Is there any hope for the Average Joe homebuyer?
Q: The only way regular homebuyers will get a contract through is to bid at retail price. Some folks say investors buy at 20 percent under market on their all-cash deals Thus, if homebuyers refuse to buy into the reality of (offering to pay cash) quick, how do they get a home?
When I bought in the 2010 frenzy, I went almost $20,000 over list (price), appraised OK and in I went. It took four months (to close on the transaction). Yet, the (comparable home to) mine in 2011 sold just slightly above the posted come-on price of mine in 2010.
- David M., Las Vegas
A: There's no doubt that buying a home in Southern Nevada right now can be an exercise in complete frustration for homebuyers, as well as for their real estate agents. Due to our recently declining inventory of local homes available for sale and to our ongoing sales surge, driven mostly by cash-paying investors, local home prices seem to be on the upswing. Similar to what we experienced during the housing boom in the early and mid-2000s, buyers are again competing with multiple offers for nearly every property they try to purchase.
I don't have all the answers to avoid what I know firsthand can be a frustrating process. But I can share a few suggestions.
First, before going to see a home you're interested in buying, make sure that you check to confirm that the property is still available and check its status before taking the time to tour the home. It is very unnerving to find a home you like and start going through the process, only to find that multiple offers have already been submitted to the bank that owns that home and that everyone involved is waiting for the bank to respond.
Cash buyers continue to account for more than half of all the existing homes here. We are also seeing large investor pools buying properties on what Realtors call the "back side" of the bank, giving these investors a chance to buy properties before they hit the Multiple Listing Service. In some cases, these investors will buy bank-owned homes at such low prices that they can flip them for profit in a relatively short period of time.
This makes it even more challenging for traditional homebuyers to get a loan in order to pay a price higher than what the investor recently paid for the property, sometimes just 90 days earlier. Since the downturn in our local housing market a few years ago, appraisals have been very conservative, in large part to minimize risks to banks and investors. As appraisers will tell you, they must often base the appraised value of a property on the sales price of what they believe to be comparable bank-owned homes, since most local home sales in recent years are bank-owned homes.
Our local and national associations of Realtors have been working with government and industry leaders to make them aware of these issues and to seek possible solutions to these problems. To get back to a more stable and balanced housing market, we need to find ways to streamline the process and remove barriers that can discourage responsible buyers.
Kolleen Kelley is the 2012 president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for more than 30 years. To ask her a question, email her at ask@glvar.org. For more information, visit www.lasvegasrealtor.com.