For about the past year the available Las Vegas home inventory has dwindled down, with recent estimates of around a 5 - 6 week supply. Las Vegas Short Sale homes sales have been outpacing foreclosures, or REO / Bank Owned homes and traditional sales through this time. The increase in Short Sales being completed in Las Vegas has coincided with Nevada's AB 284 in Oct 2011 that hindered the ability of lenders foreclosing, and the legal settlements beginning in 2012 with banks regarding foreclosures. The increase really hasn't been the result of specialists or professional negotiators, but more due to it being in the lenders' best interests. Still, not all Short Sales go through and can become challenging as you can see from the linked article. You will need the help of a diligent real estate agent to sort through available listings for those that have the best chance of completion and be able to push through what can be a tedious process.
If you are doing your own online home searches, many of the Las Vegas home listings you'll find will be short sales. Of all these listings found online, so many will already be contingent, as they are already under contract either waiting for a response or to close. Listings remain on the MLS system until either removed by the owner, the home is foreclosed, or a sale is closed. Trying to sort out which homes are available can be time consuming and frustrating without the help of a buyer's agent search that can sort out those and many other specifics. I know, because I get calls asking about properties all the time, and when I tell the caller the home or homes are under contract they wonder why they can still see them listed on these online searches.
Even in the detailed search results I can provide you may see a listing for an amazing home at an unbelievable price. Unfortunately that 'too good to be true' listing price may be just that. Why? Simply because when a short sale is listed, the final sales price has to be agreed to by the loan holder, or multiple lien holders or a mortgage insurer. They must approve the sale for less than they are owed.
This process of lenders determining a sales price doesn't begin until a buyer's purchase offer is accepted by the home owner, and that of course is contingent on this lender approval. A homeowner may be approved to attempt a Short Sale, but until an actual offer is submitted, a selling price hasn't been set by the bank. This is only the beginning point of the lender determining what amount they will accept. From the time an offer is submitted it can take anywhere from a month in a few cases to many months just to get a reply. It MAY be for the sales price, or they may counter at a higher price, or require the home seller to pay more of the loan's deficiency on what they owe. There is no set formula or procedure, each transaction is unique.
As I mentioned in a previous post about Las Vegas Luxury Homes, a home originally listed as a Short Sale at $1.35 million with a 'professional negotiator' involved, had rather quickly dropped to $875,000 and received an offer at that price. It ended up 4 months later approved by the lender at what I thought it would be, $1.3 million. For an offer to have a chance of success it needed to be much closer to that amount, not the listing price.
Variables between listing and what will be accepted can be the case at all price levels, so you need to have the assistance of a REALTOR® who understands the market. The banks are looking for fair market value, and market prices are already low. Without much more information on comparable values and knowledge of the lenders involved, it may just be a waste of your time, and your money. I don't think you'd want to have your earnest money deposit held in escrow for months, only to find out an acceptable price is more than you want to spend or can afford.
Before doing any home shopping, you need to have your funding or financing in place. You can't make an offer unless you can show proof of available funds or you've been approved for a loan covering the amount of your offer. If financing, in my own experience and that of many of my clients, I've found that working with a local loan officer and mortgage broker can be much better than dealing directly with the larger banks. They often appear to be so large that they repeatedly lose paperwork and you can be shuffled from person to person, with each one making your loan seem like a totally new experience. Typically these local broker officers will also be at your closing to answer any questions that could arise, while it would be rare for a larger bank's representative to attend.
You also have to understand that you need an agent that will be up front with you about the time frames you should expect, and determine if it will fit into your own moving schedule. Also that once an offer has been accepted, that they will continually follow up with any issues that can arise. While this is true for any home purchase, even buying new homes, Short Sales can often have even more drama and frustration involved. A great example of what can happen with a Las Vegas Short Sale in this recently published personal story from a Las Vegas Sun editor.
Of course many more Short Sales are now being completed than in the past, and they can offer some advantages. Typically their condition is better than what you may find with a foreclosed home. You may possibly be able to negotiate some repairs, where Bank Owned homes are most often sold strictly as-is. While Las Vegas home prices have been rising in the past year they continue to offer some incredible values. Combining this with today's low interest rates most often makes it less expensive to own than to rent, and can possibly be less than the cost to build, landscape, and accessorize.
Let me give you a few home buying tips for Las Vegas Short Sales. For the most part, they'll apply to any type of home purchase, a traditional sale, new construction, or foreclosure.
- If a cash buyer, have current proof of funds, with statement from the past 30 days. If financing, get a loan pre-approval AND determine at what loan amount you'll be comfortable. You may get approved for more than you'll want to spend, so ask about payments and closing costs. Different lenders may have different fees. DO NOT make any major credit purchases until after your home sale has closed.
- Find a knowledgeable real estate agent that will work with you. If they don't return calls or emails, only work 'Bankers Hours', don't work on weekends, or don't have time to answer questions or research for you, it's probably time to look elsewhere. Avoid signing buyer / broker agreements unless you are absolutely sure of your relationship with the agent. In NV, one document that must be signed for an agent to make an offer on your behalf is called Duties Owed. It is for the duties owed to YOU from the agent.
Have an idea of where you want to live. The Las Vegas Valley is roughly 600 square miles, so a lot of territory to cover. I can give you an idea of different areas that Las Vegas offers, but much depends on your individual tastes and lifestyle. For out of town buyers I suggest a visit to see many of the neighborhoods on your own, to make your own uninfluenced decisions of what you find appealing, or not.
- Decide on home needs and wants, and there is a difference. Needs are 'must haves', wants are 'would be nice'. You may need a 3 or more car garage, and you may want a pool. Or you may want a single story with a large lot, but need to stay within your budget so a 2 story home may be a better option. Know what you're willing to compromise on to give some flexibility to your search.
- If you need to change something with your search, please let me know. My searches can be very specific, so if after you start looking you decide something needs to be updated, added, or eliminated, I can easily do that for you, as long as I'm made aware.
- Be patient. Inventory is limited and there is a lot of completion out there, particularly for desirable homes. Don't be surprised if you run into multiple offer situations where the seller requests your highest and best offer.
- Understand that typically with homes under $200,000 the competition can be greater. There are many investors / cash buyers looking at those price levels, along with 1st time buyers. The higher above that range the more the competition thins.
- Normally cash buyers have the upper hand as they can offer a quick close and no appraisal issues, sometimes even if their offer is slightly lower than yours. Next comes conventional loans that can be somewhat flexible, then FHA and VA.
These are just a few quick ideas to make your home search and purchase start off a little easier. You'll need more help along the way to find the Las Vegas home that is just right for you, so don't hesitate to get in touch. You can reach me at Roberta@RobertaLaRocca.com, or call 702-354-8988. I look forward to hearing from you!