FOX5HomePros.com - Local. Las Vegas.
Are You Ready To Buy?
By Mark Karten on September 6, 2009
First, I want to wish you a very happy, healthy and safe Labor Day weekend. The year is flying by, Halloween is just around the corner - then Thanksgiving.
With time going so quickly, the opportunity to take advantage of the $8,000 first-time homebuyer tax credit is slipping away. You must close on your home by November 30, 2009. Although there's lots of talk about extending and/or expanding the program, right now it's just talk, so please don't procrastinate and miss your chance.
Whether you qualify for the tax credit or not, it's time to get serious and understand the dynamics of Las Vegas real estate in today's market. The headlines in the media have been quite clear, homes are selling quickly. Increased competition means prices are being driven higher. Yet the message is not reaching everyone. Buyers continue to submit ridiculous "lowball" offers.
What's a lowball offer? A home that's on the market for 2 days, priced at $125,000, in a good area, great condition and the buyer offers $85,000. I could give you a lot of different combinations, but suffice it to say, it's a waste of everyone's time and paper.
In 2008 and the beginning of 2009, you had the opportunity to get a "steal" on some homes. I found one sale that looked like a steal in the last 30 days. The home was listed for $144,900 and sold for $47,500. It was on the market for 269 days and built in 1964. Why the big discrepancy between the listed and sold prices? The seller never lowered the price to meet the current sold comps.
Statistically speaking, homes in Clark County are closing between 95-103% of their asking price. Simply stated, if a home is priced at $100,000 - the sold price is somewhere from $95,000 to $103,000. If there were multiple offers and a request from the seller for a "highest and best" bid, then the home closed above asking price.
If you delve deeper into the numbers, the trend is quite simple. I ran the numbers on the homes that closed in the last 30 days, single family homes on the westside of Las Vegas. The results show that if the home was on the market for 30 days or less, the sold price was 103% of the asking price (on average) Some closed for as much as 108% of list price. Homes listed 31-60 days on the market closed at 99.5% of the asking price. If you continue to 120 days or more on the market, the closing price was 95% of asking, and that doesn't include price reductions taken during that time.
When we submit offers that are 20, 30 and 40% below list price of a foreclosure that's priced in line with recent sold comps, the listing agents sometimes call to ask, "What are you thinking?" Not the client, but us, the Realtor submitting the offer. You see, if we can't justify the offer, it makes us look bad (dumb, actually). Did the buyer select this price because that's all they were qualified for or because they think the seller is desperate? Either way, it creates extra work for both agents, who are pushing paper that goes nowhere.
For short sales, it's a different process, but the thinking is the same. If you're putting in an offer on a short sale, the minimum valid offer is list price. Why? The listing agent has priced the home based on recent sold comps, which he can justifiy to the lender, in an attempt to have the short sale approved.
If you offer less, the homeowner usually won't agree because it lessens his chance to avoid foreclosure while the clock is ticking towards his deadline of eviction. Currently, only 23% of short sales are successful, and lowball bids do not help these numbers.
To sum up the message this week, if you're ready to buy a home, we will help you understand the market, what the value of the homes are and what price to offer to successfully purchase a home you want to call your own.
In most cases, if your budget is $150,000, we usually want to look at homes no greater that $145k. This will give you a buffer to submit a winning bid and stay within your price range. There are always exceptions to the rule, but overall this is our market as we head towards year-end.
Now let's talk about paying cash versus obtaining a mortgage. This is the second part of the equation. Banks will accept a cash offer over a loan because there are less contingencies.
In any transaction, you get to inspect the house and review the CC&Rs (rules and regulations of the community.) Once you're satisfied, usually within the first 7-10 days, the sale is ready to close. If you change your mind for any reason, you'll forfeit your earnest money deposit.
When you're getting a loan, the same criteria apply but now the house also has to appraise for value and you have to get approved for the loan. Because many loans don't get approved when they go through underwriting (based on a poor prequalification), a seller will almost always choose a cash buyer, even if the offer isn't as high as a buyer with a loan. The saying everyone uses is, "Cash is king."
The Las Vegas Sun's article this week gives the sales statistics for July. 70% of all sales are foreclosures, 43% of buyers paid cash and sales are up for the 16th consecutive month. What the article didn't talk about was our current inventory, which is extremely low. Click HERE to read the article.
So the question is, are you really ready to buy?
(Back)
|
Give your 