Where Does My Earnest Money Go?

Hey, I gave my real estate agent a $5000 Earnest Money Deposit check… Where does that money go?

A basic and very obvious question that most first-time home buyers ask once their purchase contract gets accepted. An Earnest Money Deposit (EMD) is simply held by a third-party escrow company according to the terms of the executed purchase contract. For example, there may be a contingency period for appraisal, loan approval, property inspection or approval of HOA documents. In most cases, the Earnest Money held by the escrow company is credited towards the home buyer’s down payment and/or closing costs.

*It’s important to keep in mind that the EMD may actually be cashed at the time escrow is opened, so make sure your funds are from the proper sources.

The Process:

1. Earnest Money is submitted to an escrow company with the accepted purchase contract
2. At the close of escrow, the EMD is credited towards the down payment and / or closing costs
3. If there are no closing costs or down payment, the the EMD is refunded back to the buyer

Who Doesn’t Get Your Earnest Money:

• Selling Real Estate Agent – A conflict of interest
• Sellers – Too risky
• Buying Agent – They shouldn’t have your money in their account

Why Fixer-Uppers Are So Popular

Although not all investors are attracted to these kinds of Las Vegas Properties, some real estate investors look for nothing else but properties in need of repair. This can be understandable, when on the surface it may appear that a motivated seller may be willing to part with his run-down parcel of land for as much as 20% to 40% under potential market value.

Of course, the inexperienced Las Vegas Investor may look only on the bright side of the picture, such as creating equity with minimum up-front cash, using government money and low interest loans to rehab eligible properties into saleable or rentable condition, or flipping a “ fixer-upper” for big profits, with a minimum outlay of funds.

All of the above speculations are not only possible, but are frequently accomplished. However, the experienced investor doesn’t only see the bright side, but will carefully evaluate possible pitfalls and cash outlay estimates after purchase before making a commitment.

As with any property purchase, and particularly with a handy-man special, a thorough building inspection by a licensed contractor is a must. Any problematical finds, such as structural damage and the extent of that damage, must be carefully evaluated before deciding to buy or walk away.

Another important consideration when dealing with this kind of investment is the outlay of funds required to repair and refurbish the property. If you are a do-it-yourself craftsman, you will probably be able to handle cosmetic repairs such as painting, cleaning, minor plumbing and electrical repairs such as leaking faucets, or replacing a light switch, etc., but, more extensive repairs would probably involve the cost of hiring a licensed contractor, especially if the building needs to be brought up to code.

All of these factors, other than just the purchase price must be carefully evaluated before making any commitments. Future use of the property, and a realistic exit strategy are other important considerations.

At this point in time, when selling prices are down and inventories are high, many investors in rehab homes would prefer to fix up and rent, rather than compete in a “buyers market.” Favorable cash flow from monthly rentals will allow the investor to bide his/her time waiting for an up cycle in the marketplace, as inventories gradually diminish and selling prices begin to rise.

Lastly, although CPA’s and real estate attorneys are valuable members of any investors team, a good Las Vegas Real Estate Agent is the key person on your team that can help you build wealth.

A good real estate agent, one that has experience in finding the kinds of properties you are looking for, and is in tune with your goals and business practices, are your eyes and ears in the marketplace.

Above all, the smart investor knows that connecting with a reliable agent will not cost you money, but actually help you to make money.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702-376-0088.

Regardless of your investment preferences, whether they are primarily geared toward corporate stocks and bonds or real estate based, diversification is the best road to take to insure asset protection during volatile marketplace upheavals. In other words, as the old and time-proven saying goes, “don’t put all of your eggs in one basket.”

Best advice to any investor; know the marketplace you are playing in. If you are not thoroughly familiar with the rules of the game, you are assuredly destined to lose.

Certainly, no one, no matter how skilled an investor one may be- and we have said this time and again- knows everything, and if you are playing the real estate game, incorporate a team of specialists as your guides and advisers. As any successful investor will assure you, it takes a team effort to succeed.

There are many ways to diversify a real estate portfolio, and the investor should –after careful analysis – choose the path that best suits present and future market conditions and projections.

Among the many and most common real estate diversification investments are:

• Purchasing and selling or renting high-end properties; estate homes, luxury condos, etc.
• Buying, repairing and renting or selling handy-man specials
• Apartment complexes
• Condo conversions
• Real Estate Investment Trusts (REITs)
• Real estate mutual funds
• Real estate hedge funds
• Real estate related stocks
• Raw land
• Commercial property

Diversification allows the investor to ride out a down cycle in a particular market, with asset loss minimized or even neutralized by an up cycle in other real estate investments.

Take for example, what is happening in today’s marketplace. An investor whose specialty is strictly geared toward the buying and selling of single-family homes is faced with falling property values due to a huge glut of available inventory, mostly consisting of distressed properties, and with no immediate prospects of this inventory diminishing to any great degree for some time.

However, an investor for example, who buys and sells homes and has additionally invested for the long term in rental properties, including single family residences and apartment complexes, will have the benefit of continued cash flow from rentals.

Investors who have concentrated strictly on one aspect of real estate investment are in trouble when their investments hit a severe down cycle, since these investors have no immediate options to fall back on.

The investor with a skilled real estate agent as part of his/her advisory team is in an excellent position to intelligently forecast near future  market trends in some instances, and make the kind of investments that will maximize revenues and minimize loss.

Although these examples are just simplified versions of complex issues, the wisdom of diversification is obvious.

There is no doubt that the overall quality of a school district has a definitive impact on home values. In fact, the one of the most prominent reasons for families with school-age children to choose or reject a particular Las Vegas Home is based less upon the likes and dislikes of the home, and more upon the known quality or lack thereof of the school the property is zoned.

It’s an absolute fact that the market value of residential homes located within the jurisdiction of a quality school remain consistently higher than the value of similar homes in a less desirable school zone.

Often, buyers will be willing to pay premium prices for a home within a high ranked school zone, which is a primary reason for such a home to command top dollar.

Even in a market of declining home values, such as we are experiencing today, homes within the better school zones are holding their value far better than most.

A home within a school zone recognized for its consistency in quality education is often considered more desirable than a home that is perhaps located more conveniently to shopping, entertainment and business districts, for example.

Sixth largest in the United States, the Clark County School District has a number of schools that have rated among the nation’s best. Green Valley High School has, in fact, been proudly ranked among the top ten high schools in the country.

Detailed information about schools in the Clark County School District, as well as charter schools, can be viewed by parents and guardians through required annual reports. These reports are also used by Las Vegas school teachers and administrators to help develop academic achievement programs designed to increase the learning skills of all students.

Additionally, a Magnet School Program developed by the Clark County School District provides students with the opportunity to attend schools offering unique educational programs.

Under these programs, parents and their children have the opportunity to choose which of the Magnet School’s specific offerings would best suit the child’s particular interests.

Important consideration should be given to the fact that there is always a possibility that school boundary changes could occur if, for instance, a particular school is growing rapidly and is near or over capacity.

A new subdivision located near an established neighborhood could possibly stress the capacity of the adjacent schools and cause a school boundary shift, and although homes in a good school zone can often command selling prices of twenty to thirty percent higher than similar homes in a lesser school zone, a school boundary shift which would put the home in a less desirable school zone would most certainly negatively affect market values.

What can you do? Evaluate all of the factors involved, and just try to make the most intelligent choice possible. Remember, in the real estate marketplace, as in life, nothing is guaranteed, and change is inevitable..

If you are looking to purchase a Las Vegas Home within a particular school zone and have any questions, feel free to give us a call at 702.376.0088.

As soon as a property is listed in public record as being in default, the vultures begin to circle the dying carcass. Vultures, meaning the not so legitimate companies that prey upon these unfortunate people in difficult circumstances, and are opportunists of the worst kind.

Unlike the honorable investor in distressed properties, who truly attempts to put together a win-win situation for everyone, the scam artists, posing as lawful business people, use scare tactics and confusing language to pressure the panicked  homeowner into making hurried and thoughtless decisions, decisions that will result in the immediate loss of their home, and the scam artists acquiring the property at a below bargain-basement price.

Many homeowners facing the loss of their property are vulnerable to any suggestions that might help their situation, and are too distressed and anxious to check out the credentials of these crooks, whose tactics are designed to keep the homeowner confused, worried, and pressured to sell quickly.

The scam artist depends upon the harried homeowner’s state of mind preventing logical thought. He/she knows that if a homeowner was able to think rationally, he/she would be checking with the state government attorney’s office and the Better Business Bureau, for any complaints lodged against these firms, before concluding any business with them.

There are countless scams out there, with one purpose in mind, to steal the home out from under the home owner and resell for a fat profit. It is not within the scope of this article to detail all the many ways these thieves operate, but just as an alert to the Las Vegas Homeowner who is suffering financial difficulties and a possible loss of their home and is looking for a solution.

Above all don’t panic. Logical thought will enable you to find the answers. Definitely avoid all the come-on ads in the newspapers and online that offer themselves as mortgage consultants, “save your home specialists,” or using the words “debt elimination,” and the like.

Contact your lender as soon as you see a problem in meeting your mortgage obligations, and see if you can work with them to resolve the dilemma you are in. Remember, lenders don’t really want to be in the real estate business. Foreclosing and selling properties in default are practically always a losing proposition for them. Foreclosures are “loans gone bad,” as far as the lender is concerned.

In fact, many lenders complain that homeowners often call too late to be helped, and that there are cases in which a person suffered a home loss that might have been avoided had they contacted the lender sooner.

If it is feasible to do so, hire an attorney who specializes in real estate laws and regulations, and can evaluate your situation, and perhaps find some logical solutions to your problem.

If you decide you want to sell your Las Vegas Home and you owe more than the home is worth, feel free to give us a call to discuss doing a short sale.  We can be reached at 702.376.0088.

Which Would Be The Best Choice

If you are planning to buy a Las Vegas Home, and are not sure of whether you are interested in a new home, a somewhat older resale, or a truly “older” home, it would be best to avoid confusion by researching what the differences are in older and newer homes, and how these differences would or would not be to you and your family’s liking and adaptability.

Be sure to have a family consultation after you have carefully examined these differences, in order to reach a consensus as to what kind of home would best suit everyone’s lifestyle.

Above all, try to reach some conclusions before you bring your appointed real estate agent into the picture. Once you are focused on the kind of homes you have decided you are interested in, and in what price range, your agent can go to work and locate properties of interest.

Differences in newer and older homes are many.  For example, older homes –in particular, homes  built in the 1950s thru the  1970s –  may offer less interior living space then a newer home ( a typical two or three bedroom home in those days might be about 900 to 1600 square feet, with one or one-and-one half bathrooms)  but may have been built on a larger lot since land was not quite at such a premium then.

Rooms and windows are generally smaller in these older homes, and each of the rooms are pretty much closed off from one another. The open floor plan of modern construction allows for lighter, airier surroundings, and larger windows will let in more daylight.

Rewiring might be a distinct necessity for some older homes, which may not be able to accommodate all of the high end kitchen appliances and electronic equipment that are in every day use today.

Additionally, the cost of a code upgrade or remodeling of an older home should be taken into consideration as well. On the other hand, an older homes mature landscaping, with towering trees and abundant shrubbery, are a definite plus factor, since landscaping today can be an expensive proposition, and trees and shrubs can take years to reach full size and maturity.

Due to lesser square footage, the older home lacks the equivalent storage space available in newer construction.

However, the quality construction found in many older homes is often better than on many comparable newer Las Vegas Homes. These homes were built to last, with sturdy 2×6 redwood framing and solid plaster walls in place of sheetrock.

Many vintage homes, such as those built in the 1920s and 30s, have architectural features that give these homes a “character” that is appealing to many people. Many of these vintage homes are located closer to downtown areas, which can make them quite expensive to own.

So, the conclusion seems to be that whether to buy a new or older home is pretty much a judgment call, and your decision should be based on many factors, and especially how well a particular home, old or new, fits in with your expectations of what an ideal place to call home should be.

If you are interested in purchasing a “resale”  or new home in Las Vegas and have any questions about the Las Vegas Market or would like to set up a time to view properties, feel free to give us a call at 702.376.0088 or fill out the form below or to the right.

The worst housing crisis in more than half-a-century has devastated Las Vegas home prices, severely impacted our economy, and thrown many people out of work and out of their homes.

But, as in any downturn, even during the Great Depression of the 1930s, opportunities for the astute investor could always be found.  Of course, in good times or bad, cash is always king, and an investor with a ready source of capital and a sound line of credit is in a position, particularly at this point in time, to acquire real estate properties at record low prices. Read More

Although there are many reasons why some Las Vegas Homes are harder to sell than others, some obvious and some not so obvious, basically, most any home should be saleable. Even if the home is in bad shape, there are always buyers out there looking for fixer-uppers. What then could be the problems that are keeping a particular home sitting unwanted in the For Sale columns for many long months?

Let’s look at the obvious:

• The asking price is too high. If the house is overpriced, then the primary reason the house has not been sold is either the fault of a homeowner who insists on a set selling price and won’t budge, or the Las Vegas Listing Agent, who is either not familiar enough with the neighborhood, and has not bothered to do a comprehensive neighborhood market study, or is hampered by inexperience and is not capable of convincing his/her client that they are being unrealistic.
• The house lacks “curb appeal.” The homeowner has neglected to spruce up the yards, front and back and the exterior may have that uncared for look; peeling or dull looking paint, a shoddy front door, screens that need repairing, cars and trash cans in plain view in the driveway, etc.
• The interior of the home has not been “staged.” That is to say, a fresh coat of paint in a neutral color, carpets vacuumed, home thoroughly cleaned top to bottom, appliances shined, furniture attractively arranged and clutter removed. Rooms should look bright and cheery, and most personal items removed to make it easier for a prospective buyer to imagine him or herself occupying the premises. A messy home is understandably a big turnoff to buyers.
• The Las Vegas Property has not been professionally marketed. If the homeowner is trying to sell on his/her own, they will not be able to access the resources or depend on the marketing skills of a real estate agent, and as a result will not get the badly needed exposure the home needs in order to attract a buyer in this very competitive “buyer’s market.” Furthermore, many buyers are uncomfortable dealing with an owner directly, and would rather negotiate through their real estate agent.

What can be done to make the house saleable, besides all of the above corrective actions? Adjust the asking price to coincide with current prevailing market conditions in the area, and for the listing agent to ensure that the property gets maximum marketplace exposure.

Additionally, the listing agent’s negotiating skills, or lack thereof, as well as a buyer’s and/or seller’s unwillingness to compromise, are often key reasons as to why a home can be difficult to sell.

If you are interested in selling your Las Vegas Home and have any questions about the process or the need to do a short sale, feel free to give us a call at 702.376.0088 or fill out the form below or to the right.

The knowledgeable Las Vegas Real Estate Investor can be differentiated from the less astute investor by the fact that the overeager investor often looks to purchase any property or properties he or she can find based almost entirely on price: if the price is right, the property is purchased!

However, the really successful investor will only purchase properties that fit within particular financial parameters as well as pre-established goals and guidelines that are not strictly based on price. These are the investors whose real estate deals are consistently profitable.

Certainly, an investor whose buying strategy is based strictly on buying low, may not always be able to sell high. The reason for this is that little or no attention has been given to so many other factors that could, and probably will often negatively impact the resale value of these properties.

Differentiating between a desirable and a not so desirable property takes experience, and a backup team of realty, legal and taxation professionals.

The successful investor will make no offer to purchase any property unless the residence meets the investor’s established guidelines and the long or short term profitability of the purchase is confirmed, and only after consultation with the investor’s team of experts.

Part of the evaluation process –aside from price – that is used by the successful investor to determine the worthiness of a property include the following:

• The neighborhood:  Property located in a stable, established, well-kept neighborhood may pose a better opportunity for a profitable resale than a newer neighborhood which may or may not develop into as desirable a location. Certainly, property in newer developments have often appreciated nicely, but an established neighborhood with a history of consistent value appreciation is the safer goal.
• The Location: Houses located on Cul- de- Sacs or corner lots may be more desirable and appreciate a bit more than the surrounding properties. The property’s current and future value is additionally dependent upon a neighborhood location that would be most desirable to families.
• The physical condition of the property is another important consideration. If the home is in less than perfect condition, are the defects merely cosmetic, or would it take an expensive rehab job to get the property into saleable condition?
• Will this home be suitable for purchase as a rental property in order to generate long-term cash flow, or purchased for a quick resale?

Of course, we’re just scratching the surface here, within the limited scope of this article but the bottom line is that the key to real estate investing success is to understand the market and which way it is headed. No easy task, unless you have the experience and the back up of a knowledgeable investment team to guide you.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702-376-0088.

BUYING A LAS VEGAS HOME

Before you even begin to search for your new Las Vegas Home, you and your family should prepare a checklist of wants and needs, a list that will analyze exactly what those absolute needs are, as opposed to your wants, such as a spare bedroom or home office, which would be nice but not absolutely necessary.

A list that is realistic, in accord with market conditions, and leaves room for compromise will help you to focus on the specifics of what your needs really are in a home, neighborhood, etc., and is helpful to your agent, who will know what to focus on as well.

A helpful list of needs and wants, emphasizing the importance of needs first, would consider the following, arranging individual needs and choices in order of most importance to you. For example:

• Where in town do you prefer to live?
• Older home (over five years) newer, or new construction?
• How much house can you afford? What price range?
• Have you been pre-approved by a lender?
• Convenience of location: short commute, or close to public transportation, nearby to shopping, schools, etc. Which of those choices are the most important?
• Neighborhood demographics: nicely kept homes on a quiet street, property located on a cul de sac, or corner lot, crime stats, quality of school district. Good schools add quality to a neighborhood and should be an important consideration.
• Number of bedrooms, baths required
• Single or two story construction. If anyone has a problem with climbing stairs, a one story is obviously the best choice.
• Consider a short sale or foreclosure property if it is only one of very few in the neighborhood?
• Have a professional home inspector check for problems and evaluate cost of repair.
• Would you prefer to pay a little more for a house in perfect condition, or would you rather buy a house that is in need of some repair in order to pay less for the home?
• How much renovation are you willing to do? Are you handy with tools and will be doing much of the repairs yourself, or would you need a contactor? Contactor fees would add to the costs which would impact your home buying budgetary expenses.
• Before making a commitment on a particular piece of property, Investigate the noise factor and other aspects of the neighborhood for conditions that may or may not be a source of discomfort or annoyance by driving through the area at different times of the day and evening, during the week and on a weekend.
• Large yard for the weekend gardener, romping room for the family dog, etc., or smaller yard for less maintenance.
• Pool
• Patio Deck
• Two or three car garage
• View
• If the community is governed by a Home Owners Association (HOA) find out if the rules and regulations are compatible with your lifestyle and freedom of choice
• Gated community with entry password security system, or gated with 24/7 on duty security guards

Let your Las Vegas Real Estate Agent know of any other special features or needs that your family may require.

If you are interested in purchasing a home in Las Vegas and have any questions about theLas Vegas Market or would like to set up a time to view properties, feel free to give us a call at 702.376.0088 or fill out the form below or to the right.

Forestalling the Foreclosure Process

LENDER VS. HOMEOWNER

When a homeowner falls two or three months behind in mortgage payments, he is a homeowner in distress, or as the lender would consider it, in default. At this point the lender will notify the debtor of the default in writing, and request that payments be brought up to date.

In answer to the lender’s request, the debtor can either bring the mortgage payments up to date, if possible, or if unable to comply with the lender’s demand, request the lender to agree to a possible loan modification, or short sale.

If the lender agrees to a temporary loan modification, the debtor must prove his/her ability to pay the agreed upon reduced amount. Additionally, since the agreement would be for a limited time the homeowner must prove to the lender that his/her prospects are promising enough to renew original on -time mortgage payments upon the expiration of the loan modification agreement.

Another possible recourse for the homeowner in distress is to request the lender to agree to a short sale, whereas the house may be sold for less than the balance still owed on the mortgage.

In this case, the homeowner would be required to produce an offer to the lender from a qualified buyer. If the property is in foreclosure and scheduled for auction, the debtor’s attorney or Realtor will then contact the lender, advising of the offer and will attempt to convince the lender to postpone the auction, and accept a short sale.

Should the debtor file for bankruptcy, the court has the authority to issue an automatic stay, preventing all creditors, including the lender, from taking any further action or continuing any further proceedings –including an auction – from taking place.

The lender can request the court to lift the automatic stay, particularly if notice of default was filed prior to the bankruptcy filing.  However, if the trustee determines that there is nonexempt equity in the property, equity that can be liquidated to pay creditors, the lender’s request may be denied.

Homeowners in distress and facing loss of their property can find out if they are eligible to seek aid through the government’s Home Affordable Foreclosure  Alternatives (HAFA) and Home Affordable Modification program (HAMP.)

To prove eligible for HAFA you must apply to HAMP first and answer qualifying questions. Although there is too much detail in these programs to be included in this article, detailed information can be obtained from the following website:

The HAFA short sale program was put into effect on April 5, 2010, and is scheduled to expire on December 31, 2012.

Certainly, there are some legal alternatives for distressed homeowners, but the best advice is to act before your lender knows you have a problem. Tell them that you foresee a problem in making payments as scheduled and perhaps you may be able to work things out, even on a temporary basis, by being upfront and showing good faith.

If you have any questions about the short sale process, feel free to give us a call at 702.376.0088 for a free consultation.

Can short sale properties be a boon to buyers who are investing in a place to live, but a risky strategy for the profit oriented investor? Unfortunately, there are no easy answers to these questions, and each individual deal must be considered on its own merits.

In a simple case scenario, a short sale to a buyer who really loves the home, plans to live there for at least several years, and can purchase it at below or close to market price so there is some equity, has made a good deal. Certainly, if it is a nice piece of property in a stable, popular neighborhood, the home will build further equity over time.

A Las Vegas Real Estate Investor however, faces more complex issues when considering a short sale purchase then would a potential home owner, issues that may or may not prove worthy of the time or investment in a given property.

For example, is the property –under current market conditions-  considered to be “under water,”  meaning that the remaining balance on the mortgage, and/or a lien or liens of one sort or another are greater than the property’s fair market value?

In such a case, the investor would be looking at a property with no equity, so it would appear that there wouldn’t be any motivation to further pursue this deal.

Or would there be? If the investor is determined, the lien holder or holders might possibly be persuaded to release the lien or liens at less than face value. That could be one way of adding some positive equity to the property.

Of course, the lender would additionally have to agree to sell the property to the investor at a mutually agreeable price in order for that deal to make any sense to the investor.

Is a scenario such as this worth the investor’s time and effort, or should he/she be pursuing less complex and more promising deals?

Once again, there are no easy answers. Since there are so many variables to each and every deal, the investor, and his advisory team of Realtor, broker, attorney and CPA must evaluate every transaction on its own individual merits.

Although Las Vegas Short Sales are most often not the pot of gold at the end of the rainbow that some naive investors may think, there can be a decent profit potential in some short sale deals if all the right factors that are advantageous to the investor are in place.

Certainly, knowledgeable Realtors and investors are aware that the real estate “picture” will be constantly changing throughout the year, and no one knows when or what exactly will occur when lenders begin to release a new flood of REO properties to the marketplace before the year’s end.

One thing for sure, there is no doubt that the successful Las Vegas Real Estate Investor in these rapidly changing times will be the one who is flexible, observant, and able to adjust his/her goals to accommodate these changes.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702-376-0088.