Buying Las Vegas Luxury Homes today can offer some amazing opportunities with Bank Owned or short sales, to normal market resales and even new homes. These can include a variety of pricing and style choices not only for the home itself, but for the type of community. You can find everything from Guard or Gated, to Golf Course, or Rural Preservation with larger lots that can be ideal for horse owners, classic car collectors, RVer's, boaters, or off-road enthusiasts.
As you can see from the pictures in my last post. 'Las Vegas Homes with a View', there are many areas around Las Vegas that offer some incredible sights of Las Vegas, including Las Vegas Strip Views, City Lights, Mountains, Golf Courses, and Lake Views, including Lake Mead in Boulder City next door. When you look at those pictures you'll discover some Lake View and Lake Side homes in Las Vegas, at Desert Shores and The Lakes, that often surprise those relocating to Las Vegas. All these view properties were considered premium home sites in the real estate boom, and still are today, yet with some amazing pricing in comparison.
Understanding Las Vegas Real Estate Market Conditions
I am contacted by national and international home buyers, as well as Las Vegas locals, and they often have one thing in common. There is a lot of confusion over pricing and availability of Las Vegas area homes. Unfortunately this is due to too much information available, and often is misleading.
Not long ago I was contacted by an NFL player's representative. The player was interested in a move in condition home with a bare minimum 2800 square feet, 4 bedrooms and pool in an upscale community that would be guard gated, up to $800,000. He wanted something close to the Las Vegas Strip and airport, and a newer home, within 10 years. So far this isn't a problem at all. Then comes the fumble. He wanted at least a 2 acre lot that would have to be walled in for his dogs. While there are properties like that in newer guard gated communities and the homes much larger than his minimum, they would be in the millions. If he wanted a smaller lot, would consider slightly older guard gated, or not guard gated, or a bit of a fixer-upper, then it could be possible. The rep was shocked. What about all these foreclosures and falling prices? They have fallen, just not to the levels you may think they have for what you want to buy, and it doesn't apply equally on every home.
Another home buyer wanted guard gated or at a minimum a gated community in a specific area, and preferably with a pool and in move in ready condition. I told him for what he wanted it would be in a range of $100 to $110 per square foot. He insisted that because he saw it somewhere online that homes in this area averaged $78 per square foot he wanted to look at homes at that price level. While I wasn't surprised, they were, when they saw the homes in that low price range. Let us just say they found out they needed a little work. When they finally found a home to buy that fit their needs it was at $101 a square foot, and that without a pool.
In the top picture above you can see a large custom kitchen, that while it has potential, is going to need tens of thousands to restore. This is from a nearly 5000 square foot home, that is just the kitchen, and I've seen much worse. This was a new Las Vegas custom home built in 2007 and listed for sale at $1.2 million. The lower picture shows what the kitchen looked like at that time. This home never sold and was foreclosed and resold as a bank owned home. Of course in this condition the home sold for a tremendous discount, but that sales price, which will figure into statistics, doesn't reflect the cost of restoration or the current value of a home like this when restored.
Available Homes for Sale In Las Vegas
Media reports often pronounce Las Vegas as 'ground zero for foreclosures' or 'leading the nation in foreclosures'. Those statements often lead potential Las Vegas home buyers into thinking there are tons and tons of homes available. In the many Internet home search sites available today buyers often see massive amounts of homes for sale, some with unbelievably low prices....and in a way, they are. There are a few things they aren't telling you, that you really need to know.
While Las Vegas has led in per capita statistics on foreclosures, these properties that have come onto the market have been absorbed by home buyers. There are many investors, often among the cash buyers that have been accounting for roughly 50% of all Las Vegas home sales for months on end. This has lead to record sales levels and low available inventory.
Currently there are around 6,000 homes and condos listed on the Las Vegas MLS that aren't under contract. This of slightly over 20,500 homes and condos presently listed. For homes that are actually available for your offer, that's less than 30%. At current sales levels, that's under a 2 months supply of homes in Las Vegas. A 'normal' balanced market is considered to have a 6 month's supply.
UPDATE: A Las Vegas Review Journal Article the day after this post was made. March statistics for single family homes not including condos are used, but it does elaborate on Las Vegas real estate inventory levels and market conditions.
So you could say that Las Vegas has been in another 'boom' for home sales, only this time prices aren't skyrocketing with 40% to 50% price gains each year. The normal law of supply and demand that would have prices rising doesn't apply at the moment, because of 2 factors. One, many of foreclosed properties have been cash only sales as these homes have conditions that won't allow for financing options, and sell well below market pricing due to those conditions. The second reason is due to very conservative appraisals, and these low priced foreclosures often used as 'comparable sales', even though the condition and upgrades can be wildly different. In a normal market buyers could offer more to get a home when there is competition or the home is more desirable. If they are financing and the home doesn't appraise as it would have in the past, then prices remain flat.
Luxury Las Vegas Home Prices - $200,000 and up
Next there is median pricing, and depending on whose statistics and methodology you chose to believe, they are either falling, steady, or going up. Of course many home buyers would prefer that they would be falling and that they can wait to get an even better deal. Here is where that can be misleading. The falling prices in these statistics will include Las Vegas Trustee Sales, or auctions of listed homes that don't receive offers, and cash only sales. These homes can often be in need of repairs and have additional risks involved, including very limited to no inspection of condition, or with Trustee Sales, additional liens on the property, eviction expenses, or as the case with the former Las Vegas mansion of Liberace, litigation. Typically they are buying very low priced homes that they can either repair to flip or rent. Many are returning to the market as rentals and so their increased value is not included in sales statistics, and of course if they are listed as a flip property, the price will be higher than what they paid. If you're not prepared to do a rehab, or have the resources needed to do that, you really need to take those properties' prices out of the equation.
So what is home pricing really like in Las Vegas? Of course there are homes available at the range of median prices you may see, BUT, there is an almost unbelievable amount of competition in homes around that range. This is very true for homes up to around $200,000, well above median. Of those roughly 6,000 listed homes that are available, about 40% of those are above $200,000. So that may give you an idea of how competitive the Las Vegas home market has become, and an understanding of what move in ready home pricing is at.
You may also see statistics claiming 50% - 60% price drops. Here you need to realize that those were from absolute market peak, and the largest drops were typically in the communities that were coming on line at the peak, and suffered from the greatest number of foreclosures. Price drops will vary greatly from community to community, so generalized statistics for an entire market don't necessarily apply. Some neighborhoods go above or below those percentages.
An example of this was from a very nice couple I met with recently. They were looking to buy in one of the Del Web active adult communities. For their home size needs, only 2 of the 5 in the Las Vegas valley had any homes that fit their budget. This was a bit of a surprise for them, as from what they had heard they assumed that there would be homes available in their price range at any of these communities.
Can you buy a Las Vegas Luxury Home at a bargain price? Of course you can. There are some $200,000 - $300,000 homes that would have sold for twice that or more at the peak. There are new construction Luxury Las homes, some on near 1/2 acre lots, priced in the high $400,000's, that would have been $1 million or more during the housing boom. With some of these luxury properties, during the peak it would have been close to impossible to buy the lot at today's selling prices, let alone build the home.
Will you get a million dollar Las Vegas home for these often quoted median prices? No, of course not. Unless a home is in need of additional investment, current market values prevail, and that will vary depending on the community. So yes, there are Las Vegas luxury homes at 50% - 60% of market peak prices, and sometimes slightly more, but when discounts become excessive you can almost guarantee that the too good to be true, probably has that additional investment catch to it.
When a Listed Price isn't necessarily a Sales Price - Understanding Las Vegas Short Sales
Short sale listing prices can also be an area for confusion, so let me explain. A listing price, even if the lender has agreed to look at a short sale, doesn't mean they have agreed to the price that you may see advertised. The lenders only give a price they are willing to accept after an offer is made. To get that first offer, it's not unusual to see these listing prices drop. The problem here is that if the price is below market value the best you can expect is that after waiting for the bank's response they may counter with a higher price. Sometimes it's much higher. Here is where you need the knowledge of an experienced real estate agent to know if the list price is realistic, if an expected counter offer will still be in your budget, or if not, placing an offer will just tie up your escrow deposit and you'll have to start over, sometimes months later.
Here I'll use another example I recently experienced, since it gives you an idea of how long this can take, and the results. For this, again you may want to take a look at my post on 'Las Vegas Homes with a View' and the Luxury Homes with unobstructed Lake Mead views. I have international clients that were interested in these homes, and one in particular caught their eye. As recently as 2010, well after the market price drops, the home was listed for $2.25 million, and the lot alone was nearly $200,000 as far back as 2000. As a short sale it originally listed at $1.35 million, then dropped a whopping $425,000 to $925,000. The listing also noted that the buyer would pay an additional 1% of the sales price to a professional negotiator, but with what sounds to be incredible savings, it would appear to be well worth it.
Since my clients couldn't make an immediate trip from the other side of the globe, I previewed the home for them. The home was absolutely incredible with so many custom features and an awesome view, that even at original list price it was a steal. I could write an entire blog on all the unique features of this custom home. I reviewed comparables, and knowing the lender involved, I explained that while they could make any offer they'd choose, I would have to expect that the lender would most likely counter much closer to the original listing price. I estimated that they should expect a counter near $1.3 million, although they may accept somewhat less, particularly as this would be a cash purchase.
Within days of sharing my thoughts, the 'price' dropped yet another $50,000 to $875,000. It gave them the impression that either this was one heck of a negotiator, they could purchase for even less as the price was 'falling' so rapidly and dramatically, and that maybe I really didn't have a good understanding of the property. After all, they were reading online about all those Las Vegas area home prices falling, and this home price dropped nearly half a million dollars in no time! Or did it?
I explained again and provided them with information that short sales typically sell for more than foreclosures due to usually being in better condition. Also that banks will agree to short sales when they feel they will be losing less than going through with the foreclosure. I also noted that the foreclosed home next door was held by the same lender, and while about 1000 square feet smaller, it was listed at $1.5 million. I reiterated that they could make any offer they chose to, but that their sizeable earnest money deposit could be tied up for months and they should expect a counter offer much higher than current listing price. While they were considering their decision the home did go under contract that day.
As it turns out I was correct. Approximately four months later this home was returning to available status, pending cancellation of escrow of the previous offer. The bank's counter offer, their accepted price even with a negotiator? It was $1.3 million, just as I estimated. This is why you need the guidance of an experienced real estate agent, and not try to figure this out on your own. Las Vegas home prices are exceptional, often less than the cost to build, and in some cases with new homes the builders have purchased foreclosed developers properties and are able to pass those savings along. Yet you have to be realistic and have local market information to be able to sort out true value. You can't get that from an online listing that may have too good to be true pricing, that can waste your time and money in trying to chase it down. You can understand Las Vegas home buyers' confusion when they see homes listed 'for sale' at prices like this once was, and think there must be more like this, when to actually purchase the home it would cost much more.
Now for some good news about Las Vegas short sales. With the recent banking settlement, 5 lenders have agreed to respond to short sales within 30 days. Those lenders are Bank of America, JP Morgan Chase, Wells Fargo, Citibank and Ally Financial. I personally know of a short sale that just happened since this agreement went into place and Bank of America responded with an expected higher counter offer in 2 weeks. From there they were able to agree on the buyers' counter offer response in days. In this case I would note there was a single mortgage on this particular short sale, and I would still expect times will vary from each individual sale. All in all, it is a huge difference from typical Las Vegas short sale response times of the recent past.
Now for some not so good news about Las Vegas short sales. Not every short sale will have one of these 5 lenders that agreed to this new 30 day window, or will they only have only one loan. With this agreement these banks are also allowed a small percentage to fall outside the 30 day window without penalty or having to make up an action plan. Here again is where you need a good real estate agent can help sort out this information for you on an individual property. In my short sale example I gave here, it was with a lender that wasn't part of the settlement, and from past experience with them, I knew that they typically take months to respond and what range they are expecting for a sales price.
Be Prepared to Buy - Have Financing or Proof of Funds in place
With limited availability of Las Vegas homes and an active market, your first efforts have to be with your financing. For those getting a mortgage, not only will you need to be approved, you need to decide what you want to spend. Approval for say $500,000 is great, but not if you only want to have payments based on a $400,000 purchase. Shop your financing and discuss payments with loan officers, as well as property condition lending requirements as these can all vary from lender to lender. Some conventional loan underwriters have recently become more flexible on property conditions and down payment requirements, and that can be a tremendous advantage in a competitive market.
For cash buyers you'll need proof of funds current to within the past 30 days to present your offer. For international buyers I suggest that these funds be listed in US dollars. While the currency type is not always a requirement, it would be a shame to not have a particular home you are interested in have your offer passed over for this reason, and yes I have had it turn up as a requirement by some sellers.
Buying New Homes in Las Vegas
Some buyers prefer to skip the competition and build new, or purchase a Las Vegas home builder's standing inventory. At times these inventory homes may be able to be finished to the buyer's desires, and there can be a number of incentives offered, such as upgrades in flooring or appliances. There is some advice that I can't stress enough for buying new homes in Las Vegas. YOU are entitled to have your own representation.
If you fail to have your Las Vegas Buyer's Agent present on your first visit to a new home builder's sales office, have your agent register you before your visit, or you register yourself by simply requesting more information online, you can be giving up your right to having your own agent representation.
Some sort of notice like this is usually posted somewhere in a sales office, but once you are there and take notice it could be too late. There have been some rumors that you can get a 'better deal' if you 'buy direct', but I have yet to see any proof of this and I have clients that have had a much different personal experience. As you can see in the print at the bottom of this builder's page, they spell out right there that their sales representatives represent them, the Seller, not YOU the buyer. This is true no matter the builder. It is best to have your own representation, as buyer's agents can not only be there to answer your questions, but can be aware of available specials and incentives of a number of builders to use for both comparison and negotiations. Just as in any home sale, the norm is for a buyer's agent's services to be paid by the seller. It really makes no sense to go it alone when your own representation is available at no cost to you.
Whatever your level of Luxury Las Vegas Home buying, from the hundreds of thousands to millions of dollars, that just a few years ago could have been double or more the price, it's best to have someone guide you through what is really happening in today's Las Vegas Luxury Home Market. It's very complex, and that inside knowledge can help you find your Las Vegas dream home at a very affordable price.
Whatever your price range for Las Vegas Luxury Homes, from the ultimate in customs to new builder homes or investment cash only homes to rehab, 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!