7800, saber@lasvegas4us.com

“GATESVILLE – REJECTION NOTIFICATION

This is to inform you that the seller decided to accept another offer on this property. This property received more than 45+ offers.

Thank you again for your offer and patience.

Sincerely, T.C./Executive Asst.”

I don’t see how this can continue as last time that we had a rush on Vegas properties (2003-2006), it obviously did not last. How can a buyer get a good deal on a Las Vegas condo or house when 45 plus buyers are competing with him/her?

Furthermore, banks are not crazy enough to wholesale what they can retail and sell in a couple of days. 45 offers on homes will result in double digit appreciation that I wrote about in the last blog. The question is, is this going to continue? I certainly hope not and 20 plus offers on a home or condo is temporary, but even 3-4 offers on homes or condos in Las Vegas  will result in appreciation, but not double digit.

This is not good for Masoud, as I am sick of abnormal conditions in Las Vegas real estate. I don’t even know what normal is anymore, but one thing is for sure, this isn’t 20^th century real estate and the methods that worked 3-4 years ago are short cuts to failure. Welcome to 21^st century real estate.

At times, people do things without thinking it through, like paying $15,000-$20,000 too much to gain an $8,000 tax credit, which may or may not be extended after December 1^st. Well I highly doubt that the US Congress will make any announcement about this until late November as they want people to buy as many homes as they can by then.

Related web site pages:  Best way to buy a home or condo in Las Vegas, buy Las Vegas house for sale, buy Las Vegas condo for sale, Las Vegas real estate

Masoud and Karen Saberzadeh

Realty One Group, Las Vegas, Lasvegasaber@yahoo.com, 702-478-7800

In August, 42 percent of residential real estate deals were cash transactions, 23 percent were financed through conventional loan and 5% were VA loan; also 92% percent were priced below $300,000.

Even though much of the run on Las Vegas residential properties have been attributed to the US Government tax credit for first time home buyers, this is not the only factor in the run on Las Vegas homes and condominiums. Most of the real estate investors which are responsible for the 42% cash deals will not benefit from the tax credit. Some of the investors have actually financed their deal and not all homes or condo buyers are owner occupied first time home buyers, so the effect of the tax credit on the homes and condo market in Las Vegas is probably less than 20%. For example investors who invest in Las Vegas high rise condominiums like the Signature at MGM Grand Las Vegas will not benefit from the tax credit.

Below are the answers that we get from Las Vegas REO agents, the first one is for a home that we made an offer on for the aforementioned client when Karen wanted to confirm that they received our offer.

Attached is an offer on above property. Please confirm receipt. Thanks, Karen
Las Vegas foreclosure agent’s Answer: Your offer is received along w/ 25+ other offers.

Buy the Signature at MGM Grand condo before it is too late

Offers on MGM Grand: I wrote in my blog that MGM Grand is where Meridian Condos were 4 months ago and there is going to be a run on MGM Grand condos. Well the run has started, forget about further price cuts at MGM Grand for the near future and things will get worse from now on. 520 square foot studios that were selling for less than $125,000 are getting multiple offers at $150,000 or more. I called the listing agents for the 5 least expensive studio suits in MGM Grand, they were priced at $129,000-$169,000, and every single one had multiple offers on it. Below is the response from my inquiry about whether or not she has any offers on a 520 square foot condo at MGM Grand which was listed for $179,000.

Her answer: 3 and counting. Just called in 2 more agents

Buying a condo at Signature at MGM Grand Las Vegas will become very difficult, if you want to buy, the time is now.

I do not have a crystal ball and every time I have written about the Las Vegas real estate market, I have enumerated my reasons. No one can say what is going to happen to the Las Vegas real estate market in six months or a year or five years. However based on the past performance of the real estate market, one can take an educated guess at the future direction of the market.

If the same interest in the Las Vegas real estate market continues and the market is as active as it is now, look for true double digit increases in Las Vegas homes and condo prices in terms of comparables and this is the true measure of real estate market performance and not the meaningless median price.

Disclaimer: I don’t know the future behavior of investors as it is impossible to predict.

I personally don’t blame banks to choose an investors cash offer over those who want to finance their deal. The bank knows that the deal is going to close and most of the times there will be no appraisal since the investor would not want to spend money on the appraisal since it is not required by a third party beneficiary, such as a lender. The bank will not do appraisal contingent repairs before closing a deal, etc. There is no downside to selling a property for cash as compared to financing. So those who want to finance their real estate deal are in a great disadvantage compared to cash buyers and lose many offers to cash investors.

Enter, Fannie Mae and Freddie Mac, which are run by the same government that some people are scared to death of letting get between the benevolent health insurance companies and the insured  who are screwed by them every day.

Anyways, Freddie Mac and Fannie have started to put the emphasis on owner occupied buyers and in some cases do not accept an investor offer for up to 15 days, just like HUD who has the same policy with HUD homes.

This brings up the problem of financing a condominium deal in Las Vegas. If a buyer needed FHA or VA loan, we would check FHA and VA approved condo list that is available online before we showed the condo. All was nice and easy until Freddie Mac and Fannie Mae changed their financing criteria and announced that they will not finance condominium communities that are more than 50% investor owned or more than 15% of units have been delinquent in paying HOA fees for 30 days, etc.

This rule excludes the vast majority of condo communities in Las Vegas and made our job next to impossible as we can’t check on the delinquent HOA fees every time we show a condo in Las Vegas. Keep in mind that the delinquencies for HOA fee is a fluid situation and can change month to month. Again, Freddie Mac and Fannie Mae are financing their own foreclosed condominiums and this the best way to buy a condo that needs to be financed.

Some may be wondering about why I have started to blog more frequently. Well I have not mentioned the fact that last time that Google updated their search engine rankings, I was expecting a big fall in the rankings due to lack of activity in blogging. Instead I saw a meteoric ascension in rankings to a point that www.lasvegas4us.com is in the top 3 real estate web-sites in Las Vegas if not the dominant one. Total domination is about 6 months away. To give a couple of examples if you search highly competitive key phrases like (Las Vegas commercial real estate), the first top three links are mine, and I am beating national web-sites like loopnet, costar and cityfeet.com. Or (Las Vegas real estate auction), again top three links are mine (top three links in Google is close to domination), I have about 50 pages of top 20 links in Google. The deal is if I don’t keep up blogging my stay at the top will be followed by a free fall and I have worked my heart out for the past few years to get to the top.