Distressed-home prices in Nevada soar as inventory shrinks

With investors buying houses and hacking down the inventory, the price of distressed homes is rising faster in Nevada than in any other state, a new report shows.

Nevada homes that were bank-owned or headed toward foreclosure sold for an average $144,182 in the three months ending March 31, up 22.71 percent from a year earlier, according to Irvine, Calif.-based RealtyTrac.

Kansas was a close second to Nevada, with the price rising 22.57 percent this past year to $143,626. Nationally, such homes sold for an average $167,095 last quarter, up 3 percent from a year earlier.

Nevada’s price increase comes amid shrinking availability and sales volume. A total of 4,512 distressed homes — meaning they had been seized by lenders, scheduled for auction or slapped with a notice of default — were sold statewide last quarter, down 63 percent from a year earlier.

Practically every house listed for sale in Las Vegas — distressed or otherwise — gets multiple offers, and prices are rising. That’s due in part to the seemingly endless appetite of cash buyers to turn cheap homes into rentals, according to brokers and analysts.

The median price of a previously owned single-family home sold in April in the valley was $167,000, up almost 31 percent from a year earlier, the Greater Las Vegas Association of Realtors reported.

Meanwhile, roughly 13,900 single-family homes were listed for sale at the end of April on the GLVAR’s listing service, down 22 percent from a year earlier.

 

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Five Reasons Pending Sales Fall Through

Buying a home can be a very emotional experience, even when it appears to going smoothly. When something goes wrong, it can be stressful. Your agent will likely prepare you for the possibility that a pending sale won’t go through, but when it happens to you, it can be heartbreaking. Help prepare yourself by learning a few reasons that pending sales fall apart.

1. You change your mind. Cold feet or, as it’s often dubbed, “buyer’s remorse,” happens surprisingly often: fear of commitment, fear of being overextended, fear that the house is not “the one.” Sometimes instincts are correct, but often people let the natural anxiety of home buying wrap around the home itself. The best way to prevent this is to prepare yourself before the process starts. Be practical about your needs, and be honest about whether a house meets them. Don’t allow yourself to be pressured into a home that doesn’t feel right. Limit your discussions about the house to your agent, family and close friends. More input and advice, even the most well-intentioned, can cause confusion.

2. You are unable to obtain financing. Sometimes a mortgage loan falls apart.  That’s why it’s important to be prequalified for loans, to avoid last-minute heartbreak. The rejection by a mortgage lender can be based on a poor credit score or negative items on a credit report. A buyer in need of a loan can correct errors on a credit report, but this generally takes a bit of time. Buyers need to be wary about taking out large loans for cars, furniture or appliances, as well as making major purchases on credit cards. These actions could compromise your loan if the lender runs a supplemental credit check.  A buyer can also offer to make a larger down payment, thus reducing the mortgage balance. If you are careful during the loan process, then you should be well on your way to financing your new house.

3. The home failed inspection. Hiring a professionally licensed home inspector can aid in detecting plumbing and electrical issues, roofing and drainage problems, or faulty heating systems. Repairs can often be negotiated into a contract so that either the buyer receives a credit or the seller agrees to make the necessary repair before the closing. Sometimes, however, your inspector can turn up something that is too large to repair, such as a structural issue.

4. You haven’t sold the home you already own yet. If you haven’t sold your house yet, and if your contract with the home owner is contingent upon selling, you may not be able to go through with the purchase. Most people cannot afford to pay two mortgages at the same time. Some buyers are able to take out a bridge loan, a form of short-term financing, to bridge the gap. New home buyers who have not yet put their old house on the market can save money with a home-equity line of credit. In this type of financial agreement, a lender extends a loan for a certain period, during which the collateral is the borrower’s equity in their own house. These two solutions can help you avoid the prospect of losing out on the home you want.

5. Your appraisal comes in too low. The lender will generally loan up to the appraised value of the home, so if the appraisal comes in lower than the potential mortgage, the buyer cannot purchase. At this point it’s time to negotiate. Either the seller needs to reduce the price to the appraisal value or the buyer must come up with the difference in cash.

All of these scenarios demonstrate why it’s important to maintain close contact with your agent throughout the process. The agent has weathered many sales and has probably saved more than a few from disaster. It’s much easier to go through this exciting and emotional life transition with a knowledgeable real estate professional at your side.

 

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Deciding Whether To Rent or Buy a home getting more complicated

Deciding whether to rent or buy a house in Las Vegas seemed pretty simple last summer: owning was cheaper than renting within two years of purchase.

But now, with prices on the rise, you might have to wait longer before home ownership pays off. Southern Nevada’s housing market has a “breakeven horizon” of three years, meaning it takes that long until owning a house becomes cheaper than renting, according to a new report from Seattle research firm Zillow.

At the end of June, Zillow reported that Las Vegas had a breakeven horizon of 1.7 years, one of the shortest in the country. By the end of September, it rose to 2.5 years.

Las Vegas is now in the middle of the pack.

In the first quarter this year, among the 30 largest metro areas analyzed, Miami and Detroit were tied for the shortest breakeven horizons at two years, while New York had the longest at 5.2 years.

Zillow says it analyzes all possible costs of renting and buying, including upfront payments, closing costs, insurance, taxes, maintenance and monthly rent or mortgage. It then factors in historic and expected appreciation rates and rental prices.

Las Vegas’ breakeven time frame is rising as home sales prices climb because of the limited inventory and high demand from cash investors.

The median price of a previously owned single-family home sold last month was $167,000, up almost 31 percent from a year earlier, according to the Greater Las Vegas Association of Realtors.

 

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Keys to Winning On A Listing Appointment

You have a listing lead and have just scheduled the appointment. How you proceed once you are in front of the sellers will determine whether you obtain the listing. Are you taking the right steps to ensure that you get the best possible results?

Price

A few days ago I was leading a “new agent” coaching call on how to price properties on listing appointments. One agent said her manager recommended completely filling out the listing agreement — including the price — prior to the appointment. She was to then hand the completed listing agreement to the seller at the beginning of the appointment.

The group’s reaction to this approach was universally negative: “I think that’s very arrogant,” and “I would never list with someone who had already determined the price without even seeing the house.”

This approach is an old technique that originated in the “hunt ‘em, tell ‘em and sell ‘em” school of real estate. You must hard close the sellers to accept the price you choose. The truth is that even though you may be the real estate expert, no one likes being told what to do with their property without their input.

A secondary problem with this approach is that it creates a win-lose situation. If the seller agrees with the agent, then the agent wins. If the seller disagrees, the agent loses because they have set up a confrontational situation at the beginning of the appointment. Agents don’t like being told they’re wrong any more than sellers do.

– See more at: http://www.inman.com/2013/05/16/play-offense-not-defense-to-score-listing-appointments/#sthash.3Vb7Y3y6.dpuf

The goal is to set up a win-win for both parties. The way to do this is to view your role as a conduit of information. In fact, a great guideline to remember is: “It’s not your house, it’s not your mortgage, and it’s not your decision.” Instead, you are a resource that your clients can rely upon to help them to make a great decision. When you take this approach, virtually all resistance melts away.

The key to winning on listing appointments is to be a conduit of information, ask plenty of questions, and avoid being put on the defensive by always remembering that it’s the sellers’ house and it’s their decision.

In the case where the sellers are unrealistic about the price, you always have the option of standing up, thanking the sellers for their time, and wishing them the best in getting the price they want. When you are willing to walk away, many sellers will relent on the price. If they don’t, you have saved yourself a lot of time and money marketing a listing that won’t sell.

Commission

When a seller asks you to reduce your commission, it means that you have not illustrated your value. The challenge with this situation is that you are immediately placed on the defensive. As in the example above, the moment you go on the defensive, you are usually in a losing situation.

A better approach is to demonstrate your value before the seller ever has a chance to object. For instance, you can prepare a premium marketing plan that outlines a minimum of 10 services that you (and/or your company) provide that most other brokers don’t provide. Even if your competitors do provide these services, most agents don’t ever explain them. This means that if the sellers are interviewing other agents, you will still win since the other agents are not normally prepared to have this discussion.

Another way to differentiate yourself is to provide a 90-day marketing plan that outlines exactly what you will do to get the seller’s property sold. Once you provide the seller with the list of all the services that you offer, you can then ask, “Which of these services do you want?”

In most cases, the sellers will want all of them. If they still ask you to lower your commission, avoid becoming defensive. Instead, ask a simple question:

“Mr. and Mrs. Seller, this is our premium marketing plan that will provide you with the maximum exposure to the marketplace that will help you net the highest possible price. If you would like to pay a lower commission, I will be happy to refer you to a limited services agent.”

No one wants “limited service.” Avoid using the word “discount” because discounts are considered to be a negative rather than a positive.

In the case where the seller says, “Well the other agent from your office offered the same services and was willing to charge us $5,000 less in commission,” a great way to handle this objection is to avoid being defensive. Instead, ask a question:

“Mr. Seller, in order to achieve the highest possible price for your property, you need a powerful negotiator, wouldn’t you agree?” (The sellers almost always say “yes.”)

Continue by saying, “If I can’t even negotiate a full commission on my own behalf, how effective do you think I will be in helping you to negotiate the highest possible price for your property?”

The key to winning on listing appointments is to be a conduit of information, ask plenty of questions, and avoid being put on the defensive by always remembering that it’s the sellers’ house and it’s their decision.

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Why You Need a Realtor Who Specializes In Seller Representation To Sell Your Home

Why You Need a Realtor Who Specializes In Seller Representation To Sell Your Home

There are many Realtors out there. Who will do the best job for you? Representing a Seller in a real estate transaction involves much more than negotiating the highest sale price. Did you know that most real estate contracts are designed to protect the rights of a Buyer, NOT the Seller? Each state uses a different real estate contract, and each contract contains numerous safeguards allowing Buyers’ the ability to exit the contract without penalty. For example, in a Nevada Real Estate Contract, unless otherwise amended, the contract is contingent upon the Buyer’s ability to qualify for financing. This means that on day 29 of a 30 day escrow, after you’ve hired a moving truck and packed up all your belongings, etc., a Buyer can cancel and back out of the agreement without penalty if their financing falls through. How is this fair to a Seller and who’s going to protect the Seller’s rights to minimize the chances of something like this happening?

 

Seller representation requires much more than simply “finding a Buyer.” In order to properly represent a Seller, you need to find the RIGHT BUYER…meaning a Buyer who’s willing to pay the highest price AND who has the strongest financing (so the deal doesn’t fall apart.) Federal laws make this a difficult task. For example, if a Buyer offers to pay CASH for your home, you have the right to request written proof of the Buyer’s cash funds, (to ensure they have enough available cash to complete the purchase) however, if the Buyer is obtaining a loan, you are limited BY LAW, to the types of questions you’re allowed to ask.

 

For example, it’s a RESPA violation to ask a Buyer or their lender what a Buyer’s FICO score is. Why does this matter? What if the Buyer’s loan program requires a minimum FICO score of 640 to qualify, yet the Buyer (who put a list price offer on your home) has a FICO score of only 642? Credit scores can quickly drop for a variety of reasons. Do you really want to enter into contract with a Buyer whose credit score is so low, it could drop during the course of your 30 day escrow and they no longer qualify? Do you want to have all your belongings packed in a moving truck and get a call at the last minute informing you the Buyer’s financing fell through?

 

There are many things that can be done to protect a Seller. You need representation by a Realtor who understands the Seller’s rights. Additionally, you need a Realtor who will thoroughly research each prospective Buyer and do everything legally to ensure you’re entering into contract under the best terms. Additionally, there are many things that can go wrong in a real estate transaction. Whomever you choose to represent you, it’s important they have the experience, knowledge and ability to proactively represent you to get the deal closed.

 

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Surging Home Values In Las Vegas Expected To Keep Their Momentum.

After bottoming out a year ago, Las Vegas home values have soared and are expected to rise further, boosting the region’s fragile economic recovery.

The Las Vegas Valley’s median home value was $138,800 as of March 31, at the end of the first quarter, up 22.3 percent from a year earlier, according to a report out Wednesday from Seattle-based research firm Zillow. Local home values hit bottom in the first quarter last year at $113,500.

In this week’s report, which covered 30 metro areas, Las Vegas had the second-highest rate of year-to-year appreciation behind Phoenix’s 24 percent. San Jose, Calif., was a close third at 22.1 percent. Home values rose nationally by 5.1 percent.

Las Vegas home values are expected to climb 7.5 percent by spring 2014, compared with the projected increase nationally of 3.2 percent, Zillow said.

Cash investors, who snap up cheap Las Vegas homes to use as rentals, are behind much of the housing sector’s recovery. Sales prices, home values, new home sales and construction projects are on the rise, although still nowhere near the boom years.

For instance, the median price of previously owned single-family homes sold in March was $161,000, up 31 percent from $123,000 a year ago. In 2006, the price was more than $300,000, according to the Greater Las Vegas Association of Realtors.

Altogether, the local economy is improving but remains badly damaged from the recession.

Nevada has the highest foreclosure rate, second-highest mortgage delinquency rate and fourth-highest credit card delinquency rate in the country. The valley has the highest percentage of underwater homeowners, whose mortgage debt exceeds their home value, and is tied for having the fourth worst consumer credit score in the country.

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Signs Point Toward Housing Recovery

Signs Point Toward Housing Recovery

 

By MARTIN CRUTSINGER THE ASSOCIATED PRESS

 

WASHINGTON — U.S. housing starts topped the 1 million mark in March for the first time since June 2008. The gain signals continued strength for the housing recovery at the start of the spring buying season.

 

The overall pace of homes started rose 7 percent from February to March to a seasonally adjusted annual rate of 1.04 million, the Commerce Department said Tuesday.

 

Apartment construction, which tends to fluctuate sharply from month to month, led the surge: It jumped nearly 31 percent to an annual rate of 417,000, the fastest pace since January 2006.

 

By contrast, single-family home building, which makes up nearly two-thirds of the market, fell 4.8 percent to an annual rate of 619,000. That was down from February’s pace of 650,000, the fastest since May 2008. The government said February’s pace was a sharp 5.2 percent higher than it had previously estimated.

 

Applications for building permits, a gauge of future construction, declined 3.9 percent to an annual rate of 902,000. It was down from February’s rate of 939,000, which was also nearly a five-year high.

 

SalesTraq, a local housing research firm, doesn’t have March numbers yet, but its February data show strong improvements in new-home sales and permits.

 

Local builders closed on 497 units, up 73.8 percent from 286 closings in February 2012. Permits nearly doubled, to 463, up from 236.

 

Builders also more than doubled their closings in the first two months of the year, selling 1,009 units, compared with 501 units in January and February of 2012. In the same period, permits surged from 438 to 1,062.

 

SalesTraq said in a report that the boost in activity has come from limited housing availability and surging buyer demand.

 

Paul Ashworth, chief U.S. economist at Capital Economics, called the national data “obviously good news.” But he noted that the surge was a result of a jump in volatile apartment construction and said the pace of building could drop in April.

 

Still, home building is expected to contribute to economic growth in 2013 for a second straight year — a reversal from 2006 through 2011, when it held back the economy.

 

Deutsche Bank predicted that home construction will reach an annual pace of 1.2 million by year’s end. Brett Ryan, an economist at Deutsche Bank, said that rate could add 0.5 percentage points to 2013 growth. That would be the biggest contribution from housing since 2004.

 

The housing recovery could spur an additional percentage point of growth by encouraging more consumer spending, Ryan said. More building and higher home sales mean Americans will probably spend more on things such as furniture and landscaping. Higher home prices also create a “wealth effect”that gives homeowners the confidence to spend more.

 

Steady job growth, near record-low mortgage rates and rising home values have encouraged people to buy homes. In response to higher demand and a low supply of available homes for sale, builders have stepped up construction.

 

March’s pace of homes started was nearly 46 percent higher than in the same month in 2012.

 

Housing construction fell 5.8 percent in the Northeast but gained in the rest of the country, led by a 10.9 percent rise in the South. It rose 9.6 percent in the Midwest and 2.7 percent in the West.

 

The National Association of Home Builders/Wells Fargo April survey released Monday showed that builders are concerned that limited land and rising costs for building materials and labor could slow sales in the short term. That led to a third straight monthly drop in confidence.

 

Still, builders’ outlook for sales over the next six months climbed to the highest level in more than six years, suggesting the obstacles could be temporary.

 

And construction firms have stepped up hiring in recent months. They added 18,000 jobs in March and 169,000 since September, the Labor Department says.

 

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the homebuilders.

 

 

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