This is video transcript of do Las Vegas short sales homes provide for big discounts?
This is the fourth video in the Las Vegas short sales homes, condos buyer guide series.
In the last 3 videos we discussed:
The 3 different ways of buying Las Vegas short sale homes, condos or high-rise condominiums that are listed in the Las Vegas MLS.
Why do buyers and real estate investors make offers on them and how long does it take to close short sale deals?
In this video, we will discuss the discount gained through buying short sales. As we mentioned Masoud spent about 8 days and analyzed all of the 177 Greater Las Vegas short sales homes that sold or closed escrow in February 2015. What we talk about is the results of this research.
Correct definitions for property conditions
Before we continue we must mention that one significant factor that influences comprehensive market analysis is the property condition.
The definition of a home sold in fair condition is that the home is fit to live in but needs extensive repairs.
A home in poor condition means that the property needs extensive repairs and is not fit to live in, for example, walls are missing. These definitions have nothing to do with whether or not the house is kept in neat and picked up condition or not.
However be warned that although there are guidelines for property conditions, many Las Vegas Realtors do not know about or follow the guidelines.
The following is an exact quote from a short sale listing, “Las Vegas home in need of many repairs but in good condition”!!! The correct category would be the Fair condition. Another had mold problems which make the home unfit for living in and still was classified in good condition. We corrected the property condition for listings that we studied to the extent that we could.
We were able to do a market analysis or CMA on 121 out of 177 sold homes. We couldn’t do so for the rest due to lack of pictures of the interior of the home which happens a lot in the case of short sales, or because the house was in poor condition. In other instances, the home was a custom built home and usually in fair or poor condition.
Breakdown of Las Vegas short sales homes by property condition
|Las Vegas short saels property condition||Excellent condition||Very good condition||Good condition||Fair condition||Poor condition|
|Las Vegas short sale homes sold in February 2015||5||15||70||63||23|
As you can see 48% of all short sales homes were classified as fair or poor condition, so much for the myth that short sales are usually in better condition than Las Vegas foreclosures, it is not true at all.
The most expensive Greater Las Vegas short sale home for sale that sold in February had a sales price of $2.375 million dollars and the cheapest one sold for $49,000.
This table shows the breakdown of sales prices for the rest of the short sale houses
% of sales
% of sales
% of sales
% of sales
% of sales
|More than $500K
% of sales
|Sales price for Las Vegas short sales homes sold in February 2015||22, 12%||57, 32%||46, 26%||31, 17.5%||18, 10%||4, 2%|
It is easy to see that 71% of total short sales were sold for less than $200,000 while only 47% of total home sales were sold for less than $200,000. This is one of the main reasons that the median price of short sales in February at $158,000 was $49,000 less than the median price for total home sales.
Of the 121 short sales homes that we were able to do a CMA on, the two most expensive short sales that sold in February 2015 provided for the most discounts, one was a 2.375 million dollar luxury home and the other was a $572,000 Seven Hills probate short sale luxury home fronting the golf course in poor condition and the savings were in the tens of thousands of dollar range.
This table shows discounts gained through buying short sales for the other 121 short sale houses that we could do a CMA on.
As you can see just about 50% or 60% of the Las Vegas, Henderson and North Las Vegas short sales were purchased with prices that were within $10,000 of current market value. 44 homes or 36.5% of the total sold for $10,000 to $19,000 in discounts and only 14% sold for more than $20,000 in discounts.
Other than Las Vegas short sales that were enrolled in an online auction by the lender, the most important factor in gaining discounts was how long the listing has stayed on the market without an offer. The other important factor is how much repairs did the house needed to bring it up to good condition.
Homes in very good and excellent condition in lower price ranges did not sell for much discount as Las Vegas real estate investors still buy these. However, more expensive homes that do not provide for acceptable cash flow and need extensive repairs have been sold for the most discounts.
Las Vegas short sales that are sold in real estate auctions
50% of short sales sold through Hubzu dot com online auction got more than $20,000 in discounts.
We could perform a CMA on 8 out of 18 listings that were sold through Homesearch dotcom auction. 4 out of 8 buyers got a discount of equal or less than $10,000, the other four were sold for less than $25,000 in discounts. It is interesting to note that 10 out of 18 had bidding that surpassed the asking list price in the Las Vegas MLS.
Bankruptcy, probate and pre-approved short sales
3 out of 4 bankruptcy short sales that we could perform a CMA on sold for $12,000 to $20,000 in discounts.
If you are willing to wait for more than a year, pre-approved short sales can save you about $15,000.
We could do only one CMA for the 1 out of 4 combination probate short sales; this was the golf course home which we talked about and the discount was big
Other than two cases, as expected, approved short sales have sold for the least discount, the reason is that approved short sales are treated like foreclosures and many sell quickly after being approved. 2 out of the 25 that we did a CMA on sold for $7,500 to $10,000 higher than comps. These buyers got a reverse discount. 8 sold for no discount. Another 8 sold for less than $10,000 in discount and only 7 listing were sold for up to $25,000 in discounts.
Unapproved short sales do better than approved short sales and get higher discounts. However, the buyer has to live with the possibility that the seller’s hardship could be rejected or getting a high counter offer from the bank that leads to breaking the deal and this happens a lot.
Buying short sales in appreciating market can hurt the buyer
In the past, we have repeatedly written that we pay no attention to unapproved short sales and the reason was that we were in an appreciating market. After months of waiting by the buyer, prices had gone up and the bank would counter at the latest prices with an appreciating market premium built in.
In a flat market there is no danger of that, so now we will make offers on all types of short sales if conditions are right.
We are not going to discuss all our findings in this short video, however, after sweating the details and performing the tedious work of doing a CMA on 121 listings for no pay we now know how and where to look for the highest discounts and can authoritatively advise our clients.
Getting good in Las Vegas real estate like in any other field requires 95% sweat which we are really good at; we don’t know what the other 5% is.
Those who have watched all of the videos in our Las Vegas Short Sale series should have a pretty good idea about them too.
If you want to buy or invest in Las Vegas, Henderson or North Las Vegas short sale homes, condos or townhomes in the immediate future, please call us at 800-762-4917.
Please like and share if you find this information useful and subscribe to our Las Vegas real estate channel for upcoming videos.
This is Karen Saberzadeh of Realty One Group and www.lasvegas4us.com wishing you a great day.
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