Part 1

The Contract  

This will be a five part series on buying a bank owned property.

From all accounts in the news Nevada leads the nation in foreclosures.  Las Vegas has the bulk of those homes.  How do you go about buying these homes and what do you need to know?  Much of the transaction is similar to a normal sell, the difference of course is the seller is a bank.

Another difference is you may not have a written acceptance right away.  The listing agent may notify the parties once the offer has been accepted but verbally at first.  The initial response can take 2-3 business days.  The written acceptance may take 5-10 business days.  Be AWARE that even though there maybe verbal acceptance it is still not binding until the seller has signed the acceptance.

The seller will then present to the buyer through their Realtors® a counter offer/addendum with additional terms and notices specific to that transaction. Buyers should check all of the terms and conditions of the counter as it will typically alter many terms of the standard residential contract that was required up front.  In Las Vegas that is a Residential Offer that your Realtor® filled out and you signed to submit the offer.

Some of the specific terms may include inspection periods, removal of any contingencies and very often a NRS113 which relieves the seller (bank) of any warranties on the house.  Other specifics include closing costs and closing dates with penalties attached should you not be able to close on time.

It is very very important to have your financing in order and a good loan officer that you and you Realtor® can work very close together on making sure you can meet the sellers (banks) deadlines.

There are bargains to be had in this market and things can work out well if you as a buyer are aware of what needs to be done to make this all run very smooth.  A good Realtor® can help make the process easier.  

The Foreclosure Crisis in Las Vegas
And Around The Nation

One day I hear and read and watch on TV that we have only just begun to see the full effects of the foreclosure crisis.  The next day that all seems to be swept under the rug and things are looking up.  It just seems you don't know who to believe and what to think about in regards to our futures.  Should we try and buy a new home, new car, new TV, etc.  Or do we sit on our money, stay put and make do with what we have.  No one has a crystal ball of course, but I do not want to live my life in fear from day to day.

I have been trying to figure out what happened?  I went to a foreclosure class recently and got a few facts.  Our teacher threw out these numbers.  9,000 letters of default are issued daily in the US. 400-500 are issued daily in Nevada.  The number that scared me some is 2.3 TRILLION ARMS (adjustable rate mortgages) have not yet reset! Now that is a scary number. Course it use to be you could not get a loan and credit was so tight.  In the Carter era in 1977 something called the Community Reinvestment Act it was to help communities get loans.  It has been deregulated almost every administration since.  Too read all about this act click here   Did this act have anything to do with the mess we are in now?  Seems to me it may have at least been easier for lenders to do very creative loans.

This is what is happening in Las Vegas right now.  If you go to a Trustee Sale you have to be a cash buyer or have a certified check.  The trustee sale is the event that concludes the foreclosure process. In states that have deeds of trusts as opposed to mortgages, the trustee is named in the deed of trust, which is the document that the borrower sign in addition to the loan documents. When a borrower falls behind with payments the lender can initiate foreclosure procedures by recording a notice of default. If the borrower does not cure the default after the notice of default, then a date for a trustee sale is set. The trustee will set a minimum bid for the trustee sale and if nobody bids, the property goes back to the lender. Keep in mind also if you bid on a property at a Trustee Sale you take on everything about that property, liens, back property taxes, and the IRS can come and take it away.

 When the properties go to AUCTION only 12% are going through.  Now the banks are trying to draw multi-offers by lowering the property to VERY low prices and then you have a bidding war.  I have a buyer right now and so far this has happened twice.  So if you are looking to buy a bank owned property, ask a lot of questions.  Ask how many times the price has been lowered, have your agent to check to see if there are any other offers and be sure you are willing to go up on price if there are.

Some lenders are now not even putting the properties on the market, but doing 5 year leases until the economy improves.  

Will the new stimulus package help? Time will tell.  In the mean time if you go to buy a bank owned property ask a lot of questions. 

Las Vegas Short Sales

There are quite a few short sales not only in Las Vegas but all over the United States.  Only 10% of the homes that are listed as short sales will actually close.  That is not a real high number.  Right now today in Las Vegas there are a total of 27,623 properties for sale this includes all pending sales and contingent ( on pending and contingent properties there is an offer) so to break it down more leaving out the pending and contingent there are 19,325 properties and of those 6,789 are short sales.  Of  the contingent properties 5,030  the number of short sales are 2,332, so these properties are sitting there with an offer on them waiting for lender approval.  The pending which are hopefully ready to close there are 3,270 properties and 272 of those are short sales that have gotten approval.

What do you need to know before you try to short sale your home?  You can be up to date on your payments but show by your hardship letter that you can not do it for long.  Your hardship letters should be as detailed as possible.  To do a loan modification you must be 3 months behind in your payments.
This may change as the Obama plan is put into use and MAY is the key word.

You have to have an offer on your home to apply for the short sale with the lender.
 

When you get an offer and your agent puts in for the short sale approval (if you are behind on payments) be sure that your agent not only talks to the loss mitigation department but also the foreclosure department.  They do not always talk to each other and the foreclosure department needs to know there is an offer as it can stop the foreclosure while the negotiations go on.  You do not want a notice of default to be filed.

Lenders expect 3-7% of loans will go bad and investors are also aware of it.  Investors now have lost a lot more than that as figures show 28% of the nation is underwater and upside down.

If you need to sell your home in a short sale be sure you work with an agent that is experienced in short sales as they can be very tricky and an agent that knows and is on good terms with the lenders is much more likely to have the short sale go through.

Single Family Residence

On The Market                16,836

Bank Owned                      5,511

Short Sale                          5,599

Foreclosures                         650

Pending/Contingent         5,391

Homes Sold                          362

Condo/Townhouses

On The Market                   3,474

Banked Owned                  1,451

Short Sales                         1,079

Foreclosures                            20

Pending/Contingent               622

Homes Sold                              60

These are the Stats for the Las Vegas Valley only.  Not Boulder City, Pahrump, or Reno only the Las Vegas Valley it does include Summerlin, Henderson and  North Las Vegas

If you are looking to move or invest in Las Vegas Please give me a call
If you have a home to sell in Las Vegas I would love to sit down and talk with you.