Part 2 - New Homes, Resales and Foreclosures - Part 1 Click Here
New Homes in Las Vegas, just as resale homes, have had prices drop due to the competition from foreclosures and short sales. In some cases these new homes in standing inventory can be priced at roughly $100 a square foot or less, offering a tremendous value. Not only because they have a builder's warranty versus the as-is of a foreclosure, they may also have added upgrades, and in some cases can be finished to the buyer's preferences. They also tend to have less competition involved than foreclosures and not the wait time or uncertainty of a short sale acceptance.
So why would you need a Buyer's Agent for a new home? They have their own sales staff, so just walk in the door and pick out your home, and get the best deal, right? Well, maybe not, there can be more to it than that.
Let me relate an experience of one of my recent clients, a great couple from the east who have been planning their relocation for the past 4 years, and visitors for many more. The past year's winter with record snowfall had really helped persuade them to finally make their move to Las Vegas. Being from that part of the country, I can relate. During their many visits they had initiated a new home purchase on their own. Without going into the gory details, they had a bad experience with one of the major builders. That is what led them to me, something I always include in my blogs and website about new home sales in Nevada:
New Home Buyers Please Note:
Registering online, requesting more information, or a first visit to a home builder without your agent present will eliminate your right to have your own agent representation.
Typically when you walk into a builder's sales office, if you look hard enough, you'll see a small sign somewhere that will say something to the effect that buyer's agents must register their clients on the first visit to be able to earn a referral fee or broker commission. Yes, that's true, REALTORS® don't collect a paycheck, we are paid by commission and only if a buyer's sale is completed. We have our own time and expenses invested in a client, and for whatever reason they should not close, that's our loss to absorb. So just like everyone else we do have to be paid for our work, only ours is performance based rather than a weekly paycheck. It's not really much different than most any small business, your success or failure is based on your service quality, business sense, and efficiency.
What the sign doesn't say is that builders are offering this as a cooperative commission, just as a homeowner would do with a resale or a bank with a foreclosure. This amount is predetermined by the seller and divided between the selling agent and the buyer's agent, or in the case of one agent handling both sides of the transaction, known as dual agency, the agent retains both portions of the cooperative. In this situation they go from an agent representing one party or the other, to what is supposed to be a neutral third party.
While this is legal in Nevada and some other states, in my own personal opinion this is like walking into a courtroom and asking a prosecuting attorney to defend you. At best, they could become an arbitrator, not representing you to the best of their ability. In any type of real estate purchase or sale I would personally recommend having your own agent. As I include myself in this recommendation, I don't do this to put down any agents, but to offer home buyers the added comfort layer of knowing they have their own representative and avoid any questions of a conflict of interest.
While some may be under the impression from these signs, sales reps, or from 'tales on the internet', that they can score a better price by 'dealing direct', I believe they're mistaken. Why? Something that effects future sales...appraisal value. Builders already have very competitive pricing, and by cutting special deals, they'll cut their own throats. Future sales will have trouble getting financing.
All sales are recorded, and those comparable sales prices effect future appraisal values for home loans. I've provided my clients with that comparative data and it was something they hadn't even considered looking at. Needless to say, in addition to the thousands in upgrades and other perks they received, their per square foot cost was also slightly lower than all other recent comparable home sales in this community. Without that information, that buying direct 'good deal' you may think you're getting, is nothing more than a guess, at best.
What other advantages did my new home couple receive in shifting from self-service to selecting me as their buyer's agent? Let's back up to their home buying process. After giving me the details of what they wanted in a new home and the price range they were comfortable with, I was able to present them with a larger and more diverse selection than they were able to find on their own. This, even though both are Internet and tech savvy with laptops, smartphones, and kindle. I was able to introduce them to communities and builders they had overlooked. Why? Simply because I work in this business daily and have access to even more resources, contacts, and research.
As your Buyer's Agent, I don't represent any specific builder, home seller, or bank. I represent you, my client. My purpose is to find the best available home selections that affordably fit your personal choices. I can do that without any limitations.
A sales agent representing a builder and quite possibly a specific community, doesn't have that luxury. Chances are they won't recommend looking at other communities or builders, no more than you'd expect a Lexus dealer to recommend a Cadillac or other competitor. As a Real Estate Agent, Federal Fair Housing Laws prohibit me from steering you to or from any area. I can only present all available choices that fit your housing or real estate investment needs. In addition to this, I personally don't claim to 'specialise' in a neighborhood or type of home, so that I can equally present all your available options throughout the Las Vegas Valley.
By offering my clients this selection of homes that would be available in various communities, they were able to begin to narrow their search even before they arrived. This allowed them to use their time here more effectively. They weren't overwhelmed or confused by having too many to chose from in a relatively short time. While some of the homes were located in those 'more often named' communities I listed in Part 1 of this series, their actual choice came down to one of the communities, and builders, they had overlooked in their own several year long search. They were actually torn between two different communities from this builder, but my suggestion of driving around each of these neighborhoods to get their own feel of them, was a big help in making their final decision.
Buying foreclosures are a different situation. Particularly under $200k, cash is king, competition is high, and it moves at a much faster pace. The home pictured above was one for another investor I'm working with, and is just one example. This home was on the market 14 days before being under contract, had multiple offers, sold at list price and closed within 28 days of listing as a cash sale. Generally speaking from a cosmetic point of view, the home was in relatively good condition, but there were a few visible items that appeared to need addressed. A home inspection could potentially uncover more, or not, and there is always the possibility of any lack of maintenance items cropping up. These are considerations when purchasing a foreclosure that will be sold as-is and without any condition disclosures that you would have in a normal resale.
If you think that foreclosure sale was fast, you're wrong. I often come across homes that have only been listed a few days and offers are no longer being accepted. It's also not uncommon when submitting an offer to receive a multiple offer form in reply, notifying potential buyers of this situation so that they can submit their highest and best offer.
To give you a further idea of how competitive the Las Vegas home market has become, let me give you just one more example. I've written around 25 and counting, very clean cash offers at or above listing price for a Canadian investor. Of those, only 3 were accepted, the rest beat by higher offers. Don't be misled by news reports of the Las Vegas Foreclosure Crisis or Las Vegas Foreclosure Rates. Yes, there are foreclosures and there continues to be, but there is also a lot of buyer competition out there, as well.
Las Vegas home inventory has been shrinking and sales have been hitting near boom year record highs during the past year. You will need to be persistent and creative if you want to be successful, but of course you don't want to overbid, particularly beyond your personal comfort zone. Here again, comparable sales statistics from your buyer's agent provide you with guidance for your offer price decisions.
Short sales are another aspect of the market. This is where a homeowner facing foreclosure is attempting to sell their home for less than is owed, and must be accepted by the lender, or lenders. This can possibly offer the opportunity to purchase a home left in better condition than a foreclosure. Unfortunately there is no guarantee that the lenders will agree to the price the buyer has accepted. The bank approval process can take weeks to months, can result in them accepting, refusing, or countering either your offer or possibly requiring the homeowner to sign a note for the difference owed.
A new Home Affordable Foreclosure Alternatives (HAFA) incentive program has been put into place by the Treasury. Hopes are that it will help streamline and speed the acceptance process, and allow for more short sales to avoid foreclosure. As it was put in effect April 5, 2010 and is voluntary, it's too soon to tell what real effect these incentives will have at this point.
Resales are often overlooked in today's market and may have less competition as so many have caught 'foreclosure fever', thinking that they are the only good deals to be found. I often get contacts for free Las Vegas foreclosure lists, and they want to shut out resale homes completely. Personally I recommend looking at all your options, and if a resale is competitively priced, it can offer good value. Unlike foreclosures, with a normal resale you'll receive disclosures from the homeowner, may have recourse if known faults aren't disclosed vs the as-is of bank owned, and have the potential to possibly negotiate any issues found during your due diligence / inspection period. Of course I also see resales that can be unrealistically priced, well above market values. Here again, a REALTOR® can provide you with comparative sales data to help you make that determination.
If you are interested in relocating to Las Vegasor would like more information on Las Vegas real estate, please email me, at Roberta@RobertaLaRocca.com, or call 702-354-8988. I look forward to hearing from you!