Welcome to BridgetMagnus.com

Over the past few years, Vegas became known as the foreclosure capital of the nation — a crown we traded with Cleveland. Even though our market is greatly improved, we still have a lot of “distressed property” and will for some years to come. So here’s information on short sales and foreclosures to get you started on your Real Estate Journey. On my site, you’ll find a lot of articles and some videos on a wide variety of topics, so don’t forget to use the search feature to find what you’re looking for. If you need an agent, please feel free to contact me and I will put you in touch with a great agent who will get things done for you. Thanks for stopping by!

 

Posted in General Real Estate by Bridget Magnus. Comments Off

Announcing My Retirement

Effective today, I am no longer an active real estate agent. I will still retain my license, but I will be referring local retail clients to my colleague, Craig Simmons of Prudential Americana Group. Please be sure to contact me if you need his phone number or email address. I will be pursuing other interests.

A million dollars sounds like a lot, doesn’t it? To be in a real estate brokerage’s “Million Dollar Club,” you have to have transactions totaling – guess how much? $1,000,000. It’s not that hard: just ten purchases or sales averaging $100,000; eight transactions of $125,000, which isn’t that far from median price of a recently sold property in Vegas. This is only attained by roughly 3 out of 10 Vegas agents locally. Not a piece of cake, but it doesn’t require a team to pull it off.

Average commission on such a real estate transaction comes to 3%. Sure, sometimes you’ll luck into a 4% deal, and sometimes you’ll only get 2.5%. So an average of 3% commission comes to a $30,000 GCI (Gross Commission Income). However, for most agents to get there requires a strong brokerage with a quality brand name. That is going to cost the agent 30% off the top, leaving $21,000 in actual checks cut.

There are a lot of additional expenses associated with the profession. We are almost all independent contractors, which means we pay a lot of bills that employees don’t think about: state and local business licenses; real estate licenses; continuing education classes; health insurance; upgraded car insurance (and more car maintenance!); the half of Social Security and Medicare taxes normally paid by an employer. Since we are each running our own business, we also each have our own marketing and business expenses. And of course, we have income taxes which are more complicated to prepare than those of an employee. For the sake of simplicity, estimate all these “overhead” expenses at 20%. That leaves the agent with $16,800.

There is no true “vacation” from owning your own business. I’ve answered the phone on the beach and written offers from hotel rooms. However, let’s pretend an agent only works 50 weeks a year. That makes a weekly income of just $336. It should be painfully clear that even a pretty good real estate agent may always have trouble paying the rent. Assuming a 40 hour work week, a Million Dollar Club agent is making just $8.40 per hour. And please don’t forget that 7 out of 10 agents aren’t even doing that well

The numbers don’t make any sense for anybody who isn’t at least Two Million Dollar Club. It’s reasonable to expect that to be 16-20 transactions in Vegas. At least one closing transaction every 3 weeks. That doesn’t account for deals that fall apart, clients that decide not to buy/sell after all, seasonal patterns, or any other obstacle. Some years back I was told by a trainer that a buyer-side transaction usually takes 32 actual working hours from initial meeting to closing, and a seller-side transaction only takes about 8 (“So list to last! You can manage a listing from anywhere!” I was told). I find that in real life, these numbers must be multiplied by 3. Those time estimates are for traditional “equity” sales and not short sales, which were rare when I got into the business. In a world where successful agents spend 2 hours of every working day trying to turn leads into clients, it’s easy to see why most agents have time management issues.

The days and wages of the full service REALTOR are being squeezed on one side by online resources and on the other by big teams that “make it up on volume.” In the face of this reality, no “business plan” or expensive “coaching” is going to magically make things better.

Thank you all for making my career in real estate exciting and fulfilling. However, it’s time for me to move on.

Posted in Realtors by Bridget Magnus. Comments Off

Wrapping Up 2012

Happy Friday. It’s the shortest day of the year, and the world did not end after all. At the beginning of the year I made a few predictions. Let’s see how I did:

Interest rates are going up: Fail! Mortgage rates actually dropped despite some evidence of inflation. What I didn’t count on is the Fed actively intervening to put and keep rates near record lows.

No 50 State Settlement: Fail! It was a harder sell than it could have been, and for a while it looked like they would only get 49 states on board.

Prices Going Up: Success! Every single index has shown gains this year.

Inventory will bottom,  maybe around 8000 units or so locally: Fail! Nope, they finally bottomed just under 5000 units, rebounded to about 5400, and even today we only have 5076 available. The after-holiday spike I anticipated never happened, and things went downhill from there.

Foreclosures will pick back up: In Progress! It’s slower than I thought it would be. My sources who are connected to that side of the industry say that more REO (foreclosure) inventory will come on the market late in the first quarter of 2013. Some banks have a “wait and see” attitude regarding state law. In addition, the foreclosure fraud settlement encouraged banks to do almost anything but foreclose: mortgage modifications, short sales, short refinancings, etc.. In the end, the only way into the light for housing does include both banks and homeowners admitting that it’s going to be a long time before homes have the same market value they did in the bubble.

Year of the Short Sale: Success! A year ago we had 5227 available short sales — today we don’t have that many total availables – 8361 short sales under contract and over a thousand shorts closed in the last month. Oh, and we were glad things had improved that much. Today we have under a thousand available short sales (!), over 10,000 under contract, and almost 1400 closed in the last month. Those  people and agents under contract are right now holding their breath and thinking their happiest thoughts/prayers/wishes about closing before the end of the year, when tax law changes. Those coming changes, rules making banks consider short sales faster, and incentives in the foreclosure fraud settlement combined to make this happen.

When you consider that many of my colleagues were predicting an onslaught of judicial foreclosures and prices dropping another 10%, I suppose I didn’t do too badly. The take away lesson is to keep an eye out for what is happening now, and be wary of anybody’s predictions for the future. After all, there’s a lot of people who thought the world was ending today.

Lucky News for the 7th

Good morning! Right now we have only 5184 available properties in our MLS, 14200 units under contract to be purchased, and 3036 closed in the last 30 days. Properties are moving fast and multiple offers should be expected on any desirable listing. While last year almost half of our closings were foreclosures, this year almost half are traditional sales! Short sales have a strong number of closings too, which is a very hopeful sign in the grand scheme of things: short sales prevent foreclosures. It’s important to get as many done before the end of the year as possible so sellers can avoid potentially huge tax liability. This is why I urge you to contact your Representative and Senators and urge them to extend the Mortgage Debt Relief Act of 2007.

Yet another big real estate site is publishing information on listings you can’t actually buy yet. This will only serve to confuse the consumer and make the role of the Realtor As Gatekeeper more important. It’s already hard to get accurate online data about availability and this move makes it worse while pretending to be a great way to get the jump on every other buyer in town.

The official October home price numbers from CoreLogic are out, and they are up year-over-year for the 8th month in a row. Trulia says that asking prices are up as well in November. The demand curve is “bullish” too, so expect more price increases in the coming months. Remember that part of the reason prices are up is that supply is down, partly on lower foreclosures than last year.

 

Advanced HUD Homes: The Good Neighbor Next Door

A while back, I talked about the basics of HUD homes: foreclosures that had been insured by the FHA, which require a different procedure to be purchased. Even though an FHA bailout might not be needed (unless it is!), I still think we will see more of these coming on to the market in the next few years because of the number of delinquencies.

HUD’s Good Neighbor Next Door is a program for teachers, firefighters, paramedics, and police officers — the kind of person most of us would want to have as neighbors. It allows them to buy certain homes from HUD at half price! All they have to do is agree to live there for 3 years. What a great deal!

Surely you’ve heard that “If it sounds too good to be true, it probably is”? This is no exception. Only a very limited number of the thousands of homes HUD owns are eligible for the program. All of them are in what are called “revitalization areas.” There are complicated rules for determining what those areas are, but the short version is that they are not the most desirable areas of town. There’s a reason they need to be “revitalized” and a clear reason why “good neighbors” might need incentives to move in.

If you are eligible to purchase a home under the GNND program, look very closely at the revitalization area maps for your area before you get lured in by the promise of “half price houses.”

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Posted in Distressed Property by Bridget Magnus. Comments Off

Friday Figures for 11/30/2012

Welcome to Friday Figures! Happy Nevada Day! All information from the GLVAR MLS system. This is what you and your REALTOR need to know before touring, making an offer, or preparing a listing in the Las Vegas Valley this weekend.

Summary:  Available properties are down again to 5184. Prices of those units are stable for the moment Here are the monthly and yearly comparisons. Would you believe that we have fewer listings now as we had just short sale listings a year ago? It’s amazing that there are under 1000 available short sales — “Year of the Short Sale” was my one best prediction for this year. The number of foreclosures available is slowly inching up, but don’t panic: there’s still just a few hundred and it’s necessary to work through the backlog. Besides, asking price on them is inching up too. There was a pretty big bump in the number of high-end properties available locally. The number of properties under contract is down as contracts move towards closing. Yes, even those short sales in many cases. Median price on those is trending up, so expect a continuing rise in median sold price. Remember that our low inventory does make multiple offers and bidding up the current normal, so median sold price is higher than median list price. Do not waste time or paper on a low-ball offer.

The News: I talked about judicial foreclosure just the other day, but here’s a great analysis of why the entire nation hasn’t been buried under a pile of bank-owned property since the foreclosure fraud settlement. Short version: it takes time and money, so expect a slow trickle and a bunch of “alternatives” in the meantime. For example, HARP refinances are going strong.

Sale of new homes dropped a little bit in October, causing doomsayers to come out of the woodwork. However, prices are still inching up and high-end homes are moving well. The trend towards “multi-generational living” is continuing, with builders offering options to help keep the parents, grandparents, and kids comfortable.

Interest rates went up ever so slightly, but are still at an amazing 3.32%. The Fed is working hard to keep this rate low, but I still think only an idiot would get an ARM (Adjustable Rate Mortgage) right now. What are the odds that rates will be this low in 5 years? You won’t need a bookie to tell you: None!

Read the rest of Friday Figures for 11/30/2012

Why Judicial Foreclosure Hasn’t Taken Off in Nevada

Back when AB284 became law — requiring banks to actually prove they could legally foreclose before doing it — many experts predicted that banks would simply shift to the judicial system of foreclosure. Some predicted a doomsday scenario of courts overwhelmed by these alternative foreclosures.

Funny, it didn’t happen that way.

Here’s the top reasons why:

  • Banks are waiting for revisions to the affadavit that must be signed under AB284. As it stands, it’s a long, complicated bit of paperwork and making even a legitimate error can land a bank worker in prison. Even legislators agree that something has to change.
  • The foreclosure fraud settlement gave huge incentives to banks to do almost anything other than foreclose. That includes short sales, mortgage modifications, mortgage principal reductions, and converting delinquent owners into renters.
  • Because it’s an actual lawsuit, it’s a longer and more expensive process. Lawyers have to get involved.
  • If the homeowner actually responds to the foreclosure lawsuit — rather than putting his head in the sand and pretending it isn’t happening — the bank still has to produce all the same documentation they would have had to provide under AB284. That’s no improvement for more money. The bank has to just hope the homeowner is a rube who won’t try to exercise his legal rights!
  • The judge decides how much the homeowner owes the bank, and the bank can’t pad that with junk fees if they want to go after the now-former homeowner.
  • Judges are elected, and none of them are lining up to be preside over cases that kick voters out of their homes.
  • Bankruptcy can still derail the entire process, leaving the bank in the back seat.
  • And most importantly, Nevada judicial foreclosures come with a one year right of redemption. That means the bank has to keep the property and maintain it for a year on the slim chance that the former homeowner can come up with every penny owed and make good on the loan.

And there you have the reason why the avalanche of judicial foreclosures turned out to be only a few dozen.

Black Friday News

Let’s start with the local stuff. This time next year, you might be looking forward to the maiden voyage of the Vegas-Los Angeles Party Train. In the meantime, be sure that the Neon Museum is on your must-do list.

I know this is what to do before renting an apartment, but it’s worth doing all these things before buying a house too! You may have to wait until you have a home inspection to check all the plumbing, but there’s no reason you can’t do the other things before writing your purchase offer!

All the indicators seem to be pointing up on housing. That includes property values. However, we still have way too many foreclosures and mortgage delinquencies. Speaking of foreclosures, I do hope nobody is surprised that the Independent Foreclosure Review Program promised by the foreclosure fraud settlement is a boondoggle.

Foreclosures at Discount Prices! Maybe.

A new report out this week shows that discounts on foreclosed properties are going down. In fact, here’s an interesting fact (emphasis mine):

The smallest foreclosure discounts can be found in:

  • Las Vegas (0%)
  • Phoenix (0%)
  • Sacramento, Calif. (0.7%)
  • Riverside, Calif. (1.8%)
  • San Diego (2.4%)
  • Miami-Ft. Lauderdale (2.9%)
  • Los Angeles (4.2%)
  • San Francisco (4.7%)

That’s right. According to data from Zillow, buyers in Vegas are not seeing any discount for choosing a foreclosed home over a non-distressed property. It makes you wonder why jump through the additional hoops of buying from the bank.

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Posted in Distressed Property by Bridget Magnus. Comments Off

FHA Condo Rules Changing

It can be tough to get financing on a condominium. That’s because the FHA is trying to “protect” consumers from getting into a community with what it considers to be problems. “Problems” include too many investors or communities that try to blend work and living space. Those rules are changing:

Under the new policies, the FHA can approve loan applications for condos in projects that have as much as half of their space devoted to commercial use, up from 25 percent before the change. That’s an especially important shift for mixed-use projects, which devote ground-floor space to stores and restaurants and upper floors to residences. “The FHA’s changes are a very helpful move in the right direction,” says John Anderson of Twin Oaks Realty in Minneapolis, a 32-year veteran practitioner in the Twin Cities area who makes about a quarter of his yearly sales in condo projects.

The FHA announced four main financing changes. In addition to the liberalized condo-to-commercial ratio, the agency is allowing single investors to buy up to half the units in a project, up from 10 percent previously. That move is as likely to help suburban and urban markets as resort areas. “I just had a closing fall through because the lender found out the investor had 11 percent of the units,” Anderson says.

The other two changes touch on delinquent home owner association dues and condo board certification. The FHA says it will OK loans on projects in which 15 percent of the home owners are 60 days late on their HOA dues. That represents an easing from the previous 30-day delinquency limit.

Unfortunately, the FHA still requires communities to have at least half owner occupants. Still, this represents a big improvement. To find out if a property meets the criteria, use this lookup tool. If it’s not there, count on having a hard time getting financing. It’s easier to pay cash.

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Posted in Las Vegas Condominiums by Bridget Magnus. Comments Off

Senator Reid’s Turn

The other day I posted a reply from Dr. Heck. I now have Harry Reid’s reply too:

 Dear Mrs. Magnus:

Thank you for contacting me regarding the expiration of tax relief for the discharge of debt associated with a person’s principal residence. I appreciate hearing from you on this matter.

This tax relief was initially enacted for two years as part of the Mortgage Forgiveness Debt Relief Act of 2007 (P.L. 110-142), offering relief to homeowners who would otherwise have owed taxes on forgiven debt. This change generally allows taxpayers to exclude income from the discharge of debt on their principle residence. Without this change, debt reduced through mortgage restructuring and debt forgiven after a foreclosure or short sale would have been treated as income and been subject to income tax. The Mortgage Forgiveness Debt Relief Act, extended by the Emergency Economic Stabilization Act of 2008 (P.L. 110-343), created a temporary exception for debt forgiveness discharged between January 1, 2007 and December 31, 2012. I supported both those bills.

I share your concern that allowing this tax relief to expire at the end of the year could have the unintended consequence of forcing families into bankruptcy rather than seeking short sale agreements with their lenders. I was pleased that the President’s 2013 budget included a two-year extension of this tax relief. A one-year extension of this provision was included in the Family and Business Tax Cut Certainty Act (S.3521) which the Senate Finance Committee passed in August. Should I have the opportunity to consider such legislation in the full Senate, I will keep your thoughts in mind.

Again, thank you for taking the time to share your thoughts with me. For more information about my work for Nevada, my role in the United States Senate Leadership, or to subscribe to regular e-mail updates on the issues that interest you, please visit my Web site at http://reid.senate.gov. I look forward to hearing from you in the near future.

My best wishes to you.

Sincerely,
HARRY REID
United States Senator

There you have it. I seem to be missing Dean Heller’s reply……