Overpriced Homes – Can They Be Sold?

Under today’s marketplace conditions, with the availability of so many Las Vegas distressed properties, foreclosures, short sales and motivated sellers in abundance, offering properties that can be purchased at considerably under market prices, why would anyone consider making an offer on a home that is unquestioningly over priced?

The overpriced home is probably in excellent ready to move in condition, has desirable upgrades, and is most likely located in a stable and well-maintained neighborhood.

Certainly, the overpriced, but well maintained home looks very good compared to distressed properties that may be in variable states of disrepair. Many buyers might be inclined to pay a little bit more for a property that has passed inspection with high marks.

Comparisons may be made between the true cost of buying a property needing repairs and upgrades and a property that is ready and waiting for you and your furniture, with no additional fix-up expenses, and the answer to this comparison might well be surprising.

Of course, all is not so simple. In the first place, most buyers will not even bother to look at an overpriced home, much less make an offer for the property.

Additionally, the question to be asked is; why would the listing agent not advise the client that the home is overvalued? The listing agent cannot use inquiries about the home to divert buyers to less expensive properties since no one will be calling.

However, the overpriced home may be the dream home some buyer has been looking for, and the buyer’s agent can use some strategic negotiating tactics to try and work out a deal that would be agreeable to all parties.

First of all the buyer and his/her representing agent needs to find out why the home has been priced out of market.

Could be that as mentioned previously, the listing agent might be inexperienced, and neglected to do a comparative Market Analysis (CMA) to aid the seller in setting a realistic at or under market price for the home. As a result, the buyer might be unaware of how far out of line the asking price might be.

Could be that the seller has an inflated view of what the property is actually worth, and has refused to consider the advice of his agent.

A savvy buyer’s agent, knowing that his/her client really loves this property, would offer to provide the seller and listing agent with a CMA, and an estimate of what a fair price for the property would be, and would follow-up by making an offer that would be closely in line with the market analysis.

By pointing out market conditions to the seller, and affirming that the buyer has been pre-approved by a lender and is in a position to purchase, particularly if there are no contingencies to complicate the deal, the buyer may now be in a position to buy that dream home at a mutually agreeable price.

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.

Las Vegas Investors, small and large, can only prosper when they are totally flexible and adaptable to market changes, and, to be sure, the market is and will always be in a state of flux. Some changes may linger for awhile but to be sure, change is inevitable.

To be successful, the investor must keep up with and take advantage of the global changes brought on by the integration of many international economies. The current value of the U.S. dollar in comparison to the Euro for instance, has continued to attract international investors interested in properties within the United States, particularly Las Vegas.

Tax shelters designed to shield capital gains are less effective when market prices are falling, and sound, fundamental management is what is required to maximize property income during both good times and bad.

The astute investor in real estate must keep up with the way in which advances in communication can affect demands for certain kinds of investments.

Will the ability to complete entire transactions on the world-wide web have serious implications in regard to the demand for office space and traditional brick and mortar retail stores?

There will always be opportunities for the small investor in good times and bad, particularly since larger investment firms are rarely interested in smaller apartment houses, office buildings and single family home properties.

The small real estate investor must be sure of the kinds of investments he/she are most knowledgeable about, and most comfortable with. What are the goals?

What is your risk tolerance? Are you investing for Capital appreciation, current or tax-free income? What are your exit strategies, and time frame?

Additionally, the investor must estimate a time frame for return OF investment (return of the originally invested funds) and the return ON investment (profit.)

Investors in general look for properties which are easiest to convert to cash, (investment liquidity) at market values.

Liquidity is certainly very important, but location is one of THE most important factors in determining a property’s overall performance.

Evaluating trends in the local market and surrounding areas are a crucial part of deciding the worthiness of a particular property as an investment objective.

The investor must also examine possible restrictions as to use of the property, such as zoning laws, how demand for the property may be enhanced or diminished by interest rates, building codes and environmental laws, an oversupply of similar properties in the area, and such.

All of the above constitute greater or lesser risk factors. A certain amount of risk is an unavoidable factor in any investment, whether it be real estate or a new business start-up. However, the successful investor knowingly assumes only “calculated” risks, factors in the investment that have been carefully thought out and investigated before making a commitment.

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

The negotiation process between buyer and seller that begins with the buyer’s initial price offering, is an emotional and very stressful time for both parties. Las Vegas Real Estate Agents naturally go through this process with their clients time and again, but first time buyers and sellers may need a lot of hand-holding to keep calm and think rationally.

Since each and every transaction is unique in its own way, the listing and buyer’s agents must help their clients to plan properly, fully understand the process, and how to react to each others negotiating tactics.

Agents for both sides could close deals faster and more often if they would educate their clients about fair market values, and explain how the results of a Comprehensive Market Analysis (CMA) can help establish a realistic price that would assure both buyer and seller that they are in a win-win situation.

Once an agreeable price is established, the buyer has already been lender approved, and the house passes its appraisal and home inspections, the deal is just about done.

Establishing a selling price for a property could be fairly easy to determine if all factors were ideal, which is generally not the case.

Ideally, the home would be in good physical shape, and well cared-for, both inside and out. There would be no encumbrances other than a first mortgage, or none at all if the home was paid off. No liens of any kind, unpaid taxes, etc.

A CMA taking into consideration any upgrades to the home and similar neighborhood properties that might be considered competition, should be a reliable guide to establishing fair market value for the seller.

The buyer should also be made to understand the relevance of a CMA, which would serve as a guideline for the seller’s offering bid. If negotiations are to get off to a promising start, the buyer –in consultation with his/her agent – should offer a first bid that would seem fair to the seller. A bid so low as to be insulting will not receive a counteroffer.

When the seller and buyer realize that the seller will make an acceptable, but not unreasonable profit, and the buyer is paying no more and most likely less than fair market value, then you have the win-win situation that will result in a done deal.

Of course, that is a perfect scenario, and does not take into consideration all of the complexities involved in the sale and purchase of distressed properties.

However, in any case, particularly with first time buyers and sellers involved in property sale negotiations, the listing and buyer’s real estate agent’s should provide the education and communication that will prove beneficial to all involved.

If you are interested in purchasing a 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.

Often, first-time home buyers neglect to consider the costs involved in purchasing insurance, and/or how the cost of property taxes will impact their mortgage payments. Likewise, someone selling their first home may not be fully aware of how much of an impact taxes levied on the sale of the home will have on the seller’s net profit.

A first-time buyer may be unaware that the property taxes paid by the seller will most often differ from the property taxes paid by the new owner. Property taxes are  based upon the assessed value of the property, and may be higher or lower for the new owner.

When Homestead exemptions are allowed, in accordance with governing state laws, the new homeowner can apply for and receive a tax reduction. In some municipalities a further age-related property tax deduction can be applied for if the home owner is in the sixty-two to sixty-five year old range.

Home Owner’s Insurance

Although a new home buyer may surely be aware of the importance of having adequate homeowners insurance coverage to protect the home against catastrophic damage resulting in a total loss of property, such as from fire, flood, hurricanes, etc., or lesser but major problems within the home, liability coverage and the like, many people still purchase insurance based on cost rather than on the reputation for quality service of a company.

Case in point; in the aftermath of the devastation caused by Hurricane Andrew in South Florida in 1992, some companies –which will remain nameless- refused to pay the full amount of damages incurred by many of these homes by second guessing reputable and reliable contractors. However, some lesser-known and smaller companies accepted the damage claims of reliable contractors and paid in full to repair and often fully restore these homes up to current code.

That is why it is so important to be sure you are covered by an insurance company with a reputation for standing by its customers in time of need. Ask your friends and neighbors about their experiences with their companies, and do some research before you commit to a company which may add to your grief at a difficult time.

Of course other insurance costs may involve title insurance which protects the borrower against ownership challenges, flood insurance (a federal program,) which could be mandatory if the property is located in a flood risk area, and FHA loan required mortgage insurance, which protects the lender against the risk of foreclosure.

A full understanding of all the details involved in buying insurance can save you big dollars. For example, the higher your deductible –the amount of the claim you are personally responsible for – the lower your insurance premium.

At least a 20 per cent down payment on an FHA backed mortgage loan will save the expense of carrying mandatory mortgage insurance coverage. Other arrangements can be made so that the insured can pay a slightly higher interest rate and have the insurance built into the loan. An additional benefit of this arrangement is that it is tax deductible, which the separate mortgage insurance is not.

As any Las Vegas Real Estate Agent hosting an open house event can tell you, that is the time when many questions are asked by visitors. Although most questions are relevant some are very revealing as to the type of potential buyer this person might be.

• How long has this place been on the market? The question reveals that this person may be looking to low-ball the seller based on the idea that if the house has not sold in some unspecified period of time, the owner is probably desperate.
• What is the tax appraisal on this property? As though they can accurately formulate an offer to the seller based on that figure. The disparity in tax appraisals from one property to the next, even in the same neighborhood, can be maddening to decipher at times.
• Has the house been inspected? Apparently this person, or these people, are not aware that they would need a new inspection of their own if they plan on purchasing the property.
• Why are they moving? Not always a relevant question. If this is the house you want, and it can be purchased at a fair price, and passes inspection with flying colors, that’s all you need to know.
• Obviously the question of why the seller is moving is asked to find out how motivated the seller is. The seller may also be aware that revealing the true reason for moving might weaken the seller’s bargaining position.
• How much did they originally pay for the house? That’s a really silly and totally irrelevant question. What if the house was purchased fifteen or twenty years ago? All the potential buyer needs to know is what is the true and current fair market value of the home. The reason a person may ask this question is that some buyers really resent the idea that the seller is going to profit from the sale. Strange but true.
• I’m not sure what I am really looking for, but I’ll know when I see it. Can we just drive around and look at some properties? That question requires an educated and tactful answer.

Certainly, no one wants to discourage a potential client –who, of course is no being represented by any other agent- but this person needs to be made to understand that he/she should sit down with paper and pen and do some soul-searching. The client should be told to consult with family members as to what is important in a home versus what would be nice but not a must, budgetary limitations, time frame, current housing situation, etc.

The client should be made to understand that just driving around in the “hope” that the ideal property can be found would prove a waste of everyone’s time.

Providing a well thought out list, the client should be told, will increase the chances of finding the ideal home in Las Vegas the shortest time, since the agent will examine the list and then choose the properties to visit that are closest in line to what the client would want.

For further information about purchasing a home in Las Vegas call 702-376-0088.

If you are planning to sell your Las Vegas Home and purchase a new one, you might be tempted to look for a new residence before your current home has been sold. Don’t do it! Just think of the predicament you would be in if you find and purchase your next dream home, and are still carrying the mortgage on your current home.

Are you one of the lucky few who could comfortably manage two mortgages simultaneously? That wouldn’t seem to be the best of situations for most people. Besides, you aren’t just paying two mortgages, you are also having to maintain two homes. That means paying double utility bills, insurance premiums, lawn maintenance, repairs, etc. And another thing, how will the insurance premiums on your old house be affected during the time it is unoccupied?

Suppose you have a serious (and qualified) buyer for your present home, and you are already into serious negotiations with the seller of a home you have decided to purchase, and both deals go through, what happens then?

Unless you are extremely lucky, coordinating closing dates to everyone’s satisfaction won’t be easy. Of course, simultaneous same-day closings can be accomplished, but the chances of something going amiss could pose problems for all.

You could also approach the owner of a home you are interested in buying and offer to purchase the property contingent upon selling your home. The seller might agree to that condition, provided you already have a contract from a buyer of your home.

Whatever you do, try to avoid overlapping mortgages. It could become nightmarish. It makes much more sense to sell your old home first, and then, leisurely and without undo pressure, search for your new home.

Remember, you naturally want to sell your home quickly, and at a satisfying price, so it is important to remember that under any market conditions, the property that looks good inside and out, is priced right, marketed right, and has experienced and knowledgeable listing agent representation, is the house that will sell in a buyer or seller’s market in a reasonable length of time.

Once you sell your home and are free of mortgage payments you can rent temporarily while you are house-hunting. Even if you decide to stay in a hotel or motel while house-hunting, and your furnishings, etc. are put in storage, it’s a whole lot better (and cheaper) then carrying two mortgages.

Under current market conditions, and with an experienced real estate agent representing you, you shouldn’t have to rent for very long. The time is as ripe as it will ever get to buy a home. Selling prices are still falling, and if you have really good credit, interest rates are at mouth-watering all time lows.

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 possibilities of making big profits in distressed properties has lured many new investors into the field. Many, surprisingly enough, are willing to risk financing these kinds of properties without the knowledge and expertise, much less the experience of the successful, long-time investor.

Frequently, these newcomers rely on “instinct” rather then on the advice of knowledgeable professionals, such as real estate agents and attorneys. Their hunger for quick, profitable deals and lack of true market knowledge most often leads to investments that either do not materialize, or turn out to be money-losing propositions.

These entrepreneurs often do not know of all the options an owner of a distressed property may have before actually being foreclosed, such as:

• If the owner is in a higher than debt equity position, but has fallen behind on payments to the lender, he may opt for a quick sale to get out from under the mortgage
• Deed in lieu of foreclosure – giving the deed to the lender – may avoid foreclosure, but is not the best of all possible options
• Short Sale: The borrower must convince the lender to allow the property to be sold, even if the sale price is less than what is still owed on the loan.

The borrower must additionally ask the lender to agree that no further action against the borrower to collect any balance still due on the loan- after the sale of the property – will be taken. The possible tax ramifications of such a sale may not leave the seller free and clear of all debt.

“Jumping” into a distressed property purchase, without a complete understanding of the process, and without a skilled advisory team is often a recipe for financial disaster.

Without these advisers, how will the new investor know the true market value of a distressed property, particularly in a difficult market such as the present?

Certainly, the new investor should be aware of the outlay of funds required-other than the purchase price- such as appraisals, home inspections, title searches, financing conditions, rehab and upgrade costs, etc.

Further investigation may be needed to uncover possible second or third mortgages, contractor’s liens, judgments, and so on.

Additionally, the new investor who finds a truly profitable investment, will rarely be the only one who knows about the property, and will quickly find himself up against the old pros, savvy, long-time investors with deep pockets, who will be difficult to compete with.

At this point, all we can say to the new investor is, do not take the plunge into distressed property investment until you have thoroughly familiarized yourself with the market in which you are playing. Put together the best advisory team possible, and make sure your funding sources will enable you to make the purchases that will make you the kind of money that drew you into this investment field in the first place.

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

Added value properties are properties that for one reason or another are undervalued, but with renovation, sometimes minor, sometimes extensive, investing in these properties could be profitable.

This is dangerous area for new investors, particularly those with a get rich quick mentality. Careful analysis by an experienced investor and his/her investment advisers is a requirement of good judgment and the only way to make a qualified decision as to whether the deal is worth pursuing or walking away from.

How to recognize a possibly under-valued property that with some tender love and care would add value, might make a worthwhile investment takes experience in evaluating real estate investment targets.

Some examples of a possible added-value investment property:

• A rental property in which the owner is not experiencing the expected cash flow from the investment. Possibly the current owner is unaware of how to track rental market trends or inexperienced in finding the right kinds of tenants and is experiencing high tenant turnover.
• The neglected, vacant property of an out of town owner, who doesn’t need the money, and may have not as yet gotten around to having the home fixed up and marketed.
• A for sale by owner (FSBO) home that has fallen into disrepair due the owner’s lack of funds. The owner has little knowledge of the property’s true market value, and is selling the property in “as is” condition.
• The owner was recently deceased, and the beneficiaries are out of town and anxious to sell. The property may be in some disrepair, maybe minor, possibly major.

The beneficiaries are reluctant to put any money into the property for renovation, and may be putting pressure on the listing agent for a quick sale and might be amenable to selling at an attractive under-market value price to a qualified buyer.

• The once residential home is now in an area that has been re-zoned for commercial use, and the owner is not inclined to be a landlord to a business owner tenant and would rather just sell the property.

There are many other reasons as to why a property could be targeted by the investor as an added value prospect, and as mentioned previously, it takes real know-how to identify and analyze a real estate investment of this nature.

As any experienced investor knows, it takes the knowledge, resources and experience of a real estate agent who knows how to recognize these kinds of properties to find the investments that may be worth pursuing.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702-376-7379.

Inspections Prior To Listing

Having a Home inspected prior to purchase is an important safeguard for buyers and lenders, in order to ensure that the structure that represents thousands of dollars in investment capital is sound and the home’s vital components are in good working order.

Las Vegas home sellers would do well to have their homes inspected prior to listing, in order to be assured that the home is in good repair or that any problems found have been dealt with.

Although some states do not require licensing of home inspectors, the State of Nevada does. Inspectors are licensed and regulated by the Nevada Real Estate Division, and certified under the categories of Residential, Commercial and Master Inspector.

Home inspectors can be located through the National Association of Home Inspectors (NAHI.) Certification by the NAHI is a professional credential for home inspectors.

A home inspector check list will include the following:

• Home interior
• Home exterior
• Foundation
• Roof, flashings and gutters
• Roof support structure
• Attic
• Basement (if applicable)
• Insulation quality
• Garage
• Electrical
• Visible plumbing, interior and exterior
• Central air and heating

After inspection, a written report will be issued that will describe the home’s overall condition and will indicate any problematical issues discovered.

When interviewing an inspector, find out what type of insurance coverage or coverage’s he has. He should have liability insurance, but he may or may not be covered by an errors or omissions policy (E&O.) An E&O policy will cover an inspector who is negligent in his work, overlooks a serious defect or malfunction, or signs off on an inspection report without denoting an obviously existing problem.

It is important to note that inspectors do not examine a home in minute detail. Inspections are visual and done primarily to discover adverse conditions, and/or safety concerns, and not cosmetic items. Wiring and plumbing not visible to the naked eye, for example, would obviously not be possible to inspect.

Inspectors do not verify code compliance, and cannot inspect inaccessible areas of the home. Additionally, the inspector cannot guarantee that some structural problem or component of the home that has been inspected might fail sometime after the inspection date, if it was in apparently good condition or good working order at the time inspected.

Since long-term prospects of systems can’t be predicted, it would be a good idea to ask the inspector if any systems he has examined might need a specialists attention in the near future.

Certainly, radon and pest inspections are very important as well, and a home inspection company might offer to subcontract and get these inspections done for you, but it probably would cost less to hire these specialists yourself.

It is important for investors in rehab properties to know that as of April, 2010, the Environmental Protection Agency, (EPA) has put into effect the Renovation, Repair and Painting rule. What this means to the investor is that if you have purchased a pre-1978 fixer-upper or are planning to upgrade a multi-family housing development built prior to 1978, it is most probable that the paint covering scheduled to be removed will be lead-based. Read More

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.