BREAKING NEWS in the LAS VEGAS REAL ESTATE MARKET……

In the first week of July, 2009 the number of available homes for sale dropped to 13,348 which is at a low that we haven’t seen in our market since early in 2006.  If your buyers are not yet aggressively pricing their offers, now is the time to educate them to get their offers accepted.  Added to that dynamic is the fact that the contracted status of 9,471 homes continues to grow with the single biggest reason for the contingency is bank approval. This has more than doubled from last year, and about 61% of those look like short sales.

Putting all of the data together it seems to point to the conclusion that short sales are going to continue to garner a larger market share than ever before as Foreclosures continue to decrease. So for all of you who didn’t catch the “Foreclosure Bus” don’t miss this next market trend!!

 

FIRST QUARTER REAL ESTATE SALES VOLUME HIGHEST IN 5 YEARS!

Finally some great news for the real estate industry–the reported March 2009 Sales Volumes on single family residences was 2,879 units, which combined with the first two months of the year brings the total sales volume to 7,391 units. This is the highest volume in the last five years, the closest first quarter year being 2005, with 7,150 units. We have also more than doubled last years first quarter production which was 3,559 total units.

Our Las Vegas real estate inventory posted through the Multiple Listing Service is also supporting a continued strong market. The listing inventory has dropped below 20,000 to 19,888 which is a 16% decrease of available homes for sale over last year. And the REO listings are maintaining at about 31% of our available inventory, although this will probably increase in the near future. However I think that having a continued stream of aggressively priced homes will only contribute to this strong trend and indicates 2009 will be one of our best years.

 

How to spot our economic recovery…..

   No,  this is not an April Fools lead in,  unlike Business Weeks nominating Franz Kafka International as the most alienating airport in the world, which is my personal favorite April 1st punk.

Yesterday at the Prudential National Convention in Las Vegas, Geoff Colvin, Fortune Magazine Senior Editor and acclaimed journalist spoke to over 3,500 Prudential agents.  He suggested that we will know when this economic crisis is behind us based on two economic indicators. The first being the Treasury Bill rates and the second is the Junk Bond ratings. Apparently during the “good times”, the disparity between the two ratings was just a little more than two point five, now the difference between the two is over 20 which suggests a high risk factor. As the ratings come closer, there will be less risk and we will all be able to sleep a little better a night.

 

Fannie Mae says No Negotiation of Sales Commission…

                                              According to the Fannie Mae Announcement 09-03, effective March 1, 2009, closing of  preforeclosure sales may not be conditioned upon a reduction of the total commission to be paid to real estate agents to a level below what was negotiated by the listing agent with the borrower, unless the fee exceeds 6%.

This is great news–no more guessing what your commission will be and no doubt this will have a positive impact on the short sale market!  I know that some agents would rather have impacted wisdom teeth removed without anesthetic than submit an offer on a short sale and  after hearing about some of the horror stories, I can’t say that I blame them. However taking into consideration my earlier blog  “how to navigate the short sale offer” and asking one more important question, has  a BPO been done by the bank, I think short sales can be accomplished with less headache than ever before.

 

Overcome Buyer Reluctance and Make The Offer!

The biggest challenge in real estate that I’m hearing from my agents these days is the buyers reluctance to make an offer. They cite various reasons, the most prevalent being the concern that “home prices will continue to drop”.  I think this is the same old fear that buyers have always had, just dressed in new clothing.  And that  is that there is an underlying concern that has not been addressed, and it is up to you as a real estate professional to find out what it is.

Every market has different challenges, either prices are going up or they are going down, interest rates are either going up or going down, and the same for cash flow. There has always been a buyers reluctance in every market and you the agent,  have a choice to either buy into their reluctance or see it for what it is. Drill deep and find out what the real issues are for your client, address that issue and then ask “do you think home prices will ever increase again”?

Of course they will and then you can move on to the close,  ”If we find the right home for you today that has most of your important wants, is there any reason that you wouldn’t want to make an offer”.

 

21 Ways to Help Your REO Offer Get Accepted

I recently attended a National Real Estate Institute Negotiating Bank Owned Properties seminar and thought that I would condense down the highlights for those of you who are writing REO offers.

1. Keep it simple–no novel writing, these offers are sent electronically and are usually reduced down to the net.

2. Try to have close of escrow on or before the 25th of the month. Takes about 3 days for bank wires. Banks are assessed their handling charges on the first and if they have not received the check before the EOM then there is an additional charge for them.

3. Try to limit contingencies and most banks will not accept  a sale of home contingency.

4. Do not call listing agent and ask “what will it take“, listing agents have no idea what the asset manager will accept.

5.Most banks will not allow an assigner.

6. Most banks will not pay a commission on an agent as principle buyer representing himself.

7. Banks prefer preapproval from banks rather than mortgage brokers.

8. Sellers are not required to pay for title so if buyer wants to pay all costs then they can dictate title company.

9. Banks will bring HOA current,  just make sure to address in offer.

10.  Even if you come in at full list, expect a counter. Council your buyer to expect counter but still offer highest and best to eliminate competition.

11. Always keep in the game and recounter.

12. When there are multiple offers and you receive a Highest and Best request from the bank-it is usually a 24 hour timeframe, but always check with the listing agent.

13.Asset managers are not emotionally invested, they usually have between 400 and 500 files to get off their desks.

14. Timelines vary on the response time for offers anywhere from 24 hours to two weeks.

15. Bank’s position is that they are responsible for only known conditions. Be sure to read the “AS IS” addendum carefully, particularly a clause that states if repairs exceed 5% of value, property reverts to “as is”.

16. If you extend COE, make sure you also extend the financial contingency, otherwise EMD goes hard.

17.  Try to limit Due Diligence to 3 days.

18. If you can document with a licensed inspector and send the inspection report listing the repairs to the listing agent, your chances are fairly good that they will be taken care of.

19. Most lenders will not allow credits for repairs at close of escrow.

20. Most banks will not accept bank wired earnest deposit, they will ask for certified funds.

21. Make sure that everything that you want the seller to pay for has the exact dollar amount including the appraisal. Offers are accepted on the “net”.

I hope these simple tips help you get more of your REO offers accepted  and wishing you  much success in 2009!!

 

THE SCOOP ON NEW FHA GUIDELINES…OR WHAT NEW FRESH HELL IS THIS?

        

       OK gang, fasten your seat belts because in case some of you have been living under a rock for the last few months and haven’t heard, as of October 1, Seller Funded Down Payment Assistance is gone!

      However, your buyers can still use Down Payment Assistance from the following sources: Family, Friends, Employer, or Church Organization.  There is some legislation in the works to bring it back but if that ever happens it probably won’t be until after the new year and I would imagine with some pretty stringent guidelines, so in the meantime it will be interesting to see how “Friends and Family” are defined.  

     Also if a buyer owns a primary residence, with the intent of purchasing a new home as their primary residence, in order to use rental income or projected rental income on their existing home to qualify for a new home, the buyer must have a minimum of 25% equity in their current property. If not, then the buyer must qualify with both morgage payments. If there is 25% equity, then the property may be subject to an appraisal or field review to verify.

     Ready for some good news now…….The increase to 3.5% minimum downpayment has been postponed to January 1, 2009 or until further notice from the Dept. of HUD.  So at least for a few more months it will remain at 3% and if the rumor mill is true, various sources say that the Seller Funded Down Payment Assistance should return after the new year.

 

Profit Seeking versus Prospecting in Real Estate…

What’s the difference between profit seeking versus prospecting in real estate?

Although this might sound like just a semantic difference, I believe the underlying value is the Grand Canyon of difference. I guess after 20 years in real estate I shouldn’t be surprised when I hear agents tell me “real estate is hard” and they hate to prospect….hmmm, there just might be a correlation there. I think one of the reasons that agents find this business difficult or hard is that they are not continually building their business and generating new sources of revenue.

It should come as no surprise that just as with every other successful business enterprise, having a real estate business, whether you’re a brokerage of one or many, profit seeking should be your second highest commitment. The first, of course is unparalleled customer service. If, as Stephen Covey suggests in “The 7 Habits of Highly Effective People”, ( Habit #2 “Begin with the end in mind), envision the final result before starting a new endeavor. Deciding on what profit you want to obtain is the first step.

His analogy of building a house was perfect; we don’t just go out and start building, it would be far too costly and full of mistakes. Instead we first envision our new home, then blueprints are drawn, plans are made, etc. So it is with real estate. Your profit seeking activities such as Open Houses, Internet Marketing, Direct Mail, should be seen as just that, activities that will bring you profit rather than prospecting which is not as directly tied to your end result.

My challenge to you is if you do not know what profit you want to have at the end of the next 12 months, take that first step and envision your future.

 

I need to make more money….

I heard an interesting proposition this weekend, and that was “the answer to any problem can solved by first asking the right question”.

Sounds too good to be true, doesn’t it?

So being the good zen student that I am, I decided to not judge but to give it a try-so I asked my agents in a sales meeting if anyone needed to make more money. You can imagine at no big surprise that quite a few of them said yes, they would indeed like to make more money. The dialogue that followed went something like this:
me: The question is how can you make more money?

                              agents: By increasing our business.

                             me: How can you increase your business?

                            agents: By increasing our prospecting. (Is this true? If you                     increased your prospecting, would you increase your business?)

                            me: How can you increase your prospecting?

                            agent #1: By doing more open houses. (Is this true? If you did more Open Houses, would you increase your business?) 

                             agent #2: By personally contacting my Sphere Of Influence. (Is this true?)

                            agent #3: By consistently marketing to my farm. (Is this true)

                            agent #4: By doorknocking my Just Listed/Just Solds. (Is this true)

                            me:  Is this true, if you did all of these, would you generate more business?

                            agents: yes

                            me: would you then make more money?

I won’t bore you with any more because you’ve probably figured out where this was going long ago but it is a simple truth; more activity generates more business, which generates more income.

I would invite you to just do at least one if not all four if you need to make more money–Namaste.