Making an Offer Subject to a Short Sale on Las Vegas Homes

Of all the types of distressed properties, shortsales are probably the hardest to close escrow on. Often the seller is still living in the property. He or she may have invested their life savings making a down payment that has disappeared with a declining market. They are upset that they are losing their home and fearful, as they will probably have little or no money to make a move with. Plus their credit is shot and there are few landlords that will even consider renting to them without a substantial deposit. Of course, if they had a substantial deposit, they could afford to make their monthly payment!

And even if the seller is cooperative, there is still the bank to contend with. In a market that is inundated with requests for short sale approval and where there is a large inventory of properties that have gone all the way through the foreclosure process, the bank's loss mitigation departments are backed up and understaffed. And often there is more than one bank to seek short sale approval from. (During the recent subprime lending years, buyers who had no down payments were able to borrow 100% of the purchase price on their home. Usually this was accomplished by putting both first and second Las Vegas mortgages on the property.) Very likely the second mortgage holder is going to be wiped out and has very little incentive to approve the sale.

Currently there are just over 5000 homes for sale in Las Vegas that are in short sale status, and of those almost 4,000 are priced under $300,000. (By comparison, there are just over 2,000 Las Vegas foreclosures or REOs, bank owned properties.) It is taking anywhere from 30 to 60 days to get an approval from the bank on a short sale. And the listing agent must jump through hoops getting the proper documentation together so that the lender will consider an offer in the first place. A typical Las Vegas short sale package would include:


Seller's Hardship Letter
Offer and Counter Offer on Subject Property
Estimated Net Sheet
Buyer's Approval Letter
Seller's Last Two Pay Check Stubs
Statement of Seller's Monthly Expenses
Copy of MLS Listing
Listing History of Subject Property
County Tax Record for Subject Property
Recent Comparable Sales for Subject Property

The seller must be able to prove that they have insufficient income to pay the monthly payment and that they have no other assets. The listing agent must be able to show a concerted effort to market the home for the best possible price. And once the offer is approved, if the listing agent forgets to put an expense on the estimated net sheet, the bank will refuse to pay it as they feel they based their decision on flawed information. Oftentimes it is difficult for the listing agent to accurately assess the costs as they may include sewer bills, unpaid HOA assessments or unrecorded mechanics liens.

And once the bank does finally approve the short sale, if another higher and better offer is received, the bank can choose to unapprove the first offer. They are not the owner of record for the property and no negotiated approval is binding on them in a short sale.

So if you are thinking of purchasing a short sale property, you need to have lots of patience, a great Las Vegas real estate agent and a bit of luck!

Differences Between Short Sales and Bank REOs or Repos

As you know, it is a great time to be a "buyer" in our Las Vegas real estate market.  Pricing on homes is almost back to the 2005 level, with many of them reduced to be "moved" by the banks. Bank repos, also known as REOs (real estate owned), are properties that have already been foreclosed upon by the bank. They may be in pretty rough condition, and it is very common for the landscaping to be completely dead and have to be replaced. They are sold "as is, where is" with no warranties. But in some cases you can make your offer contingent upon an inspection to see if any major repair work may be required.  (Some banks won't allow the due diligence period for an inspection, so you may have to have one done prior to making an offer.) 

Having said all that, you can get a "good deal" with a bank owned property as long as you allow for these extra costs and buy the home for the right price to begin with.  Just because it is a foreclosure, it may or may not be a great deal.

Short sales are a different creature.  The homeowner is behind on their payments, and, in most cases, is hoping that the lender(s) involved will let them sell "short" of what is owed.  This means the bank(s) has to approve the sale.  Again, in some cases, the house will be listed at an extremely low price designed to entice offers.  These offers are brought to the lender (s) for approval and if there is more than one offer, the bank(s) will negotiate the prices up, if possible, to reduce their losses.  Some banks may take 30-45 days to even respond to an offer, perhaps hoping to get more than one.  And the bank usually does not sign off on the offer until just prior to closing, which means they may also accept a new offer up to that point. So even though you have verbal acceptance, until it is actually signed, a short sale can be revoked at any time.

Don't overlook regular owner occupied "turn-key" homes in this market either.  Lately, most homes are priced to compete with the foreclosures: they come with home warranties and they don't need out-of-pocket cash dropped into them like most of the Las Vegas foreclosures do. 

If you think you are interested in a foreclosure or short sale, send us the general parameters of what you are looking for: price range, number of bedrooms, pool, location etc.  We will be happy to place you on our automatic email update system that will immediately send you any new listing that comes on the market with your foreclosure criteria.  (The best ones go fast, so be prepared to act quickly!) Or call us at 702-985-7654 to discuss doing a customized search for you.

2008 Already Shaping up to be a Better Year for Las Vegas Real Estate

The year 2007 was a rude awakening for owners of Las Vegas homes who found their properties steadily decreasing in value. Prices between November 2006 and November 2007 declined an estimated 10% and many of those who bought real estate during 2005 and 2006 found themselves owing more than their properties were worth. Las Vegas foreclosures led the nation and Las Vegas auctions had hundreds of properties to bid on.

But already in the last few weeks of December and the first few months of 2008, we can feel the scared-to-death-by-the-media buyers of 2007 coming out of hibernation, shaking off their fears and getting ready to cautiously dive into the real estate pool again. Experts have estimated that the worst is over, and that by the end of spring 2008 prices will stabilize and actually start to slowly appreciate in value again as inventory decreases. One think tank already is predicting a housing shortage by late 2009, assuming workers flock to the state to fill jobs created by billions of dollars of new construction on the Las Vegas Strip.

In the under $250,000 price range of homes we are even starting to see multiple offers on properties again!

"We're merely at the bottom of one cycle and heading back up on another one," said Jeremy Aguero, one of Applied Analysis' principals. He points to the stream of Strip mega-resorts planned to go up over the next few years, from Las Vegas Sands Corp.'s $1.8 billion Palazzo, opening this month, to Boyd Gaming Corp.'s $4.8 billion Echelon in 2010.

In all, the surge is estimated to add more than 40,000 hotel rooms by 2012 and create around 100,000 direct and indirect jobs, according to Deutsche Bank. "Typically, people read the papers," said economist Jim Shabi of Nevada's employment department. "They know when Vegas is building casinos and they come to town to find jobs."

G. William Barnett II, author of "Are You Dumb Enough to Be Rich?" says "These are the times smart real estate investors live for. There's more money to be made in chaos than at any other time, and no other investment strategy has created more millionaires than real estate." As for the housing markets Barnett likes best right now, he says number one is Las Vegas, which currently has $10 billion worth of commercial construction going on and will soon have a demand for thousands of new employees.

So, like it said in one of my favorite all time movies, Field of Dreams: "If you build it, they will come." And they will have to find housing! Now is definitely the best time to buy Las Vegas real estate, BEFORE the next boom comes and you are left standing on the wrong side of the wave.

Declining Markets and Increased Down Payment Requirements for Mortgage Loans

Just when the Las Vegas homes market was starting to come out of the doldrums, Fannie Mae put another roadblock in front of many would be Las Vegas homeowners. We had been experiencing a lot more activity over the past month and at the auctions almost every property had actually been put under contract.

Then Fannie Mae announced a new guideline relating to insuring loans in declining or soft markets. In Clark County, the new guideline requires a 5% reduction in the form of an additional down payment by the buyer on the maximum loan allowed on a residence. This new guideline officially started on January 15, 2008.

Many banks are enforcing this guideline on all loans, not just conforming Fannie Mae loans of less than $417,000, but also on jumbo loans over $417,000 as well. Particularly hard hit has been the Las Vegas high rise condo market where instead of 20% down on a $1M condo an investor purchaser may now be equired to come in with as much as 45%. Many are unable to close and are walking away from substantial deposits.

There is a box on the standard appraisal form called the URAR (Uniform Residential Appraisal Report) that asks the appraiser if the market is "stable," "declining" or "increasing." If the appraiser checks the box on the appraisal report that says the market is "declining," the buyer's down payment on the selected loan program has to be increased by 5%, even if the appraisal comes in at or over the negotiated purchase price.

For example, the purchase price is $200,000 and you need 100% financing. The appraisal actually comes in at $220,000. Even though the appraisal came in higher, if the declining market box is checked, you still have to put 5% down on the $200,000 purchase price. If your loan program originally called for a 5% down payment, now you will need 10% instead.

Although many lenders are looking at reconciling these types of challenges, today the appraisal of the home means nothing compared to whether or not the community has been stigmatized as "declining."

Fannie Mae and some national lenders have declared many areas around the country as declining markets. It doesn't matter what the value of the appraisal is. It's whether or not the county has been declared as declining that determines how much you can actually borrow. The maximum loan allowed is automatically reduced by 5%-10% in these areas, depending on the loan product.

Fortunately this guideline does NOT apply on government loans. So since the guidelines went into effect there has been a surge in applications for FHA and VA loans. (Many mortgage brokers didn't even have FHA or VA approvals over the past few years, depending instead upon a plethora of no down conventional programs.) FHA currently requires 3% down, but the seller is also allowed to pay that down payment on behalf of a buyer using their Nehemiah program. And VA still allows eligible veterans to obtain a loan on 100% finanacing. For more information on Las Vegas mortgages please contact us at 702-985-7654 and we will be happy to help you find the lender that has the best program and rate for your particular circumstances.

Streamline Towers Almost Ready to Open

Streamline Towers Luxury Condos are open for sales and starting to close with theri first lucky homeowners! Call 702-985-7654 for more information and updated pricing.

While media attention has so far been concentrating on the glitzy new high rise developments going in along the Las Vegas Boulevard resort corridor, Mayor Oscar Goodman's redevelopment of the "Old Strip" along Fremont Street into a San Diego style gas light district may make downtown condos the next "hot buy!" For both investors and owner occupants alike, the Streamline Towers project could be a dream come true.

The Las Vegas downtown casino area is in the midst of a major redevelopment effort, and investors are starting to snap up the still relatively lower priced condo units there before prices go sky high along with the skyline. The rebounding Las Vegas real estate market should also help. The redevelopment plan calls for a retro Las Vegas atmosphere with several distinct neighborhoods including an arts district, an entertainment district, a casino district, the Las Vegas Academy performing arts district and an office district, as well as the 12 million square foot World Market Center and the Premium Outlet Mall with over 120 shops and restaurants.

Streamline Towers will be the first luxury high rise built in the heart of the new six block entertainment district featuring nightly live jazz venues, taverns, cafes, nightclubs and boutiques. Securely financed by Barclay's Bank and brilliantly located by the 200,000 square foot Neonopolis entertainment complex and the Fremont Street Experience, the building will be 21 stories high and have 251 elegant residences with private view balconies and 10 to 12 foot ceilings, rooftop pool, spa and terrace with Strip views, a fully equipped fitness center with Strip views, a 16th floor club house with Strip views, 11,000 square feet of neighborhood retail space including hairdressers, dry cleaners, mail facilities and boutique coffee shop, private secured parking and 24 hour concierge service.

Streamline Towers also offers onsite executive leasing services for nightly, weekly and long term rentals, making it ideal an ideal property for second home owners and investors. Prices range from $425,000 to $1,100,000 and condos range in size from 756 square foot one bedroom 1.5 bath units up to 1889 square foot 3 bedroom plus den 2.5 bath units. A total deposit of 15% will be placed into escrow upon contract signing and the project is due to be completed at the beginning of 2007.

And while there are nearly 100 Las Vegas condos and high rise projects in various stages of planning around the Las Vegas Valley, only an estimated 35% to 40% will actually be built. Streamline Towers is already fully backed and funded by Barclays Bank and ground breaking has started.In addition, owners will be able to walk a mere 162 steps from their front door to Fremont Street and the new businesses going in including:

Hogs & Heifers - the original New York honky tonk bar
Beauty Bar - straight from Sex and the City a beauty parlor with cocktails
The Downtown Club - by the owners of Whisky Sky - serious nightlife arrives downtown
Take One - Everyone's a star with live entertainment and a spectacular restaurant
511 Fremont - the nightclub
Hennessey's Tavern - an Irish pub straight from SoCal, dude
Mickie Finnz Fish House - a great place for a great time
Seven the Comedy Club - the best comics in the world
601 Fremont - clubs, boutiques and more
Triple George - a fabulous New York style restaurant
Cuba - a new night spot in your neighborhood
Celebrity - a night club with great live music and no cover charge

Amazing Deals on Units Available Pre Closing at the Palms

Even at the Palms Place, where most buyers were the young and the wealthy with cash to burn, there were some buyers that knew a good investment when they saw it. They took the plunge and plunked down a 20% deposit on one of the elegant Palms Place condo hotel units hoping to make a bundle by the time the property was built.

Unfortunately in the meantime the national economy stalled and the Las Vegas real estate market dropped. Now, almost four years later, many of these same buyers are unable to obtain financing in the aftermath of the subprime market debacle. They are desperate to find a buyer just to recoup part of their deposit.

The units below are all available on the pre closing market. The original purchasers of these units want to assign thier contracts prior to closing with the Palms, and these prices are far lower than the units that have closed and are already listed for resale! Check out the one bedroom unit for only $700k! Now THAT is MOTIVATED!!

	1 Bed	Strip	1.199,000
	1 Bed	Mountain	1.088,000
	1 Bed	Mountain	1.088,000
	Studio	Strip	651,900
	Studio	Strip	615,000
	Studio	Mountain	537,000
	Studio	Mountain	525,000
	Studio	Strip	548,000

                         1 Bed          Strip            700,000   -  Deal of the Day!

* All units are fully furnished
* Closing March 2008
* Studio (approx) 620 Sq. ft.
* 1 Bedroom (approx) 1,220 Sq. ft.

**Please note, the units are all on the upper level floors.  Residential units start on the 8^th floor. Floors 13, 14 and all of the 40's have been skipped due to superstition.

If you would like to find out the details on the assignments, please give me a call at 702-985-7654 right away!

If you can't quite afford the Palms Place but really want to buy Las Vegas high rise condos, there are also some GREAT deals to be had in the Residences at MGM starting in the high $300s.

 

http://www.prweb.com/releases/2008/03/prweb791764.htm

Las Vegas Foreclosures and Auctions - Free Seminars on Buying a Dream Home, Not a Nightmare!

Everyone in the housing market these days is looking for a "steal." But around the country purchasers are finding that buying a property through foreclosure or at auction is not an easy process. There is no standardized format for purchasing, and banks and auction houses are selling these properties "as is, where is." So "buyer beware" is certainly applicable.

Las Vegas -  (PRWeb) Currently the number of Las Vegas foreclosures is among the highest in the nation, and foreclosed inventory on the market has driven down prices in the Valley substantially from the all time highs of 2005. Investors are returning to the city to pick up great deals and benefit from the strong local rental market, while first time buyers are taking advantage of affordable housing. Lower priced Las Vegas homes under $250k are even receiving multiple offers, lending strength to the belief that the Las Vegas price decline may have bottomed out.

For those desiring to take advantage of the lowest prices in the past three years, but leery of buying a "lemon," a series of FREE 45 minute seminars on foreclosures and Las Vegas auctions is being sponsored by the Tonnesen Team of Prudential Americana Group Realtors. Speakers will be acknowledged specialists in the foreclosure and auction process. Participants will receive printed information on the "how to's" of purchasing along with detailed property listings, and there will be an open question and answer period. Each foreclosure seminar will cover a different area of the Las Vegas Valley, and each auction seminar will cover a specific upcoming auction event.

The next free auction seminar covering the details on the upcoming Hudson and Marshall Auction will be held on Tuesday April 1^st at 6pm at 871 Coronado Center Drive, Suite 100, Henderson, NV. This auction will cover 100's of properties around Las Vegas, Henderson and North Las Vegas, with starting bids beginning in the $50k range but also covering high end luxury properties as well. (Exact dates and place for the auction are yet to be announced, but it will take place sometime in mid April.) This seminar will include:

1. getting pre-registered to bid at the auction
2. catalogue of the properties to be auctioned
3. how to do your due diligence prior to the auction
4. how the auction process works
5. what to take with you to the auction
6. preferred lender on hand to pre-qualify you to bid

The next free foreclosure seminar will be held on Sunday April 13^th at 2pm at 871 Coronado Center Drive, Suite 100, Henderson, NV. Foreclosures in the areas of Anthem, Seven Hills, Green Valley and Lake Las Vegas will be covered. Included at the seminar will be our "Top Foreclosure Picks" followed by an optional private tour of properties. This seminar will include information on:

1. the differences between foreclosures and shortsales, and how it affects you as a buyer
2. what to expect when bidding on a foreclosure - what the bank will and will not do
3. doing due diligence on foreclosure properties
4. a complete list of foreclosed properties in the day's featured area
5. agents on hand to do a custom search of foreclosure properties that meet your budget and needs
6. preferred lender on hand to pre-qualify you to put an offer in on a foreclosure (required on all bank owned properties)

Call 702-958-7654 to register now, or register online at: www.greatlasvegashomes.com/las_vegas_real_estate_investments.htm to participate in upcoming seminars.

 

In addition, every client who purchases a foreclosure or auction property from the Tonnesen Team will receive discount coupons for their home inspection plus the preferred lender will contribute a new washer and dryer!**

 

**Purchaser must use the preferred lender for their mortgage and close escrow to receive a free washer and dryer.  

 

http://www.prweb.com/releases/2008/03/prweb791764.htm

General Las Vegas Real Estate Update

Today's blog is bits and pieces of things that are currently going on in the Las Vegas real estate market.

Clark County commissioners have given final approval to plans for the $6 billion Las Vegas Plaza Hotel and Casino Resort (modeled after The Plaza Hotel in New York) to be built on the site of the former Frontier Hotel and Casino. Despite earlier rumors that the project was stalling due to a shaky credit market, Elad chief Miki Naftali said the project was "forging ahead as planned." Elad also owns The Plaza in New York and a Las Vegas spokesman for the group says groundbreaking could take place later this year on the 3,500-room Las Vegas Strip project which is slated to open in 2011.

Deutsche Bank announced that it was going to be commencing foreclosure proceedings on the Cosmopolitan Resort Hotel and Casino on the Las Vegas Strip. According to Deutsche Bank, they have made arrangements with the contractor to continue with construction. And sales are still being made out of the sales center in anticipation that developer Bruce Eichner will either find additional financing or will be bought out of the project. The Las Vegas luxury condos are already more than 80% sold out and the Cosmopolitan's location is the best on the Strip, making it desirable to potential purchasers or partners, and Eichner expects to reach an agreement before long.

Two major Las Vegas residential projects, Inspirada and Kyle Canyon Gateway, are having difficulties meeting their mortgage obligations. Inspirada, a 2,000-acre project, was supposed to give rise to as many as 13,500 homes. There have been about only about 162 homes sold so far, according to Focus Group, master developer. And some of the smaller partners that are joint venturing in the project are unable to meet their commitments, leaving the larger partners to either take on their portion of the debt and put more money in, or decide to walk away entirely. With existing Las Vegas new homes builders getting low on inventory, putting these two large projects on indefinite hold would certainly help stabilize prices.

The FBI is currently carrying out a number of investigations in the Las Vegas area, uncovering fraudulent schemes involving 14 financial institutions. Some of the schemes under scrutiny include artificially inflating home values and placing low income buyers and/or beginner investors into adjustable rate mortgages that they can't afford when the rates reset and forcing them into foreclosure.

Currently Las Vegas foreclosures are among the highest in the nation and foreclosed inventory on the market has driven down prices in the city substantially from all time highs in 2005. Investment buyers are returning to the city to pick up great buys and benefit from the strong local rental market, while first time buyers are taking advantage of affordable housing. Lower priced single family homes under $250k are even receiving multiple offers, lending strength to the belief that the price decline may have bottomed out.

When Should You Lock your Loan Rate?

It's not bad enough that buyers are already leary of the the general Las Vegas real estate market. Borrowers also wonder if they should lock in interest rates on their new Las Vegas homes when they first apply for a loan, or should they wait and see where the market goes. My standard response is that my crystal ball is broken, and that if I really knew the answer, I would be playing the international money markets. I have literally heard every lender in town swear that rates were going down and all of a sudden they went up, and visa versa.

So either choice involves some risk. If you lock now and rates fall, you lose. If you don't lock now and rates rise, you also lose. It's all about how much risk you are willing to take and if you are going to be more unhappy if rates rise and you aren't locked, or if you will be more unhappy if rates fall and you are locked.

The first step is to understand how the rate locking process works. There are no industry standards to go by, a lock with one lender may be radically different from the lock in program with another. Here are some items to verify:

What is being locked in? An interest rate? Or an interest rate and points? Points are a form of interest, so if a rate is locked in but not points, then the effective rate for the loan can rise before closing if the interest level stays the same but the number of points increases.

How long is the lock in? A typical lock lasts 30 days, but longer terms may be available, even up to a year on new homes.

Is there an upfront cost to lock the rate? If you pay a fee for a lock and borrow at a different rate or from a different lender, then the prepaid fee will be lost. In some cases, lenders collect a lock in fee and then credit the money to the borrower at closing. In this situation, there is no additional cost to lock the rate if you go through with the loan.

One benefit to look for: is there a "float down" option? You would lock in a rate at the current market interest rate, but if rates fall prior to your closing you would have a one time chance to finance your purchase at a lower rate.

When you lock in a loan rate lenders have one of two choices: They can secure a loan commitment with an investor at the promised rate or they can play the market themselves and hope that by settlement they can get your rate or better.

But what happens if a lender plays the market and rates go up? The lender loses. The problem is that not all lenders play fair. It doesn't happen often, but some lenders will delay the loan application process past the lock period, thus ending their commitment to make the loan.

How can you avoid this problem? Consider Las Vegas mortgage lenders recommended by your broker. An experienced broker will know which lenders have a good record delivering on commitments.

In general, whether you lock in or not, it's best to be in continual contact with the lender. Make a point to promptly supply all required paperwork, and keep notes showing when you spoke with the loan officer and what was discussed. Get timed, dated and signed receipts for all paperwork you deliver.

So when should you lock in? There just isn't a single answer that works for every situation. You need to consider general interest trends and realize that no one can predict future rates.

For more information regarding lock in agreements for your purchase, just call us at 702-985-7654and we can review the features that can best serve your interests.

Tenants Beware of Deadbeat Landlords!

It is happening all over the country - unsuspecting tenants are returning home from work to find an eviction notice on the front door. The bank has aquired the property through foreclosure and the tenant has to get out of their current home within 30 days. The tenant almost never is able to recoup any of the rent money paid or get the security deposit back.

And in a market rife with vacant homes for sale, Las Vegas has more than its fair share of deadbeat landlords and unscrupulous property managers. Almost half of the 19,000 homes currently listed are Las Vegas foreclosures and many of them are Las Vegas new homes that were purchased by investors and have never been lived in. One recent incident came to our attention:

A real estate agent who was renting a luxury 4500 square foot Las Vegas homes, came back to find the eviction notice on the front door. Immediately he called the property manager whose phone was all of a sudden disconnected. Doing some detective work he was able to track down the home's owner who lived in South America and contact him by phone. Turns out that the "property manager" was an unlicensed friend of the owner. The owner had had half a dozen properties his "friend" was "managing," and the "friend" was supposed to be paying the mortgages on them from the rental proceeds. (In Nevada, by law you must have a property management license to manage rentals that belong to someone other than yourself.)

Unfortunately, the "friend" never made a mortgage payment and absconded with the hefty security deposits and monthly rental fees being paid by the tenants. It also turned out that the owner had never even signed the rental agreement on this particular property. His signature had been forged and the "friend" had told him that this property had remained unrented.

The real estate agent's chances of recouping his $4500 security deposit is almost nil. He has to find another home to rent and move his wife, three kids and brother plus assorted pets in a very short time. The owner's home is already foreclosed upon and he lost all his equity to the bank. How can tenants protect themselves from this happening to them?

In Las Vegas, Noble Title Company is offering a $200 service for tenants called a "Request for Notice." The service identifies the legal owner of the property and whether or not the property is currently in foreclosure. If the landlord is not in foreclosure, the Request for Notice requires the bank to notify the renter should the home go into foreclosure, which would give the tenant at least four months to pack up and move before the bank repossesses the home.

At least with this service, if the tenant receives a notice that the property is in foreclosure, they could opt NOT to pay rent to recoup some of their expenses and their potentially lost security deposit. And they wouldn't be quite so jammed for time to find a new place to live. (The real estate agent mentioned above had a real problem. He already had his kids in specific Las Vegas schools, and there were no other large properties in that area for rent. He was not only forced to move his family to a different home, his kids had to move schools as well.)

So tenants beware! Even though you are only renting a home, you still need to do your due diligence to make sure you aren't unexpectedly out on the street and out of pocket as well.