Every day, guilt consumes me as I know I need to post an entry on my blog. It's like writing to Grandma who lives across the country. You know you need to do it more often, but later turns into tomorrow and before you know it, it's November 1st!
Since I haven't written since June 11th, let me fill in the missing gap of time. The summer was extremely hectic. I wear my name tag, proudly identifying myself as a Realtor, wherever I go. When folks ask how business is, and I reply, "Great!" I get a pitying look like they're thinking, "Sure it is, fella. What do you think, I live under a rock? The market has tanked, real estate agents are back to working in the casinos - who are you fooling?"
Contrary to all the media reports, if you personally know and trust someone in Real Estate, you'll find out that this is one of the busiest years to be an agent. There are so many buying opportunities that folks who are ready, willing and able to buy - they can't help but buy a home now.
So to keep this entry on the short side, I'll bring you up-to-date by telling you my business has gone from "me" to "we." In order to continue providing the extraordinary service my clients have come to depend on, I have expanded to become "The Karten Group."
We're still at Realty Executives - a company I feel very comfortable with, that has the integrity, professionalism and experience that reflects ours. In fact, we're moving our group to the main office at 1903 S. Jones, so that we're centrally located for the majority of our clientele.
Over the next month, you'll see more of our changes go into effect, and I'll introduce you to each member of the group. The market continues to evolve, and we're going to see many more foreclosures come to market, and hopefully some programs to keep struggling homeowners in their homes.
Until my next post, hopefully before Spring, I wish everyone the very best during this holiday season. We'll be here, ready to answer your questions, help you find the home of your dreams, and make the most out of the coming year!
Saturday, November 1, 2008
Wednesday, June 11, 2008
Buying (or trying to buy) a Foreclosure/REO in 20 easy steps
It's the Real Estate Game, Kiddo!
OK, that's not how I speak, but it makes my point. 2008 has brought some amazing opportunities for anyone looking to buy real estate - virtually anywhere in the country. Forget the gloom and doom headlines - I'm not buying it. Why? Because my phone and email are full of folks ready, willing and able to buy - and it's my pleasure (and my passion) to help them.
The past year has been great in separating the real estate agents who "sort of" work in this profession, and those of us who devour it. I must say I fall into the latter category. But enough about me - I want to talk about you.
The number one thing you need to know, and that I will tell you during our first conversation, is that you have to MANAGE YOUR EXPECTATIONS. Unless you are buying a home directly from the homeowner (known as a "fair market sale"), you most likely will be buying an REO (Real Estate Owned), also known as a foreclosure (although REO is the right term.)
Nothing about buying an REO is "normal." This segment of real estate has its own quirks and peculiarities, and if you're not forewarned, it's not a pleasant surprise. I will be addressing the issues that face buyers in Las Vegas, although I'm sure this is happening elsewhere also.
Here's the process you will most likely go through during the home-buying purchase:
1 - Get pre-qualified by the lender of your choice. You will learn how much of a home you qualify for. Also be sure to ask what the monthly payment is on that dollar amount. It may be more than you're willing to spend or afford after you add an HOA payment, real estate taxes - and inconsequential things like food, gas, insurance, clothing, etc.
2 - Choose a Realtor you feel comfortable with or that was referred to you with REO/foreclosure purchasing experience.
3 - Tell the Realtor all the features your dream home has in it, as well as the areas of town you're interested in. Make sure you know which features are "deal-breakers." In other words, things you MUST have (RV parking or no HOA or master downstairs, etc.)
4 - Your Realtor will put together a list of homes and you'll start looking in person.
5 - You find a terrific home and want to put an offer on it immediately! (THE FUN ENDS HERE.)
Steps 1-5 are the same whether you buy a fair-market home or REO. Now we enter the Twilight Zone of REOs.
6 - The "seller" - meaning the bank that owns the property states in the listing that you must be pre-qualified by their bank. What? You don't want your credit run again. Sorry - these are the "rules" and your offer isn't getting submitted without the right pre-approval. (I don't want to spoil the surprise, but when you don't get this home and start the process again, you'll have to get pre-approved by yet another bank!)
7 - All your friends, family, the media, tell you this is a buyer's market and you have to put in a lowball offer AND ask for closing costs, a home warranty and a repair allowance. (The reality is that if the listing is 1-3 days old and is in good condition or better, I can with almost 100% certainty tell you there will be multiple bids, above asking price and the winning bid will not ask the seller for concessions.) So the question is, how much do you really like this house?
(Unfortunately most buyers want to try it their way the first few times, and after consistently being told they're a backup offer - if there's any communication from the seller's agent at all - they start to take some professional advice.) Your Realtor should be very patient and understand what you're trying to accomplish. Remember, they're on your side and watching out for your best interests at all times (or should be). If you don't get that feeling, find another Realtor.
8 - Your agent has submitted your offer and now you wait for the answer. You LOVE this house, so you're really antsy about finding out if you've got it. A day goes by, then another, then another. It's a week (oh, this is ridiculous!) - Mr./Ms. Realtor, pick up the phone and see what's happening!
The truth is the listing agent is waiting for a response from the bank - and they've got no control over how fast the answer comes. In many cases, however, the listing agent did get the answer, and only told the "winning" bidder. So it's up to your Realtor to check the MLS daily to see if the status changes from available to pending/contingent.
So let's say you didn't get the winning bid. Now you start over again at step 6, and repeat for as many times as necessary to get to step 9.
9 - Your bid is accepted! Congratulations, but don't start chilling the champagne yet. You will now get to sign a bunch more documents (counter offer addendums - even if the bank accepted all your terms.) You should read all the addendums, and have your Realtor explain them. A lot of the terms won't make sense until down the line when you balk at the process. The addendums are the CYA (cover your as*) for the bank. After you sign the papers, start doing your due diligence.
10 - Due diligence is everything you need to do to make sure that you're happy with the property, the rules and regulations, the lender, etc. If you haven't already put your full loan application in - do this NOW! REOs will not close in 30 days, but when the seller is ready, you better be, too.
If you're planning on moving (or have to move) within 30 days, find temporary housing. Tears, pleas of mercy and anything else you resort to will fall on deaf ears in the seller's agent's office.
While you're getting your loan documents together (really this should be done already), your Realtor will order and you will pay for a home inspection ($200-500, depending on the size of the home and the scope of work done.) Hire a professional as their report will be needed later on and they see things you never will think of looking for.
If you're purchasing a home in an HOA (Homeowner's Association), you will have to review the CC&Rs (Conditions, Covenants and Restrictions). Here's a little bump in the road - many REO listing agents say they will not order the HOA resale package. Make sure your Realtor knows that by law the listing agent must order the package. They will probably make you pay for it, though. This runs between $100-250, and is most likely a non-reimbursed expense. Once you receive the package, you have 5 days to review all the documentation, and if there's something in there you can't live with, now is the time to terminate the agreement.
The same thing goes for your home inspection. If something comes up in the report that you are unprepared for (mold, roof issues, etc.), this is your opportunity to get out of the deal without losing your earnest money.
11 - Did you request a repair allowance in your offer and it was approved? If so, most banks require you to make the repairs (another out-of-pocket expense for you), and submit your receipts for reimbursement at close of escrow.
12 - Did you request a home warranty and it was turned down? Don't feel bad, almost all banks will not purchase a home warranty for you. A GIANT word of caution. If your home inspection report shows the A/C is not working, don't expect the home warranty to cover it once you move in. They will ask for the inspection report (or final walkthrough paperwork) to see that it was operational before close. ALWAYS BUY A HOME WARRANTY - enough said about that.
13 - Ah, lucky 13. Did you qualify for an FHA mortgage? Of course you did! It's only 3% down, lower MI (mortgage insurance) and easier to qualify for. Let me tell you now before you put in an offer on the "home of your dreams" - there must be a working stove, the plumbing must be in working order, the HVAC (heating and A/C) must be working, and if there's a pool - it, too, must be in working order. If not, the FHA appraiser will NOT give you a final appraisal, and you can't close on the house. Of course your Realtor already has told you this (but just in case.) And here's a bonus secret for FHA homebuyers - the MINUTE you know you're going FHA, have your Realtor ask your lender for the FHA Amendatory Clause. This one piece of paper is signed by you, the buyer, your Realtor and most importantly, the seller. I'll tell you right now, get it in early and have your Realtor ask again and again for the signed paper back. For some strange reason, it takes forever.
14 - Ok, you've done your inspections, you've read all the documents, you've gotten the green light from your lender and locked your rate - let's get this puppy closed! Actually, you've got a 50/50 chance of that happening quickly. Make sure you've submitted your receipts to your Realtor if you're getting reimbursed for repairs, make sure you have a current photo ID (driver's license is best), as you can't sign your paperwork without it. Make sure whatever money you need for closing is available to be turned into a cashier's check or money order.
15 - Once your lender has everything they need, they will transmit or overnight the loan docs to the title company. Title will review the documents and "figure the file." This usually takes 24 hours. The title company will produce an estimated HUD-1, which is all the credits and debits that the buyer and seller will be paying at closing. The title company should send this to your Realtor, so they can review it for accuracy. This also gives the exact amount of money that you, the buyer, will need to bring to closing.
16 - Now title will set your date and time to sign your paperwork. If you live locally, you will go to the branch where the escrow officer is located. If you live out of town, you can have a mobile notary bring the paperwork to you, but be prepared to pay $150-200 for this luxury.
17 - Did you remember your driver's license? Good. The signing takes about 1-2 hours, depending on how many questions you ask. ASK EVERYTHING YOU WANT - this is your purchase and there is no such thing as a stupid question. Really. Most escrow and title officers are very patient and usually explain everything in adequate detail so you don't need to ask much at all. Once you are done signing, title will overnight or fax your loan documents back to your lender. It can take anywhere from 24-72 hours for the lender to "fund" the loan - meaning sending the money to title.
18 - The seller has to approve the final HUD-1. This may take an hour to 24 hours. Once this is done and your bank has funded, and you've paid what you owe, if anything, the paperwork will be sent to the County Recorder's office to be recorded. Right now recordings are done twice a day, and the cut-off is usually 1pm. If you miss the cut-off, there's always tomorrow (unless it's Friday, then you have to wait until Monday.) Until the home records and the title company calls your Realtor with the good news, you can't get the keys or move in. (Yes, I know the keys are in that little box on the front door, but you can't have them until the home is legally yours.)
19 - The home records! Congratulations! (Where did we put that champagne bottle? It's been so long I've totally forgotten!) Now the real work begins. Make sure all the utilities are in your name - do this quickly as sometimes the sellers pull the switch immediately (although they aren't supposed to.)
20 - CHANGE THE LOCKS! Everyone in town has been in your new home, and the key may have been copied endless times already. Call the locksmith now! Once this is done, start moving in and enjoying your new home. You deserve it.
If you'd like to avoid any of the pitfalls of buying a new home, Mark Karten is available to protect you every step of the way. Best of all, it costs you nothing! You can contact Mark at mark@YouCanAffordVegas.com or visit his website, http://www.youcanaffordvegas.com/ for more information on all the current foreclosures (and regular homes, too) available in Las Vegas.
OK, that's not how I speak, but it makes my point. 2008 has brought some amazing opportunities for anyone looking to buy real estate - virtually anywhere in the country. Forget the gloom and doom headlines - I'm not buying it. Why? Because my phone and email are full of folks ready, willing and able to buy - and it's my pleasure (and my passion) to help them.
The past year has been great in separating the real estate agents who "sort of" work in this profession, and those of us who devour it. I must say I fall into the latter category. But enough about me - I want to talk about you.
The number one thing you need to know, and that I will tell you during our first conversation, is that you have to MANAGE YOUR EXPECTATIONS. Unless you are buying a home directly from the homeowner (known as a "fair market sale"), you most likely will be buying an REO (Real Estate Owned), also known as a foreclosure (although REO is the right term.)
Nothing about buying an REO is "normal." This segment of real estate has its own quirks and peculiarities, and if you're not forewarned, it's not a pleasant surprise. I will be addressing the issues that face buyers in Las Vegas, although I'm sure this is happening elsewhere also.
Here's the process you will most likely go through during the home-buying purchase:
1 - Get pre-qualified by the lender of your choice. You will learn how much of a home you qualify for. Also be sure to ask what the monthly payment is on that dollar amount. It may be more than you're willing to spend or afford after you add an HOA payment, real estate taxes - and inconsequential things like food, gas, insurance, clothing, etc.
2 - Choose a Realtor you feel comfortable with or that was referred to you with REO/foreclosure purchasing experience.
3 - Tell the Realtor all the features your dream home has in it, as well as the areas of town you're interested in. Make sure you know which features are "deal-breakers." In other words, things you MUST have (RV parking or no HOA or master downstairs, etc.)
4 - Your Realtor will put together a list of homes and you'll start looking in person.
5 - You find a terrific home and want to put an offer on it immediately! (THE FUN ENDS HERE.)
Steps 1-5 are the same whether you buy a fair-market home or REO. Now we enter the Twilight Zone of REOs.
6 - The "seller" - meaning the bank that owns the property states in the listing that you must be pre-qualified by their bank. What? You don't want your credit run again. Sorry - these are the "rules" and your offer isn't getting submitted without the right pre-approval. (I don't want to spoil the surprise, but when you don't get this home and start the process again, you'll have to get pre-approved by yet another bank!)
7 - All your friends, family, the media, tell you this is a buyer's market and you have to put in a lowball offer AND ask for closing costs, a home warranty and a repair allowance. (The reality is that if the listing is 1-3 days old and is in good condition or better, I can with almost 100% certainty tell you there will be multiple bids, above asking price and the winning bid will not ask the seller for concessions.) So the question is, how much do you really like this house?
(Unfortunately most buyers want to try it their way the first few times, and after consistently being told they're a backup offer - if there's any communication from the seller's agent at all - they start to take some professional advice.) Your Realtor should be very patient and understand what you're trying to accomplish. Remember, they're on your side and watching out for your best interests at all times (or should be). If you don't get that feeling, find another Realtor.
8 - Your agent has submitted your offer and now you wait for the answer. You LOVE this house, so you're really antsy about finding out if you've got it. A day goes by, then another, then another. It's a week (oh, this is ridiculous!) - Mr./Ms. Realtor, pick up the phone and see what's happening!
The truth is the listing agent is waiting for a response from the bank - and they've got no control over how fast the answer comes. In many cases, however, the listing agent did get the answer, and only told the "winning" bidder. So it's up to your Realtor to check the MLS daily to see if the status changes from available to pending/contingent.
So let's say you didn't get the winning bid. Now you start over again at step 6, and repeat for as many times as necessary to get to step 9.
9 - Your bid is accepted! Congratulations, but don't start chilling the champagne yet. You will now get to sign a bunch more documents (counter offer addendums - even if the bank accepted all your terms.) You should read all the addendums, and have your Realtor explain them. A lot of the terms won't make sense until down the line when you balk at the process. The addendums are the CYA (cover your as*) for the bank. After you sign the papers, start doing your due diligence.
10 - Due diligence is everything you need to do to make sure that you're happy with the property, the rules and regulations, the lender, etc. If you haven't already put your full loan application in - do this NOW! REOs will not close in 30 days, but when the seller is ready, you better be, too.
If you're planning on moving (or have to move) within 30 days, find temporary housing. Tears, pleas of mercy and anything else you resort to will fall on deaf ears in the seller's agent's office.
While you're getting your loan documents together (really this should be done already), your Realtor will order and you will pay for a home inspection ($200-500, depending on the size of the home and the scope of work done.) Hire a professional as their report will be needed later on and they see things you never will think of looking for.
If you're purchasing a home in an HOA (Homeowner's Association), you will have to review the CC&Rs (Conditions, Covenants and Restrictions). Here's a little bump in the road - many REO listing agents say they will not order the HOA resale package. Make sure your Realtor knows that by law the listing agent must order the package. They will probably make you pay for it, though. This runs between $100-250, and is most likely a non-reimbursed expense. Once you receive the package, you have 5 days to review all the documentation, and if there's something in there you can't live with, now is the time to terminate the agreement.
The same thing goes for your home inspection. If something comes up in the report that you are unprepared for (mold, roof issues, etc.), this is your opportunity to get out of the deal without losing your earnest money.
11 - Did you request a repair allowance in your offer and it was approved? If so, most banks require you to make the repairs (another out-of-pocket expense for you), and submit your receipts for reimbursement at close of escrow.
12 - Did you request a home warranty and it was turned down? Don't feel bad, almost all banks will not purchase a home warranty for you. A GIANT word of caution. If your home inspection report shows the A/C is not working, don't expect the home warranty to cover it once you move in. They will ask for the inspection report (or final walkthrough paperwork) to see that it was operational before close. ALWAYS BUY A HOME WARRANTY - enough said about that.
13 - Ah, lucky 13. Did you qualify for an FHA mortgage? Of course you did! It's only 3% down, lower MI (mortgage insurance) and easier to qualify for. Let me tell you now before you put in an offer on the "home of your dreams" - there must be a working stove, the plumbing must be in working order, the HVAC (heating and A/C) must be working, and if there's a pool - it, too, must be in working order. If not, the FHA appraiser will NOT give you a final appraisal, and you can't close on the house. Of course your Realtor already has told you this (but just in case.) And here's a bonus secret for FHA homebuyers - the MINUTE you know you're going FHA, have your Realtor ask your lender for the FHA Amendatory Clause. This one piece of paper is signed by you, the buyer, your Realtor and most importantly, the seller. I'll tell you right now, get it in early and have your Realtor ask again and again for the signed paper back. For some strange reason, it takes forever.
14 - Ok, you've done your inspections, you've read all the documents, you've gotten the green light from your lender and locked your rate - let's get this puppy closed! Actually, you've got a 50/50 chance of that happening quickly. Make sure you've submitted your receipts to your Realtor if you're getting reimbursed for repairs, make sure you have a current photo ID (driver's license is best), as you can't sign your paperwork without it. Make sure whatever money you need for closing is available to be turned into a cashier's check or money order.
15 - Once your lender has everything they need, they will transmit or overnight the loan docs to the title company. Title will review the documents and "figure the file." This usually takes 24 hours. The title company will produce an estimated HUD-1, which is all the credits and debits that the buyer and seller will be paying at closing. The title company should send this to your Realtor, so they can review it for accuracy. This also gives the exact amount of money that you, the buyer, will need to bring to closing.
16 - Now title will set your date and time to sign your paperwork. If you live locally, you will go to the branch where the escrow officer is located. If you live out of town, you can have a mobile notary bring the paperwork to you, but be prepared to pay $150-200 for this luxury.
17 - Did you remember your driver's license? Good. The signing takes about 1-2 hours, depending on how many questions you ask. ASK EVERYTHING YOU WANT - this is your purchase and there is no such thing as a stupid question. Really. Most escrow and title officers are very patient and usually explain everything in adequate detail so you don't need to ask much at all. Once you are done signing, title will overnight or fax your loan documents back to your lender. It can take anywhere from 24-72 hours for the lender to "fund" the loan - meaning sending the money to title.
18 - The seller has to approve the final HUD-1. This may take an hour to 24 hours. Once this is done and your bank has funded, and you've paid what you owe, if anything, the paperwork will be sent to the County Recorder's office to be recorded. Right now recordings are done twice a day, and the cut-off is usually 1pm. If you miss the cut-off, there's always tomorrow (unless it's Friday, then you have to wait until Monday.) Until the home records and the title company calls your Realtor with the good news, you can't get the keys or move in. (Yes, I know the keys are in that little box on the front door, but you can't have them until the home is legally yours.)
19 - The home records! Congratulations! (Where did we put that champagne bottle? It's been so long I've totally forgotten!) Now the real work begins. Make sure all the utilities are in your name - do this quickly as sometimes the sellers pull the switch immediately (although they aren't supposed to.)
20 - CHANGE THE LOCKS! Everyone in town has been in your new home, and the key may have been copied endless times already. Call the locksmith now! Once this is done, start moving in and enjoying your new home. You deserve it.
If you'd like to avoid any of the pitfalls of buying a new home, Mark Karten is available to protect you every step of the way. Best of all, it costs you nothing! You can contact Mark at mark@YouCanAffordVegas.com or visit his website, http://www.youcanaffordvegas.com/ for more information on all the current foreclosures (and regular homes, too) available in Las Vegas.
Wednesday, May 21, 2008
Short Sales Revisited
(Originally posted April 13, 2008)
Because of declining home values, many homeowners (especially those that bought between 2004-2006) owe more than their home is worth. This can be for a few reasons, such as: they put zero down, they financed the home and their closing costs (103% loan), they took an interest only loan, a 3/1 ARM or a pay-option ARM. Any of these choices will have made them "upside down" from the day they closed. Now when they want to sell, in order to walk away, they would have to bring money to the closing (not possible in 99.99% of the cases).
There is an alternative where the bank will "forgive" the amount you owe that's over the sale price. It is called a short sale (you are selling for less than the loan owed to the bank.) Due to all the foreclosures in Las Vegas and the country, the only way to compete for a buyer is a short sale. Many inexperienced real estate agents (and those not trained to do short sales) will list a home as a short sale, pick a price that is: a) reasonable for what the same homes are selling for as foreclosures or b) pick a lowball price, hoping the bank will take it and it will attract buyers to their listing.
Unfortunately, it's not that easy. You, the homeowner, have to qualify to sell your home short. Here's the general qualification list:
1 - You have to be at least 45 days behind in your mortgage payment (receiving a "Notice of Default" from your lender)
2 - You have little or no equity in your home
3 - You have no assets that you can sell (other homes, money in the bank, extra cars, boat, etc.) to payoff the shortfall
4 - You must have suffered a financial hardship (job loss, death of spouse, major health issue, rate adjusting loan)
If you qualify with all of the above, you can submit a short sale application to the bank, with your paystubs, your bank statements (from all accounts) along with a hardship letter - and the bank will review this to see if you qualify.
It's the last step that most agents are not doing. The majority of short sale listings are putting the home up for sale and then submitting the application once they receive an offer. The big problem is that this is entirely backwards, and if you're the buyer, you can potentially wait 4 to 6 weeks, even 3 months (personal experience) before the bank will even consider your offer. Once they consider the offer, they usually counter it with a higher number, rather than accepting it. Even worse, many buyers are putting in lowball offers plus closing costs (which is okay, it's a buyer's market), and the banks don't even bother to respond - EVER.
This is why I counsel most of my buyers that short sales are make believe listings and I will not show them, UNLESS, the listing says "Short Sale Approved." I do call the listing agents and ask them where they are in the process, and I've yet to have a listing be approved.
Those three magic words are the key to a successful short sale. Unfortunately, one out of 100 listings are approved.
Just for clarity, for the person selling, if this is not your primary residence, you will most likely be responsible to pay the taxes (to the IRS) for the amount "forgiven" by the lender. In some cases, the bank makes you pay them back for the money you're short - in the form of a long-term installment loan.
I am trained to get approvals on Short Sale listings, but there's a short timeline before foreclosure, and many sellers don't contact me (or any agent) before it's too late. If you feel that you do qualify for a short sale, or will in the very near future - it is time to call me now to explore your options.
Because of declining home values, many homeowners (especially those that bought between 2004-2006) owe more than their home is worth. This can be for a few reasons, such as: they put zero down, they financed the home and their closing costs (103% loan), they took an interest only loan, a 3/1 ARM or a pay-option ARM. Any of these choices will have made them "upside down" from the day they closed. Now when they want to sell, in order to walk away, they would have to bring money to the closing (not possible in 99.99% of the cases).
There is an alternative where the bank will "forgive" the amount you owe that's over the sale price. It is called a short sale (you are selling for less than the loan owed to the bank.) Due to all the foreclosures in Las Vegas and the country, the only way to compete for a buyer is a short sale. Many inexperienced real estate agents (and those not trained to do short sales) will list a home as a short sale, pick a price that is: a) reasonable for what the same homes are selling for as foreclosures or b) pick a lowball price, hoping the bank will take it and it will attract buyers to their listing.
Unfortunately, it's not that easy. You, the homeowner, have to qualify to sell your home short. Here's the general qualification list:
1 - You have to be at least 45 days behind in your mortgage payment (receiving a "Notice of Default" from your lender)
2 - You have little or no equity in your home
3 - You have no assets that you can sell (other homes, money in the bank, extra cars, boat, etc.) to payoff the shortfall
4 - You must have suffered a financial hardship (job loss, death of spouse, major health issue, rate adjusting loan)
If you qualify with all of the above, you can submit a short sale application to the bank, with your paystubs, your bank statements (from all accounts) along with a hardship letter - and the bank will review this to see if you qualify.
It's the last step that most agents are not doing. The majority of short sale listings are putting the home up for sale and then submitting the application once they receive an offer. The big problem is that this is entirely backwards, and if you're the buyer, you can potentially wait 4 to 6 weeks, even 3 months (personal experience) before the bank will even consider your offer. Once they consider the offer, they usually counter it with a higher number, rather than accepting it. Even worse, many buyers are putting in lowball offers plus closing costs (which is okay, it's a buyer's market), and the banks don't even bother to respond - EVER.
This is why I counsel most of my buyers that short sales are make believe listings and I will not show them, UNLESS, the listing says "Short Sale Approved." I do call the listing agents and ask them where they are in the process, and I've yet to have a listing be approved.
Those three magic words are the key to a successful short sale. Unfortunately, one out of 100 listings are approved.
Just for clarity, for the person selling, if this is not your primary residence, you will most likely be responsible to pay the taxes (to the IRS) for the amount "forgiven" by the lender. In some cases, the bank makes you pay them back for the money you're short - in the form of a long-term installment loan.
I am trained to get approvals on Short Sale listings, but there's a short timeline before foreclosure, and many sellers don't contact me (or any agent) before it's too late. If you feel that you do qualify for a short sale, or will in the very near future - it is time to call me now to explore your options.
How to see all the Las Vegas shows (for free)
(Originally posted on March 16, 2008)
My little secret
If you're a regular reader of my blog, you know I've reviewed a few shows that I've seen over the recent months. Real Estate has been so busy that I haven't been writing on anything except work. I wanted to share with you how I get to see so many shows.
If you drive anywhere around Vegas, you see the billboards for all the shows. You see them at the airport, in the airport, on the Strip, in the hotels, on TV, on the radio -- they're everywhere. It's really fantastic that we have every major entertainer at our fingertips. The hard part is affording the tickets to see all of them. So here's my little secret on how to see almost every show on the Strip, for FREE.
There's a service here, for locals, that offers free seats to shows for the same day. In other words, you'll get an email that says tickets are available, you log on to the website, choose how many tickets you want and go to the show. That's it.
Okay, I hear you saying, "Yeah, it's for junk nobody wants to pay for, I bet." Well, I'll let you judge for yourself. I joined the service in January (I paid a small fee for the year) and you can go to unlimited shows. Here's what we've seen in the last three months:
Blue Man Group, Bobby Slayton (comedian), Defending the Caveman, Larry G. Jones (the Man of 1002 Voices), 3 Redneck Tenors, Boz Scaggs, Sarah Silverman, Roseanne Barr (opening night), Las Vegas Tenors, Carrot Top, Barry Manilow and Ronn Lucas. The last 4 shows were all this week!
Because I wasn't near my computer at the time the email went out, I've missed tickets for Bette Midler, Zumanity and so much more. In these last three months, we have seen thousands of dollars of entertainment, in excellent seats. So what's the catch? There is none.
Before I tell you the name of the service, I have a favor to ask, because there's no reason you shouldn't join. When you sign up, they will ask who referred you. Please say MARK KARTEN. I get an extra month's subscription when you use my name, and once you're a member, you can do the same.
Alright, the service is www.HouseSeats.com and here's how it works. There are three membership levels. The first cost $39 and you get two tickets to all shows offered for 60 days (I don't suggest this level.) The second cost $89 and gets you two tickets to all shows for an entire year. This is unbelievable - because if you go to one show, you've already earned your entire membership fee (read the list above again to see what I've seen in the last three months). The last option is $169 and gets you 4 tickets to each show.
I've seen a dozen shows already, and could see a show every night. It's difficult, though, when you have to work in the morning. I can't say enough about the service, the seats and the choices. If you enjoy live entertainment and really want to appreciate Las Vegas for the entertainment town that it is, I guarantee you this is the best $89 you'll ever spend. Enjoy, and drop me a note if you've become a member!
My little secret
If you're a regular reader of my blog, you know I've reviewed a few shows that I've seen over the recent months. Real Estate has been so busy that I haven't been writing on anything except work. I wanted to share with you how I get to see so many shows.
If you drive anywhere around Vegas, you see the billboards for all the shows. You see them at the airport, in the airport, on the Strip, in the hotels, on TV, on the radio -- they're everywhere. It's really fantastic that we have every major entertainer at our fingertips. The hard part is affording the tickets to see all of them. So here's my little secret on how to see almost every show on the Strip, for FREE.
There's a service here, for locals, that offers free seats to shows for the same day. In other words, you'll get an email that says tickets are available, you log on to the website, choose how many tickets you want and go to the show. That's it.
Okay, I hear you saying, "Yeah, it's for junk nobody wants to pay for, I bet." Well, I'll let you judge for yourself. I joined the service in January (I paid a small fee for the year) and you can go to unlimited shows. Here's what we've seen in the last three months:
Blue Man Group, Bobby Slayton (comedian), Defending the Caveman, Larry G. Jones (the Man of 1002 Voices), 3 Redneck Tenors, Boz Scaggs, Sarah Silverman, Roseanne Barr (opening night), Las Vegas Tenors, Carrot Top, Barry Manilow and Ronn Lucas. The last 4 shows were all this week!
Because I wasn't near my computer at the time the email went out, I've missed tickets for Bette Midler, Zumanity and so much more. In these last three months, we have seen thousands of dollars of entertainment, in excellent seats. So what's the catch? There is none.
Before I tell you the name of the service, I have a favor to ask, because there's no reason you shouldn't join. When you sign up, they will ask who referred you. Please say MARK KARTEN. I get an extra month's subscription when you use my name, and once you're a member, you can do the same.
Alright, the service is www.HouseSeats.com and here's how it works. There are three membership levels. The first cost $39 and you get two tickets to all shows offered for 60 days (I don't suggest this level.) The second cost $89 and gets you two tickets to all shows for an entire year. This is unbelievable - because if you go to one show, you've already earned your entire membership fee (read the list above again to see what I've seen in the last three months). The last option is $169 and gets you 4 tickets to each show.
I've seen a dozen shows already, and could see a show every night. It's difficult, though, when you have to work in the morning. I can't say enough about the service, the seats and the choices. If you enjoy live entertainment and really want to appreciate Las Vegas for the entertainment town that it is, I guarantee you this is the best $89 you'll ever spend. Enjoy, and drop me a note if you've become a member!
Las Vegas Real Estate Auctions
(Originally posted on March 16, 2008)
Are they too good to be true?
If you've seen the commercials on TV, heard them on the radio, visited the websites or picked up the booklets -- you know that "The Lender foreclosed home auction is coming" and "265+ homes MUST BE SOLD!" Rather than exploring the hype, I want to show you the reality of what's being offered.
Caveat Emptor
You may have heard this Latin term before which means "Let the buyer beware," but more specifically it is a property law doctrine that controls the sale of real property (real estate) after the date of closing. When you buy a foreclosure, it's simply stated as an "As-Is" purchase.
Regardless of whether you buy a foreclosure at auction or as an MLS listing, it will always be sold as-is. To protect yourself, you need to perform your due diligence, which is gaining access to the home and having structural and mechanical inspections completed before you agree to purchase.
Why buy at Auction?
This is the question posed on page 3 of the auction brochure. In my personal opinion, this section is pure marketing, and I'd like to counter some of these claims:
Here's their pitch: "There are many reasons to buy foreclosed homes at auction. First and foremost is that you set your OWN price. You are not at the mercy of a seller's unrealistic "asking price." Other benefits include:
* No long negotiation period with offers going back and forth
* Huge selection of homes at rock-bottom auction prices
* Our Sellers are the lenders who own these homes. They are VERY motivated to sell these homes and sell them now!
Sounds exciting and great, right? Well, let's read the small print.
The process of buying at auction
First you need to register to participate in the auction - that's free. You go to www.USHomeAuction.com. Then you need to get pre-qualified (no cost or obligation). So far, so good.
Now you look through the catalog or review the homes on the website and pick your favorites. Then you visit these homes during the open houses held the weeks prior to the auction. The company advises you to "visit every property you would consider bidding on. Make an informed buying decision, go out and thoroughly inspect each property you are interested in."
Okay, let's start right here. Unless you are a home inspector by trade, you will need to schedule the home inspector to be at your potential new home during the open house. The utilities will have to be on (many times they're not and there's nobody to ask in advance to turn them on), so that all systems can be tested. This inspection will cost you, depending on the size of the home, anywhere from $200-$500. For argument's sake, let's say you do that, and the report comes back to your satisfaction.
Day of the Auction
To participate in the auction, there is no admission charge and no registration fee. Excellent! You need to bring a cashier's check for $5,000 (payable to yourself) or cash, and your checkbook. When your new home comes up for bid, you are asked to bid up to your maximum amount.
If you are the winning bidder, this is what will happen next. First a 5% premium is added to the price of the home, which becomes part of the total purchase price. You will then sign documentation confirming you are the winning bidder. Since you've been pre-qualified for a loan already, your financing and documentation will be done right then and there.
Then you sign over your $5,000 cashier's check, which gets deposited into a Trust account with a national title company (all is still good.) You also need to write a check for the balance of what equals 5% of the Total Purchase Price. After that, you will be required to close within 30 days.
Let's take a look at their example:
Your winning bid - $200,000
5% Buyer's Premium + $10,000
Total Purchase Price $210,000
5% Earnest Money Deposit $10,500
$5,000 Cashier's check - $5,000
Remainder - Personal Check $5,500
I think most readers might stop right here. Why? Right now you can buy a house up to $400,000 (including almost every foreclosure), get FHA financing with only 3% down, and the seller can contribute to that or pay that downpayment for you. You are also not rushed into spending money on an inspection for a house you may not "win" at auction.
Let's dig deeper...
Everything about the auction is on the up and up. I don't want you to think that it's anything less than that. What I'm trying to point out is that purchasing a home conventionally (using a Realtor) is almost always a smoother, saner and safer way to go. (And I can almost certainly guarantee that you will pay less than at auction.) Why? Because the banks can only lose so much money on the house! The ads may say "MUST BE SOLD" but it's not true, and the auction tells you so.
I'm going to use one of the homes listed for auction as an example. The home is located in Silverado Ranch with a starting bid of $109,000. It says "Previously valued to $290,026." This home was just removed from the MLS yesterday, I presume, in preparation for the auction. It was listed as a foreclosure sale with a price of $239,900. According to the County Assessor's office, the bank paid $290,296 (ah, there's the origin for the previously valued amount.)
My question to you is this, "Do you think if the bank only gets one bid on this house for $109,000 - that they will sell it to the winning bidder?" I highly doubt it. Here's why:
The disclosure that safeguards the auction house and lender is located under the "Terms and Conditions" section of their materials. It is in #3, Bidding and Buying at the Auction, and is labeled, "Reserve Price: All Properties have a Reserve Price, meaning the Seller of each Property has established an unpublished, minimum selling price. The starting bid is not the Reserve Price." In other words, the buyers bidding must meet or exceed this secret reserve price, have the highest bid AND the bid must be accepted by the Seller "subject to confirmation."
Are you still with me?
Gee, I admire your fortitude. Let's cover "subject to confirmation" for a moment. According to the auction company, "if your bid is not immediately accepted by the Seller, the Auctioneer will inform the Winning Bidder that their winning bid is subject to confirmation. You agree that your purchase is contingent upon the Seller approving the purchase, which is at their sole and absolute discretion within 15 days of executing the Purchase Agreement. If the Seller chooses not to sell, you will get your $5,000 plus the check you wrote back. Hmmm. Wait, I'm not done yet.
Financing your purchase
So you got pre-approved to buy your new home. Now the lender has to do an appraisal of the property. Due to the physical condition of the property, your lender may not provide financing to you. If you pre-qualified through the auction's designated lender but cannot get financing for the home, you will get your earnest money back. The terms only mention the designated lender, not any other lender.
Well, there's gotta be an escape clause for you, the buyer, right?
Uh, no. Only if you use the designated lender and you don't get approved, then you'll get your money back. If you use your own lender and you don't get approved, you lose. If you find something wrong with the home after you win the bid, you lose. Read the "Due Diligence" portion of the Terms and Conditions carefully before even considering purchasing one of these homes. If the words don't make sense, consult an attorney or someone knowledgable that you trust.
A saner alternative
While the prospect of saving tens of thousands of dollars is enticing, the reality might be somewhat different when purchasing through an auction. As an experienced Realtor, using my services (for free) allows you to be protected every step of the way through the purchase, to have safeguards from buying blindly and to have control of much of the process.
Here's the difference in the process, and the peace of mind that I can offer:
1 - You get pre-qualified with a lender.
2 - We discuss the details of the type of home you want and possible locations.
3 - I show you homes meeting your criteria, and continue to inform you of new listings as they are posted for sale.
4 - I physically preview homes you are interested in, if you wish, to reduce unnecessary running around.
5 - When we find the home you desire, we submit an offer, on your terms, to the listing agent.
6 - I negotiate on your behalf and I work towards getting your offer accepted.
7 - The offer will be contingent upon inspections done to your satisfaction and final approval of your loan. If you are unhappy with the condition of the home, or don't get loan approved, you will receive your earnest money back (usually a much smaller amount than 5% of the purchase price - normally $2,000, depending on the price of the home.)
8 - You are not operating in the dark, have representation from a Real Estate professional, have a source for any answers you seek and total peace of mind.
9 - I accompany you to your closing at title, explaining any uncertainties and I am your agent for life, after you've moved into your home and for years to come.
I hope this has been helpful as an insight into the auction process, and buying a foreclosure home in general. If you need any specific questions answered, feel free to contact me anytime.
Are they too good to be true?
If you've seen the commercials on TV, heard them on the radio, visited the websites or picked up the booklets -- you know that "The Lender foreclosed home auction is coming" and "265+ homes MUST BE SOLD!" Rather than exploring the hype, I want to show you the reality of what's being offered.
Caveat Emptor
You may have heard this Latin term before which means "Let the buyer beware," but more specifically it is a property law doctrine that controls the sale of real property (real estate) after the date of closing. When you buy a foreclosure, it's simply stated as an "As-Is" purchase.
Regardless of whether you buy a foreclosure at auction or as an MLS listing, it will always be sold as-is. To protect yourself, you need to perform your due diligence, which is gaining access to the home and having structural and mechanical inspections completed before you agree to purchase.
Why buy at Auction?
This is the question posed on page 3 of the auction brochure. In my personal opinion, this section is pure marketing, and I'd like to counter some of these claims:
Here's their pitch: "There are many reasons to buy foreclosed homes at auction. First and foremost is that you set your OWN price. You are not at the mercy of a seller's unrealistic "asking price." Other benefits include:
* No long negotiation period with offers going back and forth
* Huge selection of homes at rock-bottom auction prices
* Our Sellers are the lenders who own these homes. They are VERY motivated to sell these homes and sell them now!
Sounds exciting and great, right? Well, let's read the small print.
The process of buying at auction
First you need to register to participate in the auction - that's free. You go to www.USHomeAuction.com. Then you need to get pre-qualified (no cost or obligation). So far, so good.
Now you look through the catalog or review the homes on the website and pick your favorites. Then you visit these homes during the open houses held the weeks prior to the auction. The company advises you to "visit every property you would consider bidding on. Make an informed buying decision, go out and thoroughly inspect each property you are interested in."
Okay, let's start right here. Unless you are a home inspector by trade, you will need to schedule the home inspector to be at your potential new home during the open house. The utilities will have to be on (many times they're not and there's nobody to ask in advance to turn them on), so that all systems can be tested. This inspection will cost you, depending on the size of the home, anywhere from $200-$500. For argument's sake, let's say you do that, and the report comes back to your satisfaction.
Day of the Auction
To participate in the auction, there is no admission charge and no registration fee. Excellent! You need to bring a cashier's check for $5,000 (payable to yourself) or cash, and your checkbook. When your new home comes up for bid, you are asked to bid up to your maximum amount.
If you are the winning bidder, this is what will happen next. First a 5% premium is added to the price of the home, which becomes part of the total purchase price. You will then sign documentation confirming you are the winning bidder. Since you've been pre-qualified for a loan already, your financing and documentation will be done right then and there.
Then you sign over your $5,000 cashier's check, which gets deposited into a Trust account with a national title company (all is still good.) You also need to write a check for the balance of what equals 5% of the Total Purchase Price. After that, you will be required to close within 30 days.
Let's take a look at their example:
Your winning bid - $200,000
5% Buyer's Premium + $10,000
Total Purchase Price $210,000
5% Earnest Money Deposit $10,500
$5,000 Cashier's check - $5,000
Remainder - Personal Check $5,500
I think most readers might stop right here. Why? Right now you can buy a house up to $400,000 (including almost every foreclosure), get FHA financing with only 3% down, and the seller can contribute to that or pay that downpayment for you. You are also not rushed into spending money on an inspection for a house you may not "win" at auction.
Let's dig deeper...
Everything about the auction is on the up and up. I don't want you to think that it's anything less than that. What I'm trying to point out is that purchasing a home conventionally (using a Realtor) is almost always a smoother, saner and safer way to go. (And I can almost certainly guarantee that you will pay less than at auction.) Why? Because the banks can only lose so much money on the house! The ads may say "MUST BE SOLD" but it's not true, and the auction tells you so.
I'm going to use one of the homes listed for auction as an example. The home is located in Silverado Ranch with a starting bid of $109,000. It says "Previously valued to $290,026." This home was just removed from the MLS yesterday, I presume, in preparation for the auction. It was listed as a foreclosure sale with a price of $239,900. According to the County Assessor's office, the bank paid $290,296 (ah, there's the origin for the previously valued amount.)
My question to you is this, "Do you think if the bank only gets one bid on this house for $109,000 - that they will sell it to the winning bidder?" I highly doubt it. Here's why:
The disclosure that safeguards the auction house and lender is located under the "Terms and Conditions" section of their materials. It is in #3, Bidding and Buying at the Auction, and is labeled, "Reserve Price: All Properties have a Reserve Price, meaning the Seller of each Property has established an unpublished, minimum selling price. The starting bid is not the Reserve Price." In other words, the buyers bidding must meet or exceed this secret reserve price, have the highest bid AND the bid must be accepted by the Seller "subject to confirmation."
Are you still with me?
Gee, I admire your fortitude. Let's cover "subject to confirmation" for a moment. According to the auction company, "if your bid is not immediately accepted by the Seller, the Auctioneer will inform the Winning Bidder that their winning bid is subject to confirmation. You agree that your purchase is contingent upon the Seller approving the purchase, which is at their sole and absolute discretion within 15 days of executing the Purchase Agreement. If the Seller chooses not to sell, you will get your $5,000 plus the check you wrote back. Hmmm. Wait, I'm not done yet.
Financing your purchase
So you got pre-approved to buy your new home. Now the lender has to do an appraisal of the property. Due to the physical condition of the property, your lender may not provide financing to you. If you pre-qualified through the auction's designated lender but cannot get financing for the home, you will get your earnest money back. The terms only mention the designated lender, not any other lender.
Well, there's gotta be an escape clause for you, the buyer, right?
Uh, no. Only if you use the designated lender and you don't get approved, then you'll get your money back. If you use your own lender and you don't get approved, you lose. If you find something wrong with the home after you win the bid, you lose. Read the "Due Diligence" portion of the Terms and Conditions carefully before even considering purchasing one of these homes. If the words don't make sense, consult an attorney or someone knowledgable that you trust.
A saner alternative
While the prospect of saving tens of thousands of dollars is enticing, the reality might be somewhat different when purchasing through an auction. As an experienced Realtor, using my services (for free) allows you to be protected every step of the way through the purchase, to have safeguards from buying blindly and to have control of much of the process.
Here's the difference in the process, and the peace of mind that I can offer:
1 - You get pre-qualified with a lender.
2 - We discuss the details of the type of home you want and possible locations.
3 - I show you homes meeting your criteria, and continue to inform you of new listings as they are posted for sale.
4 - I physically preview homes you are interested in, if you wish, to reduce unnecessary running around.
5 - When we find the home you desire, we submit an offer, on your terms, to the listing agent.
6 - I negotiate on your behalf and I work towards getting your offer accepted.
7 - The offer will be contingent upon inspections done to your satisfaction and final approval of your loan. If you are unhappy with the condition of the home, or don't get loan approved, you will receive your earnest money back (usually a much smaller amount than 5% of the purchase price - normally $2,000, depending on the price of the home.)
8 - You are not operating in the dark, have representation from a Real Estate professional, have a source for any answers you seek and total peace of mind.
9 - I accompany you to your closing at title, explaining any uncertainties and I am your agent for life, after you've moved into your home and for years to come.
I hope this has been helpful as an insight into the auction process, and buying a foreclosure home in general. If you need any specific questions answered, feel free to contact me anytime.
Is now really the time to buy?
(Originally posted on March 9, 2008)
Making the jump
For most folks who are renting, buying a home is definitely on their wish list. No matter where you turn, the TV and newspaper headlines cry gloom and doom. Personally, if I see one more picture of a "FORECLOSURE" sign, I'll scream. Yet there are two sides to every story, and if you read between the lines, the message is "BUY NOW."
Time magazine really did a great job in a recent article on showing why it makes more sense to buy now than to wait. Click HERE to read the article.
Auctions, New homes, For Sale by Owner - Where to start?
Every street you drive down, you see the signs. OPEN HOUSE, FORECLOSURE, MUST SELL, NO REASONABLE OFFER REFUSED - how appealing is that!? The signs are meant to lure you in, but beware, buying a house is no easy feat. Unless you're buying from a new home builder, almost every "bargain" is being sold as-is. That means you've got some due diligence (investigation) to do, before you want to make that house your home. Don't do it alone.
Proper representation
I can't stress strongly enough how important it is to work with a Realtor. Having a Realtor represent you costs you NOTHING. We get paid by the seller. I can't speak for other real estate agents, but I am trained to protect your rights and make sure you know all the facts so you can make an informed decision, and get the best price AND incentives, no matter whether you're buying from a builder, homeowner or bank.
Most folks think they're "Just looking" when they drive through neighborhoods or go to see new home models. As soon as you walk in, unrepresented (without an agent WITH YOU), you are now going it alone. It doesn't matter if you didn't sign in, a real estate agent can't represent you.
New home sales, too
What's especially confusing for buyers is that they think when they go to see new homes, that the sales agent on-site is there to represent them. Unfortunately, that's not true. That agent represents the seller ONLY. They cannot represent you, and no matter what "bargain price" they tell you they're offering, you can do better with a Realtor. Again, you must walk in with the Realtor on the first visit.
I know what you're thinking, "But we want to narrow down which homes we like, and don't want to drag someone along with us," or "We were just driving home and saw the signs and went in." Remember, the minute you walk through the door, you're now going it alone.
This may all sound self-serving for you to use a Realtor, but talk to someone who had a bad experience with a home purchase, and you'll see I have your best interests at heart. Do you have a friend or relative who has their real estate license? That's great. Make sure they are experienced, have closed on sales recently, understand the market, the area you're buying in, and the true values of the homes being sold.
Rent versus Buy
The bottom line is this, with the new loan qualifications just released by the government and the pending rate cuts by the Fed, it is truly cheaper to buy than rent now. Why keep throwing your money away when you can start earning equity on a home of your own? Give me a call and let's get started today.
Making the jump
For most folks who are renting, buying a home is definitely on their wish list. No matter where you turn, the TV and newspaper headlines cry gloom and doom. Personally, if I see one more picture of a "FORECLOSURE" sign, I'll scream. Yet there are two sides to every story, and if you read between the lines, the message is "BUY NOW."
Time magazine really did a great job in a recent article on showing why it makes more sense to buy now than to wait. Click HERE to read the article.
Auctions, New homes, For Sale by Owner - Where to start?
Every street you drive down, you see the signs. OPEN HOUSE, FORECLOSURE, MUST SELL, NO REASONABLE OFFER REFUSED - how appealing is that!? The signs are meant to lure you in, but beware, buying a house is no easy feat. Unless you're buying from a new home builder, almost every "bargain" is being sold as-is. That means you've got some due diligence (investigation) to do, before you want to make that house your home. Don't do it alone.
Proper representation
I can't stress strongly enough how important it is to work with a Realtor. Having a Realtor represent you costs you NOTHING. We get paid by the seller. I can't speak for other real estate agents, but I am trained to protect your rights and make sure you know all the facts so you can make an informed decision, and get the best price AND incentives, no matter whether you're buying from a builder, homeowner or bank.
Most folks think they're "Just looking" when they drive through neighborhoods or go to see new home models. As soon as you walk in, unrepresented (without an agent WITH YOU), you are now going it alone. It doesn't matter if you didn't sign in, a real estate agent can't represent you.
New home sales, too
What's especially confusing for buyers is that they think when they go to see new homes, that the sales agent on-site is there to represent them. Unfortunately, that's not true. That agent represents the seller ONLY. They cannot represent you, and no matter what "bargain price" they tell you they're offering, you can do better with a Realtor. Again, you must walk in with the Realtor on the first visit.
I know what you're thinking, "But we want to narrow down which homes we like, and don't want to drag someone along with us," or "We were just driving home and saw the signs and went in." Remember, the minute you walk through the door, you're now going it alone.
This may all sound self-serving for you to use a Realtor, but talk to someone who had a bad experience with a home purchase, and you'll see I have your best interests at heart. Do you have a friend or relative who has their real estate license? That's great. Make sure they are experienced, have closed on sales recently, understand the market, the area you're buying in, and the true values of the homes being sold.
Rent versus Buy
The bottom line is this, with the new loan qualifications just released by the government and the pending rate cuts by the Fed, it is truly cheaper to buy than rent now. Why keep throwing your money away when you can start earning equity on a home of your own? Give me a call and let's get started today.
Perception versus Reality
(Originally posted on February 10, 2008)
A view from the trenches
I meet new people every day, and when they ask what I do and I enthusiastically respond that I'm a Realtor, their next question is always the same. "Aw. How's business?" Yet they think they already know the answer, since it's a pretty well-known fact. Here's the funny part, I haven't been this busy since 2005.
More than ripples
Where 2007 was a lake that had no movement on it, this year we started with some ripples, which was encouraging, and now we've got little waves going. Now a ripple might not catch someone's eye, but waves certainly do. The problem is if you're looking down at the ground and not at the water, you'll most likely miss the motion.
More specifics
I am currently working with over a dozen buyers - ready, willing and able buyers. Having been pre-qualified with a lender, they all have a clear understanding of what they can afford, and are shopping accordingly. There are so many homes for sale, that you feel like a kid in a candy shop. It's not true, but it feels that way.
Many of the homes are foreclosures, and they're a mixed bag. They can be move-in perfect, or there can be an evident past water leak or something that we're just not willing to deal with. Finding a home to buy has not been a problem. It's actually trying to buy the place that's frustrating.
Hello?
The process of buying real estate is a pretty formal one, especially in this day and age of litigation. There's a lot of papers to fill out, all covering everyone's best interests. Legally, once you submit an offer to a seller, they have X amount of days to respond to the offer. In fact, if they don't respond, it's a felony (and the statute is clearly printed underneath the required response date.) Unfortunately, in foreclosures and short sales, while we're dealing with an agent for the "seller," the ultimate seller/approver is a bank, and they hide behind a cloak of anonymity.
In a nutshell, no response. No response in a week, or two weeks, or six weeks. This is not a secret - Realtors know this is the process and we tell our clients to have patience. But put yourself in their position, and it's hard to sit around knowing whether or not your home was sold to someone else, or if you're still in the running, or if you have to put in an entirely new bid.
Multiple offers
It's rare that I preview a home for a client, and there aren't already 30 agents who have been there before me (we leave our business cards on the counter as evidence.) So when I find a great home and we submit an offer, we're certainly not the only ones in the pool. When the offers are too close to one another, or none meet the bank's minimum, I'll get a call from the listing agent - "The bank wants your highest and best offer, and you have until noon tomorrow to submit it." Wow, that's great. Now the ball is rolling and we should know one way or the other if we have the home. Uh, not really. I'm still waiting on results from highest and best offers that were submitted weeks ago.
Owner occupied vs. Investment
As everyone predicted, the investors have been waiting for this buyer's market and they are out in force. Equally, though, are buyers who want their first home, or a move-up home, and are emotionally attached when they find a home they really like. It's those owner occupied folks who get really frustrated by this process. On a normal sale, you'll know in two days whether your offer was accepted, but to wait six weeks or more just for a response is heart-breaking. And that's just for a response - then you have to counter back and forth for a few more weeks.
There are alternatives
Of course, we could skip the entire foreclosure market (loyal readers know I disregard short sales - and in fact, the Las Vegas short sale numbers have dropped by 500 this week alone.)
Buying a home directly from the owner is the preferred way of owning real estate. First and foremost, the seller is required to disclose the condition of the property (better known as the SRPD - Seller's Real Property Disclosure.) If the seller fails to disclose any material fact about the home, they are liable to the new owner. In a foreclosure, you waive your right to the SRPD because the bank never lived in the house and can't fill one out for you.
The negotiation process is much smoother and quicker, and you can close in about 30 days. The problem is that sellers are still pricing their homes above market price, and buyers aren't even seeing those homes as viable options.
If sellers would price their homes realistically, show their math (meaning - this is why the home is worth this much in today's market based on comparable solds of the last three months), and stick to their true low price - we'd really be rockin' and rollin'.
Negotiation is human nature
In a normal sale, everyone wants to negotiate. It sends shudders down a buyer's spine to put in a full price offer. However, on a foreclosure, we're now in a feeding frenzy and the bank is getting offers ABOVE the list price. It's the ultimate eBay auction where people want to win after becoming attached to the item up for bid. And I predict this is just the tip of the iceberg. Wait until the weather gets really nice - EVERYBODY will be out - looking and bidding, inching those prices up. Just what the banks want!
It's only a suggestion
I try and counsel my buyers so that they actually write an offer that gets accepted. Banks are not pricing the homes with extra padding in the price. They have a software program that gives them their bottom line based on the market (ours is declining), comps, condition of the home, length of time on the market, etc.
If you just can't stand to put in an offer at 100% list, then put in a 97% offer and be willing to pay your own closing costs. That should make you the new homeowner. Once you deviate from that simple formula, you'll just be noise in the system. If you're bidding on a listing all alone, you may have a shot at a counter offer from the bank, but you're rarely alone on a bid.
The press is waking up
There is such a thing as old news, and folks everywhere are getting tired of hearing about sub-prime loans, falling house values, etc. Now the new buzzword is "Recession." You'll read it here first, there will not be a recession. For as many articles I read pointing to the "R" word, there are more articles showing why we won't get there. Here's one that really breaks down the numbers (if you're a numbers person): The 2008 Economic and Housing Report.
The most interesting part of the above-referenced report is "Pent-Up Demand." We are definitely seeing this in Las Vegas, and the word will reach the press soon. There's no way I can say this is good news for sellers, it isn't. Home values are not going to go up any time soon. But it's the buyer's turn now, and those in the game are most likely to walk away winners.
Bottom line - it is a great time to buy. Las Vegas is back in the news in a good way, here's one example - Best and Worst Places to Buy a House. Do your own research and investigation, but it's time to get off the couch and in the car - it's time to move. Happy Hunting!
A view from the trenches
I meet new people every day, and when they ask what I do and I enthusiastically respond that I'm a Realtor, their next question is always the same. "Aw. How's business?" Yet they think they already know the answer, since it's a pretty well-known fact. Here's the funny part, I haven't been this busy since 2005.
More than ripples
Where 2007 was a lake that had no movement on it, this year we started with some ripples, which was encouraging, and now we've got little waves going. Now a ripple might not catch someone's eye, but waves certainly do. The problem is if you're looking down at the ground and not at the water, you'll most likely miss the motion.
More specifics
I am currently working with over a dozen buyers - ready, willing and able buyers. Having been pre-qualified with a lender, they all have a clear understanding of what they can afford, and are shopping accordingly. There are so many homes for sale, that you feel like a kid in a candy shop. It's not true, but it feels that way.
Many of the homes are foreclosures, and they're a mixed bag. They can be move-in perfect, or there can be an evident past water leak or something that we're just not willing to deal with. Finding a home to buy has not been a problem. It's actually trying to buy the place that's frustrating.
Hello?
The process of buying real estate is a pretty formal one, especially in this day and age of litigation. There's a lot of papers to fill out, all covering everyone's best interests. Legally, once you submit an offer to a seller, they have X amount of days to respond to the offer. In fact, if they don't respond, it's a felony (and the statute is clearly printed underneath the required response date.) Unfortunately, in foreclosures and short sales, while we're dealing with an agent for the "seller," the ultimate seller/approver is a bank, and they hide behind a cloak of anonymity.
In a nutshell, no response. No response in a week, or two weeks, or six weeks. This is not a secret - Realtors know this is the process and we tell our clients to have patience. But put yourself in their position, and it's hard to sit around knowing whether or not your home was sold to someone else, or if you're still in the running, or if you have to put in an entirely new bid.
Multiple offers
It's rare that I preview a home for a client, and there aren't already 30 agents who have been there before me (we leave our business cards on the counter as evidence.) So when I find a great home and we submit an offer, we're certainly not the only ones in the pool. When the offers are too close to one another, or none meet the bank's minimum, I'll get a call from the listing agent - "The bank wants your highest and best offer, and you have until noon tomorrow to submit it." Wow, that's great. Now the ball is rolling and we should know one way or the other if we have the home. Uh, not really. I'm still waiting on results from highest and best offers that were submitted weeks ago.
Owner occupied vs. Investment
As everyone predicted, the investors have been waiting for this buyer's market and they are out in force. Equally, though, are buyers who want their first home, or a move-up home, and are emotionally attached when they find a home they really like. It's those owner occupied folks who get really frustrated by this process. On a normal sale, you'll know in two days whether your offer was accepted, but to wait six weeks or more just for a response is heart-breaking. And that's just for a response - then you have to counter back and forth for a few more weeks.
There are alternatives
Of course, we could skip the entire foreclosure market (loyal readers know I disregard short sales - and in fact, the Las Vegas short sale numbers have dropped by 500 this week alone.)
Buying a home directly from the owner is the preferred way of owning real estate. First and foremost, the seller is required to disclose the condition of the property (better known as the SRPD - Seller's Real Property Disclosure.) If the seller fails to disclose any material fact about the home, they are liable to the new owner. In a foreclosure, you waive your right to the SRPD because the bank never lived in the house and can't fill one out for you.
The negotiation process is much smoother and quicker, and you can close in about 30 days. The problem is that sellers are still pricing their homes above market price, and buyers aren't even seeing those homes as viable options.
If sellers would price their homes realistically, show their math (meaning - this is why the home is worth this much in today's market based on comparable solds of the last three months), and stick to their true low price - we'd really be rockin' and rollin'.
Negotiation is human nature
In a normal sale, everyone wants to negotiate. It sends shudders down a buyer's spine to put in a full price offer. However, on a foreclosure, we're now in a feeding frenzy and the bank is getting offers ABOVE the list price. It's the ultimate eBay auction where people want to win after becoming attached to the item up for bid. And I predict this is just the tip of the iceberg. Wait until the weather gets really nice - EVERYBODY will be out - looking and bidding, inching those prices up. Just what the banks want!
It's only a suggestion
I try and counsel my buyers so that they actually write an offer that gets accepted. Banks are not pricing the homes with extra padding in the price. They have a software program that gives them their bottom line based on the market (ours is declining), comps, condition of the home, length of time on the market, etc.
If you just can't stand to put in an offer at 100% list, then put in a 97% offer and be willing to pay your own closing costs. That should make you the new homeowner. Once you deviate from that simple formula, you'll just be noise in the system. If you're bidding on a listing all alone, you may have a shot at a counter offer from the bank, but you're rarely alone on a bid.
The press is waking up
There is such a thing as old news, and folks everywhere are getting tired of hearing about sub-prime loans, falling house values, etc. Now the new buzzword is "Recession." You'll read it here first, there will not be a recession. For as many articles I read pointing to the "R" word, there are more articles showing why we won't get there. Here's one that really breaks down the numbers (if you're a numbers person): The 2008 Economic and Housing Report.
The most interesting part of the above-referenced report is "Pent-Up Demand." We are definitely seeing this in Las Vegas, and the word will reach the press soon. There's no way I can say this is good news for sellers, it isn't. Home values are not going to go up any time soon. But it's the buyer's turn now, and those in the game are most likely to walk away winners.
Bottom line - it is a great time to buy. Las Vegas is back in the news in a good way, here's one example - Best and Worst Places to Buy a House. Do your own research and investigation, but it's time to get off the couch and in the car - it's time to move. Happy Hunting!
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