The bank that holds the mortgage wants the seller to stay in the home right up until close of escrow.  Once we list a home, we should be able to put it into escrow within a month or two.  Then the process of getting the short sale approved begins.  This can take around 3-4 months.  Once approved, close of escrow is usually within 45 days.  That means most short ssale seller’s can stay in their home for at least 4-5 months from the time they list their home here in Southern Nevada.  No two deals are alike and it could be as little as 2 months  or as much as 14 months.

If you are worried about where you will land once you sell your short sale here in Las Vegas, don’t worry too much.  There are plenty of landlords that are happy to lease homes to recent short sale sellers.

That being said, I need to relay a story that happens all too often.  An FHA buyer submitted and had accepted an offer on a beautiful one story home in Summerlin.   His offer was equal to the last sold model match, which sold only 2 months earlier.  When he received his appraisal, it came in $21,000 light of the contracted price of $180,000.  The last sold model match sold for $180,000.  The appraiser felt it necessary to reduce the most recent sold comparable by 5%/month to accommodate what he said was a declining market.  The prices in this sub-division haven’t fallen at all in more than 15 months.  So the buyer, being stuck with this appraisal has no choice but to withdraw his offer and try to find another home that will appraise.  In the meantime, an investor that wrote a cash offer that doesn’t require an appraisal, will end up getting the home for $172,000.  That will help justify the appraiser’s work and force our market to slide again.

When an appraiser doesn’t do his job correctly, it impacts so much more than one deal.  This real estate transaction, could have served to help stabilize our values and put an owner occupant in a home, instead it de-stabilizes our market and created another rental.

There are some that believe the banks loaning money have implemented procedures to insure that appraisals come in low.  The ironic part of that is that the banks own most of the homes on the market and they are serving to keep the prices down on the very product they are selling!  I myself, don’t believe they are doing that, but I do believe they should be helping all of us to insure that appraisers can be held accountable for bringing in low appraisals.

I know that there may be people that believe that I’m just another Realtor complaining about appraisals because it’s hurting my commissions.  I can assure you that my rant is about what’s fair to regular home buyers versus investors.  I actually help many investors buy homes and I believe in real estate investment as part of anyone’s financial portfolio, but I also still believe in the American Dream.  I know it’s been a nightmare the last several years, but if we are going to go back to good times, we need to have an environment that promotes home ownership.  I’m not in favor of “no money down” or going back to the days of loaning money to anyone that can fog a mirror.  I’m in favor of giving families an opportunity to own their own home, instead of renting it.

Well, that applies to our real estate market too. The most recent development surrounds our current inventory. As of this moment we have 5,474 single family homes available in our entire multiple list. We have 13,113 single family homes in escrow. We have closed 3,195 homes in the last 30 days.

That means we have about 45 days worth of inventory available. One of the basic premises of economics is that when an inventory of available product is low and the demand is high, prices go up. That’s not happening though. There are three reasons that pricing has not reacted to the inventory. First, the low inventory is partially a result of the lack of bank foreclosures over the last 5 months. The banks will eventually start bringing homes back to market. I do want to caution buyers however, there aren’t as many out there as you think. It’s likely that once the banks fire up their machines again the output will be the same or even less than it was last year. That’s because the banks are liking short sales. The second reason for prices not moving is the appraisals. You have heard me whine about this before, but it’s still happening. Appraisers just find it easy to bring homes in low and there is no way we can get them to allow prices to start moving in the right direction. The third reason, is that buyers are still cautious. There is a real sense that we may see another downturn in pricing as a result of either interest rates going up, or demand drying up.

All of these reasons have some validity. There will come a day, in the not too distant future when prices will start to rise. That’s when the buyers will all want to buy.  Some of the wealthiest people in our country made their money in Real Estate markets just like this!  Pay attention buyers.  You will be wondering in 5 years why you didn’t buy now.

Check out the press release here by clicking here!

Shelley, Harvey and the entire team would like to express our heartfelt appreciation to all our clients and vendors who helped make 2011 such an outstanding year. We look forward to working with each and every one of you to make 2012 even better!

They have since been resistant and perhaps even defiant in wanting to proceed with foreclosures.  That is the concern.  Will the banks allow these additional requirements to impede their ability to get homes to market?  While they may not be pleased with the process and it will cost them more time and money, I think they will get their procedures in order and eventually we will see the market stay on its course.

That means that while we are in the holiday season and approaching a new year, the number of foreclosures will remain low, but they will pick up in the first or second quarter of next year and the inventory will continue to remain at the levels we have seen in the last 30 months.

The impact on homeowners desiring desire to short sale their homes is still unclear, but the banks have all concluded that short sales are far more favorable than Foreclosure and this legislation will certainly not change that opinion.

When we receive a low offer on our listings, we will counter back to a price that we deem a good value to the buyer and reasonable to the lien holder.  We also counter out the costs that we know the lien holder will not allow and we counter with information to the buyer and buyer’s agent that enables us to know that the buyer fully understands the nature of short sales.  Sometimes the buyer decides to reject our counter.  That’s OK because it’s likely that buyer wasn’t going to be patient enough to endure the process.  We would rather leave the home on the market to attract another buyer that will endure and help us to close the escrow.  If the buyer agrees to our counter offer, then we know we have a quality buyer that will be there when we get an approval from the lien holder.

When I’m working with a buyer that chooses to make an offer on a short sale, I will pull the comparable sales to evaluate the fair market value just like the lien holder will do upon receiving the offer.  This gives my buyer the information well ahead of a counter we may get later in the process.  My buyer will be prepared for the idea that the lien holder will likely counter back at a number that is close to fair market value and my buyer is prepared to accept that counter and proceed.  If the lien holder doesn’t counter and accepts my buyer’s offer, even better!  My buyer gets the great deal!

I also enjoy talking about my work. Whenever anyone finds out that I’m a Realtor, they invariably have questions for me.  They usually are curious about the real estate market in general and will ask “How’s the market?”  They might expect to hear how difficult it is or how bad it is, but what they hear back from me these days is how good it is.  When our home prices were rising 5% per month, we heard how bad the market was for buyers, not how good it was for sellers.  Now that are home prices are so low, we hear how bad it is for sellers but not how good it is for buyers.  The newspapers and other media vendors sell more with bad news than good news. 

I’m excited about the opportunities in our current market.  We are seeing out of state and out of country investors buying up homes here at an un-precedented rate.  The smart money is coming to town. 

You might comment that sounds great for buyers, but what about sellers.  I would suggest that any seller in this market should be buying as well.  If you need to sell your home and your thought is to wait, then consider the market.  If you wait till your home gets to a certain value, what do you think the home you are going to buy is going to do in that time?  It’s likely going to go up too. 

I had a client that is a grandmother and she wanted to move closer to her grandchildren so she could spend more time with them.  She then let me know that she needed to wait to get a certain number before she moved.   She waited for 6 months and then asked me about values.  I had to tell her that they actually were continuing to drop.  She knew that if she waited for the value of her home to get where she wanted, she might not ever get to live near her grandchildren.  She listed the home and we were able to sell it quickly, then she took her proceeds and bought a home near her grandchildren.  She let me know that the net effect to her bank account was $0.  She was able to get such a great deal on her purchase that she was actually saving money every month.  Money she could use to spoil her grandchildren.

There are many lessons that can be drawn from this near calamitous experience. What I find fascinating is that singularly each occurrence: a pedestrian crossing a street, vehicles entering this particular seldom used intersection, would be routine and uneventful. However when each happening occupies the same space and time the outcome is dramatically altered.

The real estate market in Las Vegas is an example of a convergence of seemingly ordinary and innocuous events in a business environment that was deemed for years to be safe and bullet proof. The outcome created has been near fatal to our financial security. A slow down in construction, a rising unemployment, a diminished tourist trade, non diversification of the local economy, singularly these economic conditions could have been dealt with, but collectively created a Titanic event.  We have experienced all the conditions that feed upon themselves and aggravate the spiraling conditions. Local, state and federal governments have yet to address the causative factors but work on peripherals that prolong the conditions and expend diminished monetary resources unwisely. Our time will soon expire to effectively create change. We must seek out and support leadership that has the interest of populace, demonstrate sound economic beliefs, and are not motivated for personal and political gain.

On behalf of Prudential Real Estate and Relocation Services, I want to
congratulate you on being named to “The Thousand,” the Wall Street
Journal/REAL Trends report of America’s top real estate agents and teams.

Reaching this exclusive list is an incredible honor and reflects your
passion, skill, discipline and creativity. As impressive, you are
recognized for achievements made during some of the more challenging times
our industry has faced. You are a shining example for our entire Prudential
Real Estate Network.

Again, congratulations on your achievement. I wish you continued success
far into the future.

Sincerely,

Earl Lee
President
Prudential Real Estate and Relocation Services