A Checklist for First Time Home Buyers in Las Vegas

The latest run up was challenging for first time home buyers trying to break into the Las Vegas real estate market. Low inventory, strong demand and cash investors, often made it difficult, if not impossible for this group. Now as the real estate market shows signs of cooling off, first time home buyers will have more opportunities going into 2015. While this shift presents an easier market to navigate, more housing choices and negotiating power, it shouldn't be the main reason you buy your first home. Buying your first home is dependent on a variety of personal criteria, not what the real estate market is doing in Las Vegas and Henderson. This decision should be based strictly on financial, not emotional factors.

(On a side note, the herd mentality has often shown to be destructive financially. Buying real estate, tech stocks or tulips just because everybody else is, has proven to be disastrous throughout our history. Given the enormity of such financial decisions, cooler heads always prevail. I generally have been safe betting against what is in vogue with the majority.)

Regardless of the market, buy when you are ready. Buy when it makes sense to you and your family. Buy after carefully examining the fiscal strength of your household. Never buy on emotion. Ever.

So when are you ready to buy your first home? Here are few things to think about first.

You must have a strong awareness of your monthly budget. 

If you haven't done this already, now is the time to start. It's not just a mortgage payment, but also home owner's insurance, property taxes, upkeep costs and possible HOA fees. Utilities too may also run higher. Create a spreadsheet so you can clearly see how much money is coming in and how much will be going out with these added expenses.

What kind of shape is your reserve fund in? 

Typically I think it's best to have at least six months of living expenses in savings prior to a home purchase. Losing your job, an illness or a family emergency may disrupt your income. In addition to life events, home ownership can also throw you curve balls: A roof may need to be replaced, or the AC may go out during one of our hot summers here in Vegas. Either option could leave you reeling financially if you don't have enough money in the coffers. Don't lie to yourself here; this is where most people get into trouble. Life happens, so it's best to plan accordingly.

Is your debt under control? 

New guidelines for "qualified mortgages" will scrutinize debt levels during the mortgage application process. New legislation wants to make sure you don't get in over your head and lenders want to make sure they get repaid on the loan. It's always a good idea to pay down as much debt as you can six months to a year before you begin your home search. Unless you can pay for a new car or vacation with cash, wait for these until after you've purchased your new home.

Are you prepared for the long term commitment of home ownership? 

I wouldn't recommend buying a home unless you can meet the criteria in this article and plan on staying in place for at least five years. If you own for less time, it is unlikely you'll recoup the cost of ownership and will have gained very little if any equity. (An exception to this would be buying on a 15 year mortgage.) Keep in mind that we've already seen the bulk of appreciation here in Las Vegas over the last couple of years. If you buy going forward, it is highly unlikely you're going to capture another 25% on your home. Ultimately though, you should be buying a home for a place to live, not solely for appreciation.

Your landlord's phone number just so happens to be your phone number! 

Keep in mind the cost of home ownership. Over the years I've done all kinds of things: Replace hot water heaters, basic plumbing, not-so-basic plumbing, swapping out dishwashers, cleaning gutters, laying tile, replacing thermostats, you name it. If it's broken in your house, you are solely responsible to fix it. Do you have the time and energy for yard work and shoveling snow? If you don't have the time, will you have the money to hire help for these tasks? Keep in mind the time, energy and expense of home maintenance prior to your property search. Read more about renting vs. owning here. 

So there you have it.

I believe we have a new real estate market emerging next year for first time home buyers here in Las Vegas and Henderson. With opportunities come responsibility, and the ability to be honest with yourself. Carefully examine your finances, time and energy required for home ownership first. Once you’ve done that, give me a call and I’ll find you a beautiful home.

How the Internet is Changing Real Estate in Las Vegas and Henderson

New data shows what a vital role the internet plays for both buyers and sellers nationwide as well as the Las Vegas real estate market.  Results of a study produced by Google and the National Association of Realtors are below.

Key findings were:

• 90 percent of homes searches started online
• Buyers perform about a dozen searches before taking action on a site
• 86 percent of buyers use video to find out more about communities such as Lake Las Vegas, Aliante or Rhodes Ranch.
• The majority of buyers watch property videos on YouTube
• The age bracket most likely to take action on a real estate website is 25-34

This report found that over the last four years, home searches online have increased 253 percent. Not surprisingly the study also confirmed that the majority of home buyers begin their search online with very specific search words. For example according to Google, “Green Valley Ranch Real Estate” and “Sun City Anthem Homes” are highly searched key phrases right now.

The internet has given the buyer more data at their fingertips than ever before. Gone are the days of visiting the broker’s office for housing statistics or additional local information. The current generation can read Vegas home builder reviews online, watch videos on YouTube about Boulder City biking, look up walk scores for various neighborhoods and analyze ratings for the Clark County School District,  all from the comfort of their home or mobile device. Today’s buyer is extremely proactive in doing their own due diligence before they even pair up with a Las Vegas Realtor.

When they are ready though, almost 90% of buyers will use a Realtor to buy a home here in Nevada and nationwide. First time and repeat buyers alike will work with Realtors to help facilitate the sale of a property after doing their homework online. Online multiple listing services nationwide are attracting more than 20 million users on average per month. Not only that, but traffic to these sites increased about 30 percent.

Finally, mobile devices are changing the way buyers search for their homes in Las Vegas. Mobile real estate searches are up 120% and right now about a quarter of real estate buyers search with a mobile device. Google also found that roughly half of the people used their phone to find the location of a property or request more information about from the Realtor.

Love Thy FSBO

Many years ago, before I got into real estate, my wife and I decided to sell our first home without a Realtor. We had put a great deal of work into our property, rehabbing nearly every aspect of our house and finished off the basement. Unfortunately for us, the real estate market was pretty soft at the time. To makes things worse, the market value was also about what we owed on the home. Not really a great scenario for somebody looking to sell and certainly not much room for commission. Despite this, we had a job transfer and needed to move. So I took on the task of selling our home myself.

I decided I would list it for sale by owner (FSBO), but also offer 3% to a buyer’s agent if they brought a buyer. As it turned out I was rather disappointed by some of my interactions I had with agents.

The internet was still fairly young at this time and Google had not yet become the predominant force that it is today. Through another search engine I managed to sleuth down a list of all Realtors in the area. The list had all their contact information, including their emails. To me, this was a marketing jackpot (and actually still an integral part of how I do business today-online marketing.) My idea was to create a webpage for my home with all pertinent information and photos, then send a friendly email to the real estate agents with that link. Inside that email I offered commission to those who brought a qualified buyer.

As you may imagine it was a painstakingly slow process. I didn't have an email scraper program or access to software that could email everybody at once. I sent emails one at a time. It didn't take much to realize that exposure was one of the hardest things to come by as a FSBO and I needed something innovative to have buyer agents see my home. Short of placing my home on the MLS, I felt this was it.

Responses were mixed. Some were very supportive and loved my idea, promising to bring buyers over whose profiles matched our home. Others though, were extremely rude to me. I had a few replies that really stuck in my head after all these years.

The first claimed I had violated the “Spam law” and demanded I send him 25 dollars at once, or he would "report" me. (yea really)

The second told me how ignorant I was (all FSBOs she said) and that she would never consider working with somebody who wasn't represented by a Realtor. She concluded by telling me she was a (get this) “Profesional agenet.” Apparently, one who was unaware of how to use spell check. My wife and I still laugh about this one to this day.

Finally the third told me that 3% wasn't enough and they would only consider bringing a buyer by for 4.5%.

Looking at this from an entrepreneur’s point of view, I was dumb-founded. Here I was, a home owner, offering them thousands of dollars if they brought me a buyer. Their responses were to extort me, demand even more money, or tell me how stupid I was. Not a great way to build a brand, that’s for sure.

I did take a quick moment to email them back (along with their broker) to point out that the majority of  FSBOs end up listing with a Realtor after trying on their own. I had read all the pitfalls of selling myself and understood the risk. I also made it clear that if and when I did use a Realtor, I would never use their brokerage. Ever.

It’s funny how life experiences will shape the way you look at things later. I could never imagine being that obnoxious, just in general, it’s not who I am. However I appreciate what FSBOs are trying to do and I know it’s an uphill battle, especially if you are not on the Greater Las Vegas MLS. I talk to these people every day and they have a variety of reasons why they are trying to sell themselves. Many I take on as listings later, and some I do not. Ultimately though, I respect what they are trying to do and simply offer my help along the way, regardless if the list with me or not.

So did I end up selling my home? Actually I did not. Like many of those who try and sell their home on their own, my price was off. I actually was aware of this, but didn't have any room to move at all, especially in a weak market. I ended up keeping the home as a rental and sold it years later when the estate market turned.

The Case against Open Houses

I’ll be honest, I’m no fan of open houses. I believe it’s an antiquated sales technique in a market that has since moved on. There are a few reasons I feel this way. The first and foremost is the rise of the internet. Secondly, feeding freshly baked cookies to tire kickers and your neighbors won't yield a sale. In addition the safety component is a real issue. I don't know about you, but I'm not too keen on complete strangers coming into my home and walking around. Ultimately though, I just don't feel they are effective. There are much better ways to market a home these days.

What the data says

In 1995, roughly 4-5% of buyers were looking for homes on the internet. Today 90-95% search for homes online. It’s no secret that the internet has revolutionized the way we buy and sell real estate. Large websites like Trulia and Zillow take up the lion’s share of the online market place. Local brokerages and individual Realtors also offer MLS access to customers. In other words, we are saturated with housing data and can access it 24/7 in a variety of different ways.

I know what you’re thinking; a picture is not the same as viewing a home in real time. I completely agree. But in my experience, those who are serious about purchasing a home almost always do three things:

• Get qualified with a lender
• Look at Las Vegas and Henderson homes online (on a third party website or with their agent’s MLS notifications)
• Go look at the homes they are interested in

Buyers who are sincerely motivated, look at homes after making an appointment through their agent. Surveys have shown that less than 2% of homes are sold through open houses. In other words holding an open house was unnecessary, as it would have sold regardless.

Meet your neighbors

Over the years I’ve found that open houses bring out bored neighbors, people who aren’t qualified and others who still have a house they need (or can’t) sell. A recent poll found that 62% of Realtors said that attendees of open houses “are not serious buyers at all.” I would agree with that. I’ve talked to countless looky-loos, who after a series of questions, admitted they lived around the corner or still had a home they wanted to sell “next spring.” Yes prospective buyers can show up on your doorstep, but I’ve found that this is rare. Even rarer is that this small pool of qualified buyers will choose your home.

Fishing for buyer leads

Some brokers like open houses as a means to find new buyer clients. There is something to be said for face-to-face interaction. It’s much easier to build a professional relationship in real time. From a business perspective however, I believe there are much more efficient ways to build my client base than wasting my seller’s time. It also goes without saying that holding an open house as means to primarily benefit myself is unethical. 

Stranger danger

Open houses march a parade of strangers through your home. The majority of these prospective buyers are harmless, but attacks can and do happen.  Real estate agents have been beaten, robbed and even murdered showing homes. Owners representing themselves have also become victims of violent crimes. Agents or homeowners intent on holding open houses here in Vegas should work with another person, plan escape routes, keep doors unlocked, requires signup sheets, ask for photo IDs and try to get tag numbers. Does this sound like a fun way to spend your weekend?

The bottom line

A home sells because it’s positioned correctly in the Las Vegas real estate market, shows well, is professional photographed and aggressively marketed online. Motivated buyers research neighborhoods, schools and comparable sales before seeing homes they are interested in. The bottom line is that agents, as well as sellers, have waned on this outdated marketing tool over the years for a reason: It’s simply not effective.

Las Vegas Real Estate: Pay Down Your Mortgage Fast

After the initial excitement of buying a home here in Las Vegas wears off, the number of years you’ll be tied to your mortgage can sometimes be a tough pill to swallow. In previous blog posts I’ve been a strong advocate of the 15 year mortgage, but that’s not necessarily for everybody. While I’m a big fan of 15 year mortgages, they do require a bit more money every month and that’s not always feasible for most Americans.

So what are some of the tricks to help pay down your mortgage quicker here in Las Vegas or Henderson?

I read this years ago and it stuck: Pay yourself first. I apply this thinking to long term retirement accounts, everyday savings accounts and my home. This pertains to anything that takes care of you first and foremost; both immediately and later down the road. (And no, this does not mean a big screen TV.)

Use extra money to pay down your mortgage

If you receive a tax return, use that extra money to pay down the principle on your mortgage.

If you receive a raise, continue to live on your previous salary and use the additional income to pay down your mortgage. An extra $200 a month is $2,400 a year, an additional $300 a month is $3,600 a year. It all adds up. On average, paying an additional $1,000 per year can trim up to seven years off of your mortgage. Of course, this also lowers the total interest you pay out as well. Even seemingly small monthly additions towards your principle balance add up over time. In the long run it certainly beats splurging on electronics or the temporary satisfaction of dining out.

Make extra payments as early as possible

The first few years of mortgage payments, for a thirty year mortgage, go almost entirely to interest. In fact, the amount paid to principle does not overtake the amount paid to interest for nearly 10 years!

For this reason, if you can, you should pay extra during the first several years of your mortgage. You’ll begin to pay down the principle faster, which is tremendously beneficial. This can be done by adding as little as $100 per month from the very first payment. 

Consider a twenty or even fifteen year mortgage

The thirty year loan is great for the first time home buyer, but once your finances have become more stable, you really should consider a shorter term.

Aside from paying off your mortgage quicker, the savings on interest payments is immense. For instance, if you bought a home in Summerlin for $350,000 the interest paid after 30 years is $288,000. On a 20 year note the interest paid would be $159,000, while a 15 year term would be $137,000. As you can see, a 20 year mortgage provides the buyer a significant savings of $129,000, while a 15 year loan saves the buyer $151,000 over the course of the loan!

While a fifteen year loan payment may be too high, the twenty year mortgage may be more attainable. Given the heft of savings, it’s certainly a no-brainer. Think of it this way: You will pay off all of a 15 year fixed loan and 90% of a twenty year loan, before you pay off HALF of a 30 year fixed loan.

Pull money from investments?

In some cases it may be worth it to pull money from your investments to pay off a mortgage. There are many factors to consider though. What is your current mortgage rate? How much time is remaining on the loan? How does that compare to the return on your investments? If you financed your home with ultra low interest rates, then it is probably not worth it to break into your investments. There are also tax implications to this move, especially if you are tapping into your retirement accounts to pay off the home. It’s not something I would do personally, but it may make sense for some people. Every scenario is different. 

There are many ways to pay down your home in Las Vegas, while trimming off years and saving thousands in the process. It requires both a plan, and the financial discipline to implement it. There is no one size fits all, or absolute right way for everyone- everyone’s situation is different. Put your ideas down on paper and make a plan!

Keeping your House Safe and Secure from the Bad Guys

Many years ago I was sleeping in my parent's house, when I heard a knock at the door. I was 19 or 20 at the time, severely hung over and not so happy about being woken up at 8 in the morning. Soon there was a second round of knocking, which got me to the edge of the bed and my feet on the floor. Out of the corner of my eye, peering through the blinds, I saw two men walk away from the house and get in a car. I watched them drive away.

It had been a couple of years since high school. Often I would run into an old classmate who looked completely different. Usually they had gained weight, lost weight, grown their hair out, cut their hair, or maybe they were sporting a beard. One of the men looked my age, but I didn't recognize him. I figured they were old schoolmates that had changed their appearance. There was a part of me that wondered who they were, but I drank too much the previous night to really care.

At this point I was up, still sitting on the edge of the bed, and just staring at the ground. I couldn’t fall back asleep, but I surely didn't want to get up. So there I sat, staring at my feet for the next ten minutes.

Soon I saw movement again outside. I turned my head to the right and looked through the blinds. They were back, walking towards the front door, but their car was not in the driveway. I waited for a knock, but there was none.

I walked to the front door, anticipating an old schoolmate. When I got there, I couldn't see anybody through the pane. The door however, was shaking, slowly, back and forth. I knew then something wasn't right.

As I slowly approached, I peeked through the upper glass pane and saw one of the men, squatted down at the end of the walk-way, peering around the corner. As I watched him, the door began to move again, back and forth. I stood on my tip-toes and looked down. There was the second man, trying to pick the lock to my parent's front door. I immediately called 911, told them my house was being broken into, and decided to exit out the back slider. This certainly was not the morning I was expecting.

Growing up in Florida, it rained constantly in the summer months, and my folks had a rain gauge attached to a 2x4 sticking in the ground. Upon exiting their home, I went from being scared to quite angry. I pulled this 2x4 out of the ground and decided to approach them. Probably not the wisest idea, but given how quickly this all happened, my age, and my hung-over state, it wasn’t surprising.

At this point I was barefoot, and clothed in nothing more than a pair of cut off sweat pants as I walked outside. With no shirt, no shoes, serious morning breath and brandishing a 2x4 as a weapon, I was a perfect candidate for “Cops."

My anger rose as I approached the corner. I came around the front of the house slowly and quietly. I was now furious with rage and ready for a physical altercation. The younger male with long hair now had my brother’s window open, the screen thrown on the ground beside him. When he saw me, he froze.

Strangely there were few words spoken. As I walked towards him with my improvised weapon, he continued to back up. It was a very slow walk between the two of us for the next 50 feet or so, before he took off running. His lookout ran in the other direction. I had recalled which way they drove their car after their initial visit. I ran up to the street, anticipating that he would come from that direction in order to pick up his accomplice.

I was correct. But I would not get his tag, because as he drove by, he aimed a gun at me through the window and I covered my face praying he wouldn't shoot. (15 minutes ago I was asleep. Asleep!) Thankfully, no shots were fired.

I walked back to my parent’s house and waited for the police to arrive.

So how can we protect our homes from the bad guys here in Las Vegas?

My parents didn’t have an alarm system, they didn’t have a dog and their property was hidden by a large hedge of trees. They also had some acreage, enough to keep the would-be burglars hidden from neighbors. There was a combination of things that left their home open to an intruder. Some their fault, most not.

First things first

Secure the doors and windows. I was shocked to find this out, but not everybody is as OCD as I am (there is no sarcasm font I'm told.) Over 1/3 of burglars enter a home through an unlocked door or window. High quality deadbolt locks can secure doors, but they do little good if they are not in use.

A dog really is your best friend

My previous residence of 8 years did not have a security system. But it did have two dogs who barked. A dog does two things: 1) It acts as an alarm and 2) It is a physical threat to an intruder. Burglars obviously don't want to be seen or heard, but they also don't want to get hurt.

Home alarms

There have been plenty of arguments against security alarms on various TV programs like 20/20. Regardless, they still make noise which can deter a bad guy. They also will notify authorities immediately. In my case I had time to call 911. Others may not have the time, or be able to find their phone.

Install motion lights

Motion lights are affordable and  and work immediately to deter crime. Burglars don't want to be seen or heard, and illuminating an area as they approach can be quite effective. When used in conjunction with security cameras this can absolutely dissuade a criminal.

Meet your neighbors

I’ve also learned to work with my trusted neighbors, and keep an eye on each other’s houses when we are away. If it looks like somebody is at home, burglars move on to the next property. If you’re leaving for a holiday weekend to go camping at Mt. Charleston for instance, have a neighbor park in your driveway, pick up your mail, and check in occasionally.

So what happened?

So what happened to the knuckleheads who attempted to break into my parent’s house? One police report, and one line-up later, they were in custody. Apparently they had been breaking into homes all over the area. One of them was only 17 years old, while the other was 32. The minor however was released on his own recognizance. Shortly after he appeared on the local news “Most wanted” segment because he decided not to stick around. I never knew what happened to his partner in crime though. (Perhaps he went on to become a lobbyist for Goldman Sachs?)

More than anything, I was just glad my Mom or Dad weren't home when it happened.

Remember, even if you live in a gated community here in Vegas, put security measures in place to protect your home and more importantly your family. 

For most people here in Las Vegas and Henderson, buying a home requires getting a mortgage. First time home buyers or even those who have purchased property in the past, can find this process to be rather daunting.

Mortgage lenders often sound like they speak a different language. Here, I define some commonly-used mortgage terms to help you navigate the mortgage maze here in Las Vegas.

Adjustable-Rate Mortgage (ARM)

The interest rate on your mortgage can go up or down. Rates are tied to an underlying market index, such as Treasury yields or the London Interbank Offered Rate (LIBOR). The interest rate and monthly payments fluctuate with the underlying index rate. Most ARMs come with an initial fixed-rate period, and only switch to an adjustable rate when the fixed period ends. They can offer a cheap solution for borrowers who plan on moving before the fixed rate is up.

Annual Percentage Rate (APR)

The overall cost of a mortgage, including the interest, points and fees. It assumes you will hold the mortgage for the whole term, so may not be a useful way to compare loans.

Closing Costs

Expenses incurred by buyers and sellers when transferring ownership of the home, including appraisal fees, title insurance, transfer taxes and recording fees.

Collateral

No matter which lender you go with or which type of mortgage you take out, your home is collateral for (secures) the loan. If you don't pay according to the terms of the contract, the lender can foreclose on your home.

Debt-to-Income Ratio

The amount you earn versus the amount you pay out to creditors each month, including your mortgage costs. Under new "ability to pay" mortgage criteria, a borrower’s debt-to-income ratio must be 43 percent or less.

Down Payment

The cash deposit you put down; as a minimum, between 3.5 and 20 percent of the purchase price. The more cash you put down, the better your chances of securing a decent interest rate.

Fixed Rate Mortgage

The mortgage interest rate -- and thus monthly payments -- stay the same for the life of the loan. You know exactly what you are paying each month. On the downside, when market rates fall, you may end up paying too much for your loan.

Good Faith Estimate

A statement of the APR and closing costs due on the loan, required by the Real Estate Settlement Procedures Act. Lenders must provide a GFE within three days of the borrower taking out a loan, and again at closing. Smart shoppers scrutinize GFEs from two or more lenders before committing to a loan.

Loan-to-value (LTV)

The size of the mortgage relative to the property’s value. The cheapest deals are usually available to homeowners borrowing 80 percent or less.

Origination Fee

Points charged to cover the lender's cost of making the loan.

Points

Additional money paid up-front to secure a lower interest rate on the loan. One point equals 1 percent of the loan amount. Borrowers typically pay anywhere from zero to 3 or 4 points.

Prequalified and Preapproved

Think of prequalification as a dry run. The lender reviews your income, assets and debts to arrive at an estimate of how much mortgage you can afford. Preapproval takes prequalification to the next level. The lender credit screens, contacts your employer and verifies your credentials. It then issues you with a letter saying that you qualify for a certain amount of mortgage for a certain time. Preapproved buyers are attractive to sellers, as the lender's already jumped through many of the underwriting hoops.

Principal

The amount of debt left on the loan, excluding interest, penalties and costs. This is the money that actually buys your house.

The city of Las Vegas has experienced a revitalized real estate market over the last couple of years. Sellers no longer had to anticipate buyers clobbering them over the head (so to speak) with low ball offers. Median list price has been rising and inventory shrunk to historic levels at one point.

Then why do I continue to come across homes that have languished on the market for hundreds of days? Every morning I look through expired listing and often call home owners. An expired listing is a home that did not sell in the allotted time when they signed with their brokerage-usually 6 months. The first thing I ask is why their home didn’t sell. I’m curious to know what they think the reason was. The answer I still get is “This market is lousy.”

This clearly hasn’t been true for quite some time, so I proceeded with my next question: How many showings did you get? The answer is almost always “We got a few at the start and hardly any after that.”

Before I go any further I should make it clear that I don't bother contacting homes that are poorly maintained or are filled with clutter. (Cluttered homes do not sell in my experience and buyers typically stay for a much shorter period of time when viewing them. I’m also not interested in being on an episode of Hoarders. Pawn Stars would be cool though, assuming I had an Elvis pinball machine, and needed extra cash… but I digress.)

In fact most of the homes I call are beautiful and show great. The owners have often been meticulous in both the care of their property and the staging. Yet…tumbleweeds.

Why is this? Who is to blame? Recently I turned down a gentleman that called me to list his property. His condo had been on the market for about 18 months with no luck. He switched Realtors, but after another 40 days he still had no action. He then found me online, was ready to fire his new agent and hire me. The first thing I did was go to the MLS and look up the property. It was clean, remodeled and had a new HVAC system.

Then I looked at the sales history. All comparable condos sold for 10% less than he was asking. Likewise he originally started out nearly 40% higher than his competition. When he did make price drops they were made begrudgingly and were ineffective.

In this instance his blame was laid solely on the Realtor. I agreed with only half of what he was saying. The Realtor’s pictures were poor, dark and lazy (he had actually used some older MLS photos, which clearly was unethical in my opinion as well.) However the Realtor was also suggesting a price reduction to reflect true market value and the owner scoffed. In that regard I agreed with the agent.

The owner felt that marketing was the problem: If only the Realtor had marketed the condo properly, it would be sold by now. Unfortunately it does not work that way when trying to sell a product. I could market a property to everybody living in Las Vegas and Henderson, but if the product is overpriced they are not going to buy it.

I showed him the comparable sales, some of which had sold much lower than his asking price. He told me again that his property was worth more and marketing would solve the problem. I wished him luck and did not take the listing.

Looking at his listing history showed an all too familiar pattern: A seller that started out too high, sometimes much too high. Then as price drops were made, even ones that appeared significant to the home owner, they were still not enough. At the end of the six month listing agreement, they fell off the MLS, completely unaware that they were never in the game to begin with.

Who is to blame for this scenario though? Ultimately I hold the real estate agents responsible. Comparable market analysis can be fairly easy to perform, especially for homes in master planned communities like Summerlin, Green Valley, Aliante and Rhodes Ranch, where there is frequent sales activity to pull from. An agent can have a good ballpark figure relatively quickly by accessing the MLS. How you arrived at the baseline price should be explained in a concise fashion, allowing the data to essentially do the talking. If the home owner cannot agree to a realistic market valuation of their home, then the Realtor should not take the listing because it’s not going to sell.

It’s that simple for both parties.

Me? I’m not interested in wasting your time or mine. I like to sell homes not just list them!

The Art of a Real Estate Deal in Las Vegas: Communication is Key

Selling your home in Las Vegas can be a delicate process often fraught with anxiety on both sides of the aisle. However it need not be this way.

Communication and having empathy for the buyer’s point of view is paramount to success. Once an offer is accepted and signed by both parties, we now have a legally binding contract. A contract does not guarantee a closed sale. There are a few things that can derail the process along the way (such as inspections and financing) and that’s before you factor in human emotion. Over the years I’ve watched sellers allow poor communication, impatience and greed dismantle an otherwise strong contract. In fact I’ve even seen deals die less than an hour before closing!

As a seller this is what you DO NOT want to do

Become greedy. Not long ago I listed a residence. I had worked with this seller on another home and he was fantastic. His properties were immaculate, he didn’t overvalue his real estate, nor did he believe he could defy market trends. Ultimately he was a dream client, just great to work with. Prior to listing we looked at the data together and arrived at a price that we felt would get us under contract quickly. He agreed and we placed the home on the MLS that Friday. By Sunday we had a full price offer, all cash, which could close in less than two weeks. The only contingency was for an inspection. It’s about the best deal you’re going to get.

His response? He wanted to think about it.

Yes really.

Because the offer was strong and came in so quickly, he wondered if he was losing money. He asked if we should decline the offer and raise the price instead. The reality was that a great Las Vegas home, priced well, will go under contract quickly regardless of the market (This is one of the biggest misunderstandings about down-markets by the way, that homes can't be sold quickly and for top dollar.) He wasn’t selling himself short; we had simply priced the home perfectly.

Shortly after he asked me flatly “Do you think I’m being greedy?”

I asked if he would like to lose a cash buyer by trying to make a little more money. I also pointed out that if the home were to go back on the market, the chance that he’d get another full price offer was slim, especially after raising the price. Was that worth the risk? He changed his way of thinking and we closed the home ten days later.

What you WILL want to do

Work with the buyers and don’t take things personally. Buyers will ask a lot of questions and it’s your job to accommodate their requests for information. Do they want to come back and view your home again with their parents? Allow it. Did they need to come back and measure a room? Allow it.

Realize that communication is critical. The more they know about your house the better. Don’t view these inquiries as intrusive or take things personally. Work with the buyers to achieve a goal together. They want to buy a home in Las Vegas and you want to sell it. Return requests for information promptly such as surveys and home repair documentation.

Not all deals are going to work out, but following these basic guidelines will certainly help the odds of a successful closing. Remember that both parties are anxious about the sale and people intrinsically tend to think of their needs first.

The bottom line

Be empathetic, understanding, patient and honest. It goes a long way to getting your home in Las Vegas sold. It goes a long way in life too.

Las Vegas Real Estate: Why Now Really is the Best Time to Sell

I’ve read the complaints online over the years: A Realtor is always going to say it’s a great time to buy or sell. Sure, some of that statement has merit, I’ll agree. And I’m actually saying that today too, but for a much different reason. Let us look at what has been happening.

Las Vegas has experienced explosive appreciation over the last couple of years. Historically low inventory, cheap money fueled by the Fed, an influx of cash investors and rock bottom prices rallied this market. On the other hand median household income has not increased to account for such appreciation. Wages have not gone up, and while unemployment has gone down, we are still above the national average (currently under 5.9%). This phenomenon is not exclusive to Las Vegas of course, this is happening in cities all across the nation.

Inventory hasn’t increased much, although the median price for a home in Las Vegas has crept sideways the last couple of months.  We still remain in a seller’s market, with the exception of micro markets inside the city.

Many signs point to a market that is cooling off, and when it’s said and done, I tend to believe valuations are a bit inflated. I also believe they are out of whack with basic economic principles, such as median household income, unemployment numbers and the types of jobs being created locally.

Historically speaking, the median home price in the U.S. is 2.5 times the median household income. Larger, more expensive cities have bucked this trend obviously, but as a general rule this is what we look for. The U.S. Department of Commerce shows the Las Vegas median household income hovering around $54,000 per year. On the other hand, the current median house price in Las Vegas is $200,000. This is roughly 4 times the median household income. I find it highly unlikely that incomes are going to play catch up over the next couple of years. A more plausible scenario is that home values correcting locally here in Las Vegas, and across the country. 

Where does this leave buyers? This is a ALWAYS a household economics question. The value of a home may vary over time. It doesn’t always go up and it doesn’t always go down. Nothing is guaranteed when you purchase a place to live. And that is the key phrase “A place to live.” Financially, does it make more sense for you to buy or rent right now? Do you plan on moving anytime in the next five years? Can you purchase your home on a 15 year mortgage as means to gain equity quicker? Do you have enough in reserves? As a buyer, these are questions you should be asking first and foremost regardless of what may or may not happen to the market.

What about sellers here in Las Vegas? I talked to a gentleman last week who wanted to wait longer to lock in some more appreciation before he put his home on the market. I don’t think that is going to happen and I told him so. Likewise, by 2015-2016 I suspect the market profile here in Vegas will be an entirely different animal. Sellers had a great run with low inventory, cash investors and high demand.  Today, we’re seeing less cash investors, and multiple offer scenarios aren’t nearly as common.

Home sellers sitting on the sidelines now, should understand this will not last indefinitely. It will probably continue to hold for a while, but eventually the Fed will raise rates and this story will wind down. Because of this, if you’re thinking about selling, 2014-2015 would probably be a wise idea.