Las Vegas Agents: Why Are You Paying Franchise Fees?

Is it necessary to hang your Las Vegas Real Estate License with a franchise company like a Century 21?  I thought so.  When I got into the business back in 2001, I hung my license with a Century 21 franchise in Henderson, Nevada.  I really didn’t realize the cost of doing business at a franchise like Century 21 until I received my first closing check.  Being a new agent, I was on a 50/50 split but I didn’t realize I lost an additional 6% for the franchise fee.  How is that a 50/50 split?  After a few more closings, I sat down and looked at my options.  Was I really receiving a benefit hanging my license at a franchise like Century 21?  Was it really worth 6% on every transaction I closed just to hang my license at a brand name real estate company?

Maybe a few years ago it did make sense to hang your real estate license with a franchise like Century 21 but in today’s real estate market, it makes no sense.  The shift to the Internet has leveled the playing field in the real estate industry.  Buyers are using the Internet to search for homes and sellers are using it to find a real estate agent who can sell their home.  This is why I don’t understand why a Las Vegas Real Estate Agent would hang their license at a franchise that charges 6% for every transaction they close like a Century 21.

Let’s look at another example of why it doesn’t make sense.  Las Vegas home prices peaked in June 2006 with a median price of $315K and currently the median home price is $141K.  The average real estate commission in today’s real estate market is $4,230 compared to $9,450 in 2006.  Anyone that loses that kind of income is going to notice a serious hit to their pocket book.  With that kind of loss of income, why would you keep paying the same fees you were paying in 2006?  Your fees are still the same but your income isn’t.

In today’s Las Vegas Real Estate Market, if you are going to hang your real estate license at a real estate brokerage, you better be receiving something of value.  Whether it be low monthly licensing fee, real estate leads or a generous split, it needs to make financial sense.  The cost of doing business has not decreased, so every dime you can cut from your expenses is very important.

Every dollar you make from your real estate business is very important and to give away a few hundred dollars per closing just to be associated with a brand name company is not worth it.  Like I said earlier, I hung my license for over 4 years with a Century 21 Franchise that charged me a franchise fee on every transaction I closed.  I must have given away over $10K dollars during that 4 year period and for what.  Since I started my real estate brokerage, Shelter Realty, Inc., I never had a client tell me they wouldn’t work with me because I wasn’t associated with a brand name real estate company.

So back to my original question, why are you giving away a few hundred dollars in franchise fees on every transaction just to be associated with a brand name brokerage?

If you are a Las Vegas real estate agent whose interested in joining our real estate team, we have opportunities for you.  For more information, fill out the form on our Las Vegas Real Estate Career page or call us at 702.376.7379.

Renting a Las Vegas Home can be very scary in today’s real estate market.  With so many homes going into foreclosure, it’s hard to know if the home you are renting could be next. Many times, renters find out the home they are renting foreclosed after the fact which doesn’t give them much time to find a new home to rent, pack and move.  Well now there is good news for renters in Las Vegas. The US Government just passed the “Helping Families Save Their Homes Act of 2009”.

The “Helping Families Save Their Homes Act of 2009” became law on May 20, 2009.  It included provisions to protect tenants from eviction as a consequence of a foreclosure affecting the property being rented.  The new law requires tenants be given 90-days notice prior to having to vacate, and allows them to stay through the remainder of their lease, if the home will continue to be a rental property.  The protections of this law apply only to “bona fide” tenants – who have a written contract, the lease was the result of an arms-length transaction, and the rent is not substantially less than the fair market rent for the property. Under any conditions, tenants may still be evicted if they violate the lease terms.  These provisions expire on December 31, 2012.

With the passing of the “Helping Families Ave Their Homes Act of 2009” renters can feel a little more at ease if they get the bad news that the home they are renting has foreclosed. They will have ample time to get their affairs in order and locate a new Las Vegas home to rent.

If you are looking for a home to rent in Las Vegas, feel free to give us a call at 702.376.7379 and we can assist you in finding a home for rent.

Call me crazy but I don’t understand why there aren’t any lending programs for Foreign Investors.  Right now in Las Vegas, home prices are at historic lows and it’s drawing the interest of real estate investors from all over the world.  I get numerous emails and phone calls every day from people outside the United States inquiring about Las Vegas Home prices and the process of buying a home in Las Vegas.  Unfortunately, I have to inform them that if they don’t have cash for the entire purchase, they won’t be buying an investment property in Las Vegas.

Doesn’t real estate play an important role in the economy?  I think we all know the answer to that question is an emphatic “Yes”!  So why aren’t there Loan Programs for Foreign Investors?  Many of these large Banks like Wells Fargo and Bank of America could easily create Loan Programs for Foreign Investors that required Foreign Investors to put down at least 30%, open a bank account in the US and anything else they would need to lower their risk.  In most real estate markets like Las Vegas, home prices have pretty much bottomed out thus minimizing the risk for the Banks if the Foreign Investor defaulted, especially if they required 30% down.

Creating loan programs for Foreign Investors will benefit local real estate markets and the economy in several ways.

1. More buyers will enter the local real estate markets absorbing many of the foreclosures that are plaguing neighborhoods.
2. Requiring a minimum of 30% down will generate a large cash infusion for banks, increasing their ability to lend money.
3. It will generate much needed tax revenues for local and state governments.

I am sure we could list numerous reasons as to why there should be loan programs for Foreign Investors but what I want to know is “why aren’t there any loan programs for Foreign Investors.”  What am I missing?

Anyone that is following the Las Vegas Real Estate Market is aware that home prices are at historic lows. Due to the fact that Las Vegas has been leading the nation in foreclosures, Banks and Lenders have been placing homes on the market far below market value which is driving down home prices. Even though many Las Vegas Homes are selling above list price, the fact they are priced so low is still causing home values to fall.  This trend could continue as foreclosures are still prevalent in the Las Vegas Valley.

With such great deals to be had, Investors are flocking to Las Vegas just like they did in 2004 and 2005 but the big difference is the price of the homes.  If an Investor purchased a home in 2005 and rented it, chances are their mortgage payment was higher than the amount of rent they collected.  In today’s real estate market, you can find great deals on homes that will net you positive cash flow.  We currently have several Property Management accounts where our Landlords are cash flowing over $400 a month.  That just wasn’t possible in 2005 unless you had put down a size-able down payment which really defeats the purpose of investing.

Even with the amount of rental homes hitting the Las Vegas Real Estate Market, rental rates have not fallen as demand is so high.  So many Las Vegas Homeowners have lost their homes and have no choice but to rent.  It will take years before they can buy a home again due to changes in lending guidelines and many won’t buy a home again due to the traumatic experience of losing their previous home.

If you are thinking about buying a Las Vegas Investment Property and want to know rental rates for a particular area, feel free to give us a call at 702.376.0088.

I am sure you hear many Las Vegas Real Estate Agents calling themselves a Short Sale Specialist.  Short Sales have become very prevalent in the Las Vegas Real Estate Market as many homeowners now owe more than their home is worth.  With the rapid decrease in home values, Las Vegas Real Estate Agents are trying to capitalize on this niche by calling themselves a Short Sale Specialist.  So what makes a real estate agent a short sale specialist?  Is it a few successful short sale transactions or maybe listing a few short sales?

Unfortunately that’s not the case.  Short Sales require a real estate agent that is experienced in marketing the home, obtaining an offer at or near market value, negotiating with the lender or lenders on the sellers behalf, coordinating with other lien holders and at the same time, keeping the buyer’s agent informed so their buyer doesn’t walk away due to the length of the transaction.  Some might say it isn’t necessary to obtain an offer at market value but if you are representing the seller, it is definitely in their best interest to get the highest offer possible.  This could be the difference in the Lender requiring the seller to hold an unsecured note or not.

Knowing the intricacy of the short sale process, Paul Rowe with Team Sena can be definitely called a Las Vegas Short Sale Specialist.  Paul’s entire responsibility is to represent our clients on the sale of their homes even though they owe more on the home than it’s worth.  He explains the entire short sale process and the importance of consulting with an Accountant and/or Real Estate Attorney in regards to the legal and tax implications of a short sale transaction.  He has been handling short sales for Team Sena for over a year now and has had great success.

If you are thinking of selling your Las Vegas Home and you owe more than it is worth, give Paul Rowe with Team Sena a call at 702.376.0088 or complete the contact form to the right.  If you have questions about the short sale process, check out our “Frequently Asked Questions on Short Sales”. Don’t wait till it’s too late, call us today!

With only a 3.5% minimum down payment requirement, FHA Mortgage programs are being used by more Las Vegas First-Time Home Buyers.

Some people easily get down payment and equity confused, especially in a market like Las Vegas which has a significant number of undervalued bank owned and foreclosure deals.

However, on a purchase transaction, the FHA clearly defines that the minimum down payment needs to be 3.5% of the lesser of the appraised value or the sales price.

Keep in mind that the down payment does not include borrower-paid closing costs, pre-paid taxes, insurance, title, appraisal, and home inspection fees.

To be approved for an FHA loan, all sources of funds have to be properly documented and verified by an underwriter who will be looking to see if there were any undocumented debts incurred by the borrower to obtain the FHA down payment cash investment.

Acceptable sources of borrower funds include the following:

• Earnest Money Deposit
• Savings and Checking Accounts
• Cash saved at home
• Private savings club
• Savings Bonds
• IRAs
• 401 (k) and Keogh Accounts
• Stocks and Bonds
• Thrift Savings Plans
• Gift Funds
• Sales Proceeds
• Sale of personal property
• Commissions from sale
• Trade Equity
• Rent Credit
• Sweat Equity
• Collateralized Loans
• Disaster Relief Grants and Loans
• Employer’s Guarantee Plans
• Employer Assistance Plans

Questions About Sourcing FHA Down Payment Funds:

Q: How is the Earnest Money Deposit verified?

The EMD is the initial deposit submitted with an accepted purchase contract offer which is held in an escrow account. These funds count towards the borrower’s down payment and/or closing costs.

The EMD is verified by a cancelled check, certification from the deposit-holder acknowledging receipt of funds, or separate evidence of the source of funds.

*If the EMD exceeds 2% of the sales price or appears to be excessive based on the borrower’s history of savings, there may be more documentation required to source and document the money trail.

Q: How are Savings and Checking Accounts verified?

A verification of deposit (VOD), along with the most recent bank statement is one way a lender may request to verify these funds. If there is a significant increase in an account, or the account was recently opened, a written letter of explanation may be required as well.

Q: What if I have been saving money in a jar or under the mattress?

The borrower will need to provide a written letter of explanation and evidence of the ability to accumulate the cash. This can include analyzing a borrower’s income stream, the time period which the funds were saved, spending habits, documented expenses, and a history of using financial institutions.

Q: How is a down payment documented from a 401 (k) or IRA?

While liquidation of the account is not required, underwriters will only use up to 60% of the value of the assets, unless the borrower can prove that a higher percentage an be withdrawn after subtracting any Federal income tax and penalties.

Q: Do I have to show liquidation of funds from Stocks or Bonds?

No, you may not have to show actual liquidation of funds from a Stock or Bond, but the accounts will be verified by providing monthly or quarterly statements.

Q: Who can give a Gift Fund?

A gift fund can be considered as an acceptable source of down payment as long as there is no expected of implied terms of repayment to the donor by the borrower.

Gift funds can be given by the following:

• A relative
• Borrower’s employer or labor union
• A charitable organization
• A government agency or public entity that has a home ownership program
• A close friend with a clearly defined and documented interest in the borrower

As a general rule, the FHA is not concerned with how the donor obtained the Gift Funds, as long as the funds are not associated with the sales transaction.

Q: Can real estate agents use their commissions as part of the down payment?

Yes, a family member who is a licensed real estate agent may also donate their commission.

There are many more down payment options that can be considered by an FHA underwriter as acceptable funds to close.

It is important to be completely transparent with your loan officer at the time of the initial application and financial strategy session so that we can put a game plan together for your individual scenario and goals.

Purchasing a new Las Vegas property can be an overwhelming process between the various contract negotiations, mortgage approvals, inspections, and new appraisal guidelines.

The following outline will help buyers with the overall time line:

1. Loan Application –

The loan application should be one of the first places home buyers start, especially if you are planning to apply for an FHA mortgage.

This is where the loan officer can spend a little time with a potential borrower to discuss their unique lending scenario, financing goals, and qualifying guidelines.

Depending on the amount of information requested by both parties, a typical loan application generally can take between 15 minutes to an hour.

It is highly beneficial to get all of the required documentation submitted at this time as well so that any potential underwriting challenges can be addressed.

2. Pre-Approval Letter –

A pre-approval lets the borrower and seller know how much they can qualify for, and is issued once the loan officer has verified income, assets, and credit.

As lending guidelines continue to change, most loan officers will take the pre-approval a step further and run a full online Fannie Mae (DU) or Freddie Mac (LP) automated underwriting approval to make sure the borrower has an additional layer of confidence prior to shopping for a new home.

Most sellers are requiring a full approval be submitted with a purchase offer.

Keep in mind, DU or LP approvals are not considered full underwritten approvals, unless an underwriter has physically analyzed the submitted documentation.  Every bank has their own quality control systems for this process, but the average time it should take for a full underwritten approval is 48-72 hours.

So basically, it is a good idea to get everything in and wait an extra day or so for an underwriter to issue a full approval.

3. Loan Search / Good Faith Estimate –

Once a pre-approval has been issued, it is important that the lender and borrower agree on the actual terms of the new mortgage prior to submitting offers on a new property.

A Good Faith Estimate is a form that outlines the interest rate, down payment, purchase price / loan amount, and other estimated closing costs so that the borrower can make an educated decision.

Even though the GFE is an “Estimate” based on the disclosed costs of the new loan, there are several things that the loan officer does not have control over.  Make sure you ask your loan officer what specific line items you can expect to be consistent or change at the time of closing.

4. Purchase Offer –

Depending on which market you are in, the purchase offer and acceptance process can be an entirely new beast to deal with.

Short Sales, Bank Owned (REO), and Rehab properties may take several weeks of negotiation before a perceived win / win deal is reached. It is important to hire a full-time real estate professional who is familiar with the landscape and knows how to navigate these types of transactions.

Recent neighborhood sales, pending foreclosures, and the actual terms of the purchase agreement are a few things that you need to pay close attention to before you commit to putting a sizable earnest money deposit down.

4. Due Diligence Period –

This is the time, as defined in the purchase agreement, that the borrower and seller have to complete all inspections, appraisal, review HOA / title documents, and anything else that may have an impact on the successful closing of the purchase transaction.

Due to new HVCC and FHA Appraisal guidelines, it may take a few extra weeks before an appraisal can be delivered.

5. Appraisals / Inspections Completed –

Typically, the appraisal and home inspection are paid for in advance by the borrower and have to be completed within 10 days of an accepted offer.  Obviously, an extended period of time will have to be given if the mortgage falls under HVCC guidelines.

The mortgage company will have to order the appraisal through a third party Appraisal Management Company, but the buyer’s agent generally handles the logistics of the property inspection.

Most borrowers like to be present at the time of the home inspection, however, the appraisal is handled privately by an appraiser.

6. Final Conditions Submitted to Bank –

The appraisal, preliminary title report, and any addition borrower documents are submitted to an underwriter for final approval.  This process takes 48-72 hours and is the final step, other than a loan lock, needed to order closing documents.

Proof of hazard insurance is also required prior to ordering loan documents.

Some mortgage programs allow a borrower the option of including their quarterly real estate tax payments and annual hazard insurance premium in the monthly mortgage payment by establishing a separate escrow (impound) account.

Make sure that you know what your total monthly mortgage payment is before ordering documents.

7. Loan Lock –

Mortgage rates have a tendency to change a few times a day depending on market conditions and adjusting credit / bank guidelines.   It is important to regularly communicate with your loan officer to make sure you get the rate and closing cost scenario that you have budgeted for.

Some brokers have the ability to change banks or negotiate a lower rate if things change for the better, but you are ultimately putting full trust in your loan officer when it comes to the rate game.

Rates can be locked between 7 – 90 days. A good rule of thumb, the shorter the lock period, the lower the interest rate.

Since a .125% adjustment in rate may only impact your monthly payment by a few dollars, it is a good idea to find a rate you are comfortable with and lock as soon as possible.

With the rapid fluctuations in pricing due to the turbulence on Wall Street, rates could move .5% in a matter of hours causing monthly payments and closing costs to significantly change.

8. Final Loan Documents Signed –

The final loan documents are delivered to an escrow or title company for preparation.  The borrowers will either sign with an escrow officer or meet an approved notary at a convenient location.

Sinings can take between 1-2 hours, depending on the amount of questions the borrower has about the transaction.

If there is additional funds to close, like a down payment or closing costs not covered by the seller, the borrower will bring a certified check to the escrow company.

*Make sure your loan officer knows where these funds are coming from so that there is a documented paper trail for the underwriter to approve.

The final property inspection is also completed during this time. If there are things that still need to be fixed before the you agree to close on the purchase, let your loan officer know if you want to hold off on funding, unless the rate or documents are set to expire.

9. Funding / Recording-

Once the final documents have been signed by the borrowers they are shipped back to the bank for a quick inspection and then set in line for funding.

A wire is sent from the lender through a few places and eventually ends up at the escrow company.

Since this process may take a few hours, it is common to hear about a delay between the time a bank “Funds” a loan and an escrow company “Records” a closing.

The first question home buyers want to know generally revolves around how much mortgage money they can borrow or get qualified for.

Simply looking on a search engine for “Mortgage – how much can I borrow” will more than likely only produce a bunch of mortgage calculator results vs real information that describes the entire process.

While an online mortgage calculator may be a decent tool to use as measurement, there are several other factors that play a part in a full mortgage approval.

Banks look at a few things when qualifying a borrower for a new mortgage:

• Credit

The most common measure of a borrower’s credit standing are the three scores which can range between 300 and 850.

A minimum 620 fico score is required for most FHA lenders, and anything higher may increase your chances of getting approved with a lower rate.

There is other criteria that banks look at regarding a borrower’s credit standing, such as payment history, total balances and limits, type of credit borrowed, and recent inquiries.

Since mortgage rates are also tied to credit scores on some loan products, knowing where you stand or how to improve this rating could make a significant impact on your monthly payment.

• Debt-to-Income Ratio

The (DTI) is calculated by dividing a borrower’s total monthly liabilities (minimum credit payments, auto loans / leases, child support, mortgage payments…) by the verifiable monthly income.

* Verifiable income includes pay stubs, W2’s, Tax Returns, and in some cases 1099’s and bank statements.

Example Scenario:

Current liabilities + new mortgage payment = $1,500 a month

(divided by)

Gross Monthly Income of $3,500

The DTI would be 42%.

Most mortgage guidelines require a 45% or lower Debt-to-Income ratio.

• Loan-to-Value

The (LTV) is calculated differently depending on whether the new transaction is a purchase, refinance, or rehab loan.

Basically, it is the amount of the new loan in comparison to the total value of the property.

When qualifying for a Las Vegas FHA loan on a purchase, a 3.5% down payment would equal a 96.5% LTV.

Keep in mind that banks will verify a paper-trail of the assets used for the down payment, so it is important to communicate with your loan officer about your current financial position.

There are a few factors to consider when deciding on the amount of your new mortgage:

1. Desired Down Payment

2. Budgeted Monthly Payment

3. Length of time you want to own the property

Updated Clark County Nevada lending limits will also play a role in determining the type of mortgage program and amount you are qualified for.

Since Las Vegas mortgage rates may also have an impact on your monthly mortgage payment, it is important to pay attention to the market.

Schedule a strategy session with our professional Las Vegas Mortgage staff by phone or at our office to discuss the best lending solution for you and your family.

Updated on 09/19/11 –  Short Sales can be difficult to complete and quite confusing for buyers and sellers.  To help you to better understand the Short Sale Process, we have completed a list of commonly asked questions along with information we need when handling a short sale in Las Vegas.

Whose names are on the loan?

It is important for us to know everyone who will be involved in the short sale.

Do I have to include my spouse on all the paperwork if they are not on the loan?

Generally not, unless advised differently by your attorney. In Nevada however, if your spouse is on legal title to the property, they will be included on the listing paperwork.

Can I sign the paperwork myself if there are others on title with me?

No, all persons who are on title must sign listing paperwork here in the State of Nevada.

Why are you considering a short sale?

Performing a short sale should be the last action before letting a property fall into foreclosure. You should have already explored other workout options first such as loan modifications. Once it is clear that other options will not work for you, it is time to look seriously at doing a short sale. Do not delay; take action so that you will be left with enough time to complete a short sale prior to foreclosure.

How much time do I have before I get foreclosed upon once I am in default?

Well, good question. It depends on the individual banks involved as well as State your property is located. Here in Nevada, you have 3 months and twenty days once a Notice of Default (the official filing a lender makes with the County Recorder) has been filed. After this time period, a Trustee Sale is often scheduled within 30 days. Your bank usually will usually get your property at the Trustee’s Sale. Technically, you are in default one day after you miss a payment, but it usually takes a couple of months before a Notice of Default is filed. The more time we have as real estate agents, to conduct a short sale, the better chance you have, just make certain you have exhausted other options prior to attempting the short sale

Why do you keep saying I need to try other alternatives to a short sale PRIOR to listing my home as a short sale?

A short sale is simply another workout option to a bank, just as a loan modification, forbearance or refinance, and as far as the bank is concerned, the least desirable. A bank would always prefer to do a loan mod instead of a short sale. Once you start a short sale and try another workout option, the bank will suspend the short sale in favor of the other option, leaving the listing agent, buyers with offers on the property and anyone else involved in a transaction, in a lurch. It will take at least 30 days to get an answer on a loan mod. By that time, all the data and offers on a short sale will be obsolete. The bank will request all new paperwork to re-initiate the short sale. Bottom line is you can only do on workout option at a time.

Will banks let anyone who is behind do a short sale?

Not necessarily. A bank usually requires a hardship. Examples of hardship are job loss, pay cuts and underemployment, mortgage payments that have escalated beyond what a borrower can now pay, job transfer, an increase of the monthly obligations of the borrower such as having additional dependants to support. Normally, a person would simply sell to get out of this financial hardship but under current market conditions, that is simply usually possible as many people are under water in their mortgages.

If I file a bankruptcy, how would that affect the ability for me to sell my home on a short sale?

Filing for bankruptcy during your short sale will only delay the sale.  You will need to seek court approval to sell the home.  In some cases, it could take 3 or more months to get a court date and may jeopardize the short sale.

Should I continue to pay my mortgage while attempting a short sale?

As a REALTOR, I cannot advise someone not to pay their mortgage. That is up to you. My job is to get the home under contract, negotiate with your lien holders to approve a short payoff, and get the home successfully closed.

Do I have to be behind on my payments to do a short sale?

Usually, yes. It does depend on the bank. Some won’t even look at a short sale application without being behind, others simply want an applicant to be behind prior to the home closing, so as long as one payment is missed prior to a short sale approval letter being issued they’re fine with it.

Can I do my own short sale?

Very unlikely, banks prefer professional REALTORS being  involved.

Who else should I talk to about doing a short sale?

A good real estate attorney as well as a CPA should be consulted as well. There are tax ramifications and potential deficiencies that may result from a short sale. REALTORs cannot give professional advice in these areas.

I think I need to do a short sale on the home in which I live. How long can I stay there?

You probably should begin to prepare to leave and not plan on trying to time it perfectly so you can stay right up until foreclosure. For one, most homes are more difficult to sell with owners or tenants present. They usually limit the showing times, do not keep the property in prime show condition, and frequently intimidate buyers who “feel guilty” about the sellers situation preventing them to focus on the real task of evaluating the home for themselves. Your REALTOR is able to guide you on the State statutes governing foreclosures. They should also be in contact with your lender and should know when a foreclosure is imminent.

I have tenants, how does this affect them?

You should be honest with them, and depending on their lease, they may have to move out early to accommodate a buyer who wants to occupy right away or most certainly, if the home is foreclosed. A lease would have to be honored by the new buyer, but that buyer might simply choose not to move forward with making an offer if there is a tenant. You need a buyer more than you need a tenant, so find an equitable solution!

I am going to vacate the property. Do I have to maintain the property?

The best looking homes normally sell the quickest. If you can afford to maintain basic utilities that will generally aid your agent’s ability to sell the home.

What are some of the things my REALTOR will need to know in order to help me with my short sale?

They will need to know all of the liens against a property. Most important will be the number of banks involved. You should inform your REALTOR if you have been paying your home owner association dues. Other liens might include property taxes, IRS tax liens, mechanic’s liens, child support judgments, SID/LID assessments, sewer, water, trash bills, etc. Avoid unnecessary liens such as inexpensive HOA (home owner association) dues. Keep paying them if possible. In Nevada, HOA’s are in a first lien position which means they get paid even before the banks do! The more liens that are filed against a property, the more difficult it is to successfully close a short sale. A lien holding bank allows only so much of the proceeds of the sale to pay off closing costs, liens etc. If the costs are too high, the bank will tell the REALTOR to find more money. That may mean, getting a buyer to pay a higher purchase price. If the buyer in this situation is unwilling, the deal will die, which is bad news for the seller.

Other items your REALTOR will need to know.

The names and number of banks on your mortgage; the amount of your monthly payment; how much you owe on the property.

I hear that 2nd mortgages can really disrupt a short sale.

In our current real estate market in Nevada, where homeowners are so far under water, most 2nd mortgage holders have little hope to recover much of the money the lent. We rarely see 2nd mortgage initiate foreclosure proceedings as they will probably receive no money from the foreclosure. Negotiations are crucial with them in order to have them cooperate, even though they have little financial incentive.

How is the REALTOR paid and what are the costs to do a short sale?

REALTORS are paid from the proceeds of the sale by the seller’s bank. All costs such as taxes, commissions, escrow fees etc. are taken off the top. The selling bank will cap the fees. If the sale price is insufficient to cover the fees and still net the bank what it feels the property is worth, it will not approve the sale. Sometimes banks want a seller  to contribute money or some other form of consideration (usually in the form of a promissory note). If you have equity in another property, they may look to have you access that equity if they determine they need more money to approve the sale. You will have to determine on your own whether or not it makes sense. In any event, you will not know what they will require until you are in negotiations with your bank.

What if the buyer wants me to contribute to their closing costs?

Your REALTOR will write in the contract that any seller concessions are subject to the approval of the lien holding bank. If they approve the closing costs, you’re set. If the don’t approve and  more money is needed, you will either have to get the buyer lower their demand for costs or you might want to contribute out of pocket if you can afford it. Remember, that you will be walking away from a very large debt and if kicking in some money to make the deal happen, you may want to consider it.

What is a deficiency?

The deficiency amount is equal to the complete amount of indebtedness including all late fees, attorney costs, expenses (if applicable) less the amount received by the lender from the sale (net proceeds after closing costs). The goal of the short sale negotiations in addition to the approval is to obtain a full release from the bank in that they will not pursue a deficiency.

I refinanced recently and pulled out some equity.

This is where you may be most vulnerable for a bank to pursue a deficiency. There is a difference between the debt to purchase or improve a property, and the debt pulled out and simply spent. The latter form is often treated just like credit card debt and a bank may consider obtaining a judgment for that debt. It is critical you consult an attorney as well as a tax professional familiar with short sales if this situation applies to you. You always want to minimize your obligations, so

Why not just let my home go into foreclosure if I am going to still have potential liabilities?

Several reasons: first, an approved short sale, properly negotiated and reviewed by an attorney, usually means that the debt is satisfied. Banks will generally report that the debt was paid short of what was owed, but it will show as paid. Second, it is preferable to avoid a foreclosure on your record. Fannie Mae has indicated that it will be possible to obtain a loan from them after two years while a foreclosure is five years. Your goal is to satisfy your debt obligations even though you are facing a financial hardship. Doing nothing is usually more destructive.

If you have a question that we did not answer, please contact us at 702.376.0088 and we can discuss your short sale questions.

British Airways announced they will be adding a daily direct flight to Las Vegas from London starting in October, just in time for the opening of Project City Center.  This is great news for Las Vegas as visitor count over the last year has dropped and any opportunity for Las Vegas to add more flights to McCarran International Airport is another opportunity to bring in more tourists. According to British Airways, round trip fares will start at about $460, plus fees and taxes.

With many Americans staying closer to home because of the recession, it’s important that Las Vegas keeps doing a great job of tapping into the International Markets.

After reading the title, I know you are probably thinking, yeah right, but just hear me out for a second. 

Could the Las Vegas Real Estate Market be undervalued?  I think without a doubt the answer to that question is yes.  Below I have listed some key points to why I believe the Las Vegas Real Estate Market is undervalued.

1. Homes priced below $150K are selling above list price.  (The average median home price in Las Vegas is $141K.  A significant drop from the high in June 2006 of $315K)
2. Homes that are priced below $150K are receiving multiple offers.
3. Homes priced below $150K are receiving offers within hours of being placed on the market for sale.
4. Standing inventory has steadily decreased over the last year even though we are seeing an increase of bank owned properties hitting the market.
5. 13 Consecutive months Las Vegas home sales have increased compared to the same month from the previous year.  Even though unemployment is over 10%.
6. There has been an increase in foreign investors purchasing homes in Las Vegas.

These are all signs to me that indicate the Las Vegas Real Estate Market is undervalued.  I know there other so called real estate experts that are predicting the 2nd wave of foreclosures, which could happen but I have been hearing that since mid 2008 and here we are, 13 consecutive months of increased home sales compared to the months from the previous year.  On the flip side to the 2nd wave of foreclosures, the Obama Administration has passed legislation that is helping Las Vegas Homeowners to modify their home loan allowing them to stay in their homes with a more affordable mortgage payment.

Nobody knows what’s going to happen over the next 6 – 18 months but I am confident the Las Vegas Real Estate Market will begin to see home prices stabilizing and standing inventory will still be on the decline.

After reading this and you still don’t think the Las Vegas Real Estate Market is on the road to a recovery, then check out this article by the New York Times indicating that Las Vegas is showings signs of rebounding.

When I decided to get into the business of Property Management in Las Vegas, I knew I needed someone that had experience to teach me the ropes.  After interviewing a few property managers, I decided that JoAnn Davis was the right one to teach me.  JoAnn has been a licensed real estate agent since the mid 1970s and has been doing property management for the last 5 years.  When we first began to talk, she told me crazy stories about what she has experienced in her years and I chuckled and thought to myself, “business just isn’t done that way anymore.”

Boy was I wrong.  Some of our recent Landlord clients have told me some crazy stories of what their previous property managers were doing which just blew my mind.  One client advised they were no longer receiving rent checks and he called his property manager.  She advised that the tenant moved out last month and he asked why didn’t you tell me and she said she forgot (are you kidding me).  He then asked if she was going to get it rented and she said she would work on it.  After 3 months and no contact, he called his property manager and asked for an update and she advised that she rented it a month ago but the tenant needed some time to get the rent but yet the tenant was living in the property.  When he told me this, I was in shock that this Las Vegas Property Manager was in business.

I had another client advise they noticed their monthly deposit for rent had changed so she called the property manager.  The property manager advised the last tenant broker their lease and moved out so she rented it to someone else for a lower amount.  My client was very upset that the Propety Manager never contacted her to let her know what was going on and then to top it off she rented it for less without consulting with her.

I have heard many other stories and I am sure other property managers have as well.  I just can’t believe that there are property managers in Las Vegas that operate like this and are still in business?  My advice for any landlords looking to hire a Property Manager in Las Vegas, ask lots of questions and request to speak with some of their current clients.