To be brutally honest, I don’t think things are as bleak as the nice people from the Huffington Post would have you believe. And I find their closing example insulting: a man who just can’t find people to sell fire extinguishers door to door in the desert heat in the middle of summer for what probably works out to less than minimum wage. I’m not lining up for that job either. It is true that we lead the nation in foreclosures, but it’s also true that foreclosure filings are down 15% from last year. The crush of foreclosures and short sales (and the expiration of the buyer’s tax credit) has driven prices down slightly since April. Nevertheless I’m hearing ads for real estate investing seminars and getting ads in my email, so clearly some people think it’s time to take advantage of these lower prices.

It’s also true that the drop in housing prices has meant that Realtor’s commission checks are smaller than they used to be. Strangely enough, I find it encouraging for the Review Journal to print quotes like this:

“So you’d better have a different job because there are 12,000 agents and maybe 500 or 1,000 are making it along and the others are not,” [Real Estate Agent Joe Stewart] said.

Actually there’s over 16,000 licensees in Clark County according to the Real Estate Division. Not all of them are Realtors. As peculiar as it seems, I am looking forward to seeing the number of Realtors in the Valley decline. Hopefully the ones of us that are left will be the smartest and the best.

Take a look through books, blogs, and magazines oriented towards Realtors and before long you will find something on pictures for listings. Usually it runs towards tips and tricks for taking really great pictures of listings to show a home in its best possible light. Sometimes it’s merely advice (or ads) to let a professional take those pictures, saving the busy Realtor much time and energy and producing a better end product too.

But today I want to defend some really bad pictures in a listing by a local Realtor. These were so bad, they were featured on a website that does nothing but bad and amusing real estate listing pictures. Commenters asked why on earth the listing agent actually put these pictures in the listing. One even emailed the agent to ask why she would do such a thing! Here’s the post, feel free to go see for yourself.

How and why can I defend those pictures? Because the listing agent did the right thing by posting them.

When you look at the pictures in the listing, you know this is not a turnkey condo. You know it’s going to take a lot of work before you can move in or rent it out. Before you and the buyer’s agent even drive over there you know that there’s either a broken window or a hole in the wall, you know it needs new carpet and pad, you know it needs to be scrubbed top to bottom, you know the kitchen is in need of updates, you know that to put it politely the bathroom is “in rough shape.” You will arrive with no delusions that FHA financing is possible, and in my experience it will be difficult to get any financing. You know it will take thousands of dollars and several weeks of diligent work after closing before it is habitable. What you see is truly what you get.

In short, she has saved everyone a lot of time by ensuring that only dedicated investors or truly handy individuals will even bother to look. If there were an “Honesty in Listings” award in our local MLS, I would nominate this one.

The rarely seen owner and CEO of Realty ONE Group — and my broker of record — Kuba Jewgieniew actually sat down for an interview with the Las Vegas Sun. Here’s the highlights.

REALTORS: If you are considering a change and you like what Kuba has to say, why not give me a call and get a first-hand view of what it’s like to work at Realty ONE Group?

Not very long ago, it was common to have a second mortgage just to avoid private mortgage insurance. The first mortgage would be the traditional 80% of the purchase price. The second could be a conventional, ARM, or even HELOC for 10% or even 15% of the purchase price (MSN seems to think these are still available, but I don’t know any local mortgage brokers who do them). Many people used this sensibly to pad out the finances during a big move, and paid off the second mortgage after their previous house closed. Of course this isn’t the only way people used second mortgages: many others used their homes as an “ATM” to pay for home improvements, open businesses, and whatnot.

The point is that there are a lot of second mortgages out there and that is making refinancing, modifications, short sales, and all other foreclosure avoidance measures difficult now.

There is good news, sort of. The latest adjustments to the Federal foreclosure avoidance programs include a provision to make sure the holders of the second mortgage get something, even if it isn’t very much. It does put principal reduction for both first and second mortgages on the table, too. The hope is that 3,000,000 to 4,000,000 foreclosures can be prevented over the next 3 years. That sounds like a lot until you realize that experts like Lawrence Yun expect that many foreclosures this year alone. Given Mr. Yun’s track record, I consider that an optimistic number. Some experts think that as many as 12,000,000 homes are “at risk.” Only preventing a quarter to a third of those foreclosures is merely a smaller catastrophe for families and communities as well as anybody who works in banking, real estate, or the construction trades.

While it is certainly true that we aren’t going to work through this mess without addressing second mortgages and the fact that market value of most American homes are far below what they are mortgaged for, this is only a first step. Some think it doesn’t go far enough, that bankruptcy law needs to be amended to account for this sad reality. Others wonder how far Washington can or should go, when it is clear that nobody can prevent all the coming foreclosures; they wonder what will happen to those of us who followed the rules, and exactly how long we should let this failed government initiative continue to operate.

As for myself, I think the banks are part of the problem, and have been for some years due to the unique banking combination of bureaucracy and pursuit of profit. It is important to put in place good procedures for short sales and modifications and insist that everyone abide by them. Failure to do so will insure more foreclosures, collapsing property values, no incentive to build anything, and great incentive for those of us who “played by the rules” to walk away. But the hard part will be convincing the bank to stop pretending that the loans on their books are worth face value. If you own stocks, you know what you paid doesn’t change what it is worth now. Banks are still pretending they can get full value out of homes that are worth half that — thanks in part to the predatory pricing tactics of banks on other foreclosed properties! This will of course be big trouble for banking profits.

Once again it turns out that the problems in foreclosures and in banking are related and must be tackled together.

You just missed them. Right above this line of text. That blank spot? That’s it!

In a market like this one, where everybody is out to get a real estate deal before it’s too late, a lot of people are looking for an edge — a way to get the great deals that nobody knows about, or at least learn about them first. And some real estate agents cater to that desire with offers like “FREE LIST of up-to-date bank-owned, REO, and pre-foreclosure properties”. Never mind that the “free list” is compiled from the same Multiple Listing Service that I use to generate customized lists of homes for people, often with very specific needs or very picky tastes.

The truth is that there is no “secret” list that only the “right” Realtor knows. You don’t need a special Realtor who only deals in, for example, homes owned by Countrywide or GMAC. The nice person from Century 21 can easily show you any listing from Coldwell Banker. The only way any Realtor would possibly have an “inside track” on a property is if the signed listing agreement is sitting on her desk waiting for her to put it in the MLS system.

In this day and age, it would be a huge mistake for a Realtor to keep what used to be known as a “pocket listing”  – that’s a listing that stays in his pocket rather than being shared. What are the odds that one of his buyer clients is interested? Rather small. He’s got a lot more chance of selling that house if every agent in town knows about it and shares it with their clients!

The myth of the listing that isn’t in the MLS is almost as hard to fight as the myth of phantom inventory. Check out this San Diego realtor who went to find these mysterious listings owned by the bank but not for sale. There weren’t very many of them, a few were still occupied, and one had a lockbox on it — clearly being made ready for sale. Since mechanical lockboxes are not terribly secure, he was able to give his Youtube audience a little tour (remember I mentioned back in December to change the locks on your new place).

I don’t chase rainbows. I help real people find real properties.

Most Realtor’s websites are dominated by two things: “Look how wonderful Suzy or Jack Realtor is”; and property search. This site is different. I would rather show you that I know what I am doing than toot my own horn. And the search link takes you to my brokerage’s site. Why? First, because I see no reason to waste money (that I could use to market my listings) and time (that I could use to help clients) — just to compete with Realtor.com. The other reasons are below. 

There are a lot of ways to search for real estate online. Almost any brokerage website has a search function right on the front. Most of that information comes from their local MLS (Multiple Listing Service), filtered for public use. That same information is also available through Realtor.com, Zillow, and a bunch of other real estate websites. Some of these sites are easier to use than others, but all share some similar problems.

It’s hard — if not impossible — to search for very specific things: Most real estate searches fall short once you get beyond how many bedrooms and other very broad criteria. Maybe you know exactly which school you want your kids to attend. Maybe you’ve read about how complicated short sales are and want nothing to do with them. Maybe you’re an investor, so a property with a tenant in place is preferable. On the other hand, maybe you are planning on moving in yourself, so tenant occupied won’t work. Even something as simple as “single story vs. two floors” can be hard to do on many sites. Sometimes, the price ranges offered in the site’s “picker” are so wide as to be useless — making things difficult if you already have your pre-approval letter and know to the penny how much you can spend. Why is this? So you’ll call your Realtor!

Availability is an issue:  Many search sites make no distinction between homes that are actually available and those that have pending purchase contracts. That increases the number of possible listings you’ll see on any given search. On a regular basis, I have clients who send me lists of homes they are interested in seeing — only to be told they aren’t actually available. This is a frustrating situation for both the client and myself. The client first thinks I am an idiot for not presenting these “perfect” listings, then they feel duped when they find out the home isn’t available. Why is this? So people will call the listing office, and be told “Oh, I’m sorry that one isn’t available anymore, but may I run a custom search of similar homes for you?”

Over 80% of buyers use the internet to start their home search. Many sellers also use online resources to help figure out what their home is worth before calling a listing agent for a Competitive Market Analysis (CMA). However, the tools available to Realtors gives a whole lot more information than is available to the public at any website.

The truth is that real estate search sites aren’t really about helping you find a home. They’re about increasing your interest in real estate and getting you to talk to a real estate professional.

That’s why I can say without fear of being contradicted that I can save any home buyer time when searching for a home — and “time is money.” I can also save sellers time (and ensure they get all the money they can) by finding truly similar homes for market analysis. Feel free to search online. But when you are serious about finding instead of just searching, call the number at the top of the page or click the “Contact Me!” link in the sidebar.

By now I think we all know that foreclosures are up, which is driving prices down, which is encouraging buyers to get out there and buy “bargain” homes while they can — sales are up in 17 states, including Nevada. 

One huge group of buyers is the first time buyer. They see that they can now often buy a house for what it had cost them to rent. They see that interest rates are low. They don’t have to get out from a house that’s worth less than what’s owed on it to take advantage of the current market. They see that $8000 first time buyer tax credit. 

There’s exciting news about that credit now: it looks as though it can actually be applied directly to the downpayment. This is brand new, not yet finalized, and details of the program aren’t available yet. No word on what paperwork has to be filed with whom, nor how long it will take to get the downpayment into the escrow account. This means buyers get the benefit now instead of next April. Remember, you’ve got to buy by November to take advantage of this.

Obviously, first time buyers are not experienced in buying a house. They can get caught up in scams. They don’t know what is normal in a real estate transaction. They don’t know what needs to be done to protect their interests. They don’t necessarily know what to look for when evaluating properties. That’s where a Realtor comes in. But with so many people calling about these homes, how does the Realtor know you are serious, and not just looking? How do you make her excited to work with you?

Here’s how to set yourself apart. Before you ever call a real estate office, talk to your bank about a mortgage pre-approval letter. This does three things. First, you will know exactly how much you can afford — or let you know you can’t really afford anything yet. What’s the point of wasting a weekend looking at homes it will turn out you can’t buy? Second, if you do find that dream house, you will need that pre-approval letter to show the sellers that you are serious, “ready willing and able” buyer. Third, it lets the Realtor know that you are organized enough to have thought about the fact that you need a mortgage to buy a house. Have that letter in front of you when you call the real estate office for the first time, and let her know what it says.

If you can’t talk to your bank, or think better deals can be had elsewhere, there’s still a way to impress your Realtor that you mean business: ask your Realtor up front who she recommends to get you that pre-approval letter. She has worked with a number of mortgage brokers, and can probably give you a short list of reliable people she trusts to get the job done. This will tell her that not only do you understand what it takes to buy a house, but that you trust her judgement.

I am available to help a limited number of first time buyers. If you seriously want to buy a home, I want to help you do it! I will save you time by asking serious questions about what you need and what you want in a home before we ever start looking at listings. I’ll tell you what the real estate market is doing and advise what to do about it with no nonsense. To find out more, call the number at the top of this page, or click the “Contact Me!” link in the sidebar.

While homebuilder confidence remains near a record low, it turns out that actual housing starts are up 22% mostly due to apartments (official Census report). It sounds like the homebuilders have put in a “panic bottom”.

Renters, beware of the NAR lease scam. “In this scam, rental property is offered to consumers, who are led to believe that NAR is functioning as an intermediary to receive rental deposits from prospective tenants and, upon receipt of the deposit, to deliver the keys to the property to the tenant. The tenant is instructed to send money via Western Union to NAR’s purported agent, in the United Kingdom. NAR is not involved in this business and believes it is a scam.” At least it isn’t Elvis. 

A new HUD and DOT initiative is designed to tackle both housing and transportation costs at the same time. Many Americans have found themselves in a situation where they can’t really afford to live anyplace near their work. This is expensive and stressful for the entire family. 

This morning, I was forwarded a report on average closing prices here in Clark County. No shock that prices have declined again and foreclosure sales are up.  Prices are down roughly 60% from their peak, and have declined for 11 straight months. But the rate of decline is slowing. Greed and fear say to wait for prices to fall more, but the fact is that we won’t know where bottom is until prices begin to rise again. That’s one of several reasons I track not only average prices, but the number of homes in various price ranges.

At least we aren’t in Detroit, where the median home price is $7500, roughly what you would pay for a Hyundai. Yet more evidence that housing markets are fundamentally local, not national.

And one last item, how to spend time in Vegas without spending money.

I hope everyone will join me tomorrow for Friday Figures!

In the meantime, if you have a real estate need, please be sure to click the “Contact Me!” link in the sidebar, or just call the phone number at the top of the page.

I wish I had a dime for every time I have heard someone mistake a Zillow “Zestimate” for market value.

Zestimates are interesting and fun, but often do not reflect actual market value. They are not appraisals.  They are not a CMA — Competitive Market Analysis.  They are not a BPO — Broker’s Price Opinion. They aren’t necessarily based on much of anything that would determine how much a willing, ready, and able buyer would pay — and that’s what market value is.

I’ve seen it happen over and over, and the nice people at Rain City Guide see it too. An estimate on a recently foreclosed home, for example, probably is nothing more than the balance of the owed mortgage. Imagine the shock of thinking your neighbor’s house just sold for 10% less than prevailing neighborhood prices, when the “buyer” was just the mortgage holder. Alternatively, home owners may think to themselves that they have “insider information” that makes their home substantially more valuable than Zillow said:  ”they don’t know about my latest remodeling,” etc..

If you want a back-of-napkin idea of what homes in your neighborhood are worth, spend 10 minutes poking around Realtor.com and seeing what’s available. Depending where you live, you might be able to figure out actual sale prices using data from your County’s Recorder or Assessor. County data will be very accurate, as long as you remember that values do change over time and condition does matter. This sort of information is probably sufficient for anybody who does not need to sell their real estate. However, if you want current, accurate data, that you can use to set a fair price that will be met in a reasonable period of time, call your local Realtor.

I am available for CMA presentations and a limited number of sales listings. I would rather do relatively few listings well than dozens badly! Yes, I do short sales too. For more information or to set up an appointment, please click the “Contact Me!” link in the sidebar, or call the number at the top of this page.

The absolute best part of my job is handing keys to a new homeowner after the sale closes.

I got to do that twice today, for two different families. I am so happy for them!

Sadly, in each case there was what I consider to be a safety and security problem waiting to happen. I won’t go into great detail except to say that when you close on a new home — particularly one that was bank-owned or one that had a mechanical lockbox — you should plan on getting a locksmith out to change the locks immediately. Preferably, the same day! Nothing bad happened, but the keys were not as secure as I would have liked.

Even when buying from a private owner, you have no way of knowing how many copies of that key are out there: Did they change the locks when they moved in? Was a family member prone to losing keys? Are they forgetting about the copy they gave to a relative? Or maybe that key they lent to the neighbor to feed the cat when they went on vacation?  What about that key they hid in their glovebox “just in case”? Do they even know about the copy their teenager gave to a friend?

Institutional sellers such as banks only amplify this problem.  For the sake of their convenience, many banks key all their REO (“Real Estate Owned”) properties to a small number of master keys.  It saves them a lot of effort trying to keep track of what keys go to what home, and it ensures that the previous owners aren’t coming back.  How many of those keys are out there? Who knows! These sellers need to give access to various contractors to fix up and clean the property. All these contractors of course should be licensed, bonded, and insured! However, even the most conscientious contractor can sometimes accidentally drop a key or have his shop broken into. What if one of his employees turns out to not be as honest as we all would like?

Finally, I am not a fan of mechanical lockboxes, and haven’t been since the day I arrived at a listing to find the lockbox broken into, the door unlocked, and all the toilets missing. Some of these locks are 3 digits, with only 1000 possible choices; even the more complicated ones often have easily guessed combinations. Electronic lockboxes, while not perfect, are much more secure. Only a Realtor with the electronic unlocking device can get into them, and she needs to enter her personal code to do it. Unfortunately, the contractors I mentioned earlier cannot access these lockboxes. That means it is sometimes a necessity to have the mechanical box, but the right way is to use two boxes and make it hard for unauthorized parties to get to the mechanical one. 

The bottom line is simple: leave room in your home purchase budget for a locksmith to come and professionally change your locks immediately after you take possession of the property.