Salvatore Martines
Hello Everyone,
First let me welcome those of you receiving this for the first time. I like to send these "Stat Letters" out to all of you periodically to keep you informed as to what is really going on with our local real estate market. I try to keep it short, sweet and to the point. Please feel free to forward this along to anyone you feel may find it informative or someone you think I may be able to help out. Thanks for reading and I hope this finds all of you well!
Well summer is finally coming to an end and for me that means enjoying a lot more of the great outdoors. In October we can expect to see temperatures averaging in the 70's. What a lot of people don't realize is how much there is to really do here that does not involve gambling or hanging on the strip. I recently took my girls out on a Lake Mead sunset dinner cruise. It was awesome. It's about a 30 minute drive down to the lake and you hang out on this older paddle ship called The Desert Princess. You board the ship, order your dinner and hang out on the deck where the ship maneuvers through the canyons and takes you all the way to Hoover Dam. It's pretty cool to see if from that perspective. Here's some pics:
Another thing we like to do when we can get away for a few days is head up to Mt. Charleston for some camping. We went up there a few weeks ago for one last trip for the year. The weather was in the high 90's here and up there the highs were in the 70's. It's about 45 minutes to get up there from Henderson and the camp sites are about 9500 ft above sea level. Here's some pics of our last trip:
As many of you know, I recently took up golf in the past few years and try to get out whenever possible. Last weekend my buddies and I took a ride about an hour north to this awesome course in the middle of the desert. I would have never guessed something like this existed out there in the middle of nowhere. The course is called Coyote Springs and it will one day be an exclusive golf club community with many homes, schools, businesses, etc... but for the time being it's an oasis in the middle of the desert. It's quite a trip when you see it. Check it out:
So now you can see why I can't wait for the cooler weather to get here. I absolutely love being outdoors and enjoying everything Vegas has to offer. Now let's switch gears a bit and get down to why you guys are really reading this in the first place. Real estate update time!
We have been seeing continuous price increases since January of 2012. Not surprising. We got hit really hard and a ton of folks out here lost big in our 2008-2010 recession. We went through some hard times with a bad economy and a loss of employment. We soon had a ton of bank owned inventory that banks were trying to give away. This lead to a very under valued housing market and drew in investors from all over the globe. The returns being had were and still are phenomenal. Flippers were coming in and buying cash, spending about 5% of the purchase price in rehab and upgrades and selling for a 25%profit within 90 days. Long term buy and hold buyers were cleaning up as well. You can buy a home, rent it out and collect income all while the property values soar. Why would you not invest your money here?  
In this letter I want to discuss WHY we have seen our market go from a dominating seller's market from just a few months ago to a more neutral buyer and seller market. We are still in a very strong seller market but we will begin to see some changes that give buyers some of the power back.
Let's first look at our inventory levels for available SFR (Single Family Residences) inventory: 
In January we had 2839 available Single Family Homes. In August we climbed to 4877. That's a 58% increase in SFR inventory this year alone. Simple supply and demand logic here folks. More supply = less demand. With less demand we are going to see a few things. One of the differences we will begin to see is sellers no longer "requiring" buyers to waive the appraisal contingency right off the bat when the buyer is purchasing using a bank loan. Waiving the appraisal contingency is the 2nd player I'd like to discuss. I'll explain:
 Waiving the appraisal contingency means that a buyer pays the difference between appraised value and contract price in cash. Here's an example of waiving the appraisal contingency utilizing a conventional loan with 20% down:
Contract price :    $300,000
Appraisal value:  $290,000
Loan amount:      $232,000
Original Down Payment:   $58,000
Cash diff due to appraised value coming in lower than contract price: $10,000
Total Down Payment: $68,000
You can only get a loan amount on the appraised value ($290k) so you have to cover the $10k spread in cash at the close of escrow. This is in addition to your down payment and closing costs. This was and still is happening a lot and is one of the main reasons we have been seeing price increases. I'll go further.
Say a buyer was in contract for $300,000 but it appraised for $290,000 because that is what the sold comps supported. Because the buyer had to waive the appraisal contingency and pay any difference cash to get his deal accepted it now closed for $300,000. Now this last sale is used as a comp for similar models in that same neighborhood. That model home is now valued at $300,000 not $290,000.  This is what has been happening since early 2012 and it raises the values over the course of a year tremendously. This is also why new home prices have sky-rocketed and why they also refuse to lower their list price. I'll explain further:
New home construction appraisals only use new construction comps.  If a new home sells for $300,000 and a week later they raise the price of that model to $305,000 the appraiser will adjust to the new price due to a "increasing market". Now they can sell that model at $305,000. They do that for a few weeks and then raise the price to $310,000. Again due to a increasing market the appraiser will adjust and it will appraise for the $$310,000. This goes on and on as long as the demand is there. Before you know it that model home is selling for $350,000 and appraising as well. This is also why the builder refuses to give you a "deal". If list prices are set at $350,000 and you get a "deal" at $335,000 then that sale will now play into the comps of the future sales thus dampening the steady increase. The only way we will begin to see price decreases is when supply surpasses demand and the new homes begin to sit. And before we even start to see that we will first see more and more " increased buyer incentives" from these builders because they can give you more upgrades without discounting the price. Here's another example:
You go to a new construction site and they are selling that new home for $350,000 and because demand is so high they only give you $3,000 in free upgrades if you use their "in-house" lender. Now a few months go by without mobs of buyers standing out front waiting for their turn to pick out their lot. Now the homes are begining to sit. So what does the builder do? They keep the listing prices the same and increase the "incentives". The builder will pay your closing costs if you use their "in-house" lender in addition to throwing in $7500 in free up-grades. This way they can keep their sold comps at $350,000 and just give more in incentives.
Ok, now that you get what waiving the appraisal contingency can do, let's look at the "actuals and factuals" of what our average prices have been doing:
Here are the stats showing the average prices over the years:
Single family homes have been on a steady rise since January 2012 and have began to level off June, July and August of this year with the average selling price hovering around $220k. Why? Well more available inventory and less bidding wars.
Now let us take a look at the number of closings to give you a snap-shot of the active market:
You can see that in January we only had 2858 closings. This was strictly due to the low level of inventory available. As inventory levels begin to rise, more and more buyers that were previously outbid on everything are now back in the game and beginning to be able to get their offers accepted. This is especially true for VA and FHA buyers.
As many of you may know, the types of sales have changed dramatically over the last year. About a year ago we were seeing mostly short sales, some REO's, a good amount of flips and a few regular traditional sales. Now everything has changed. Many home owners who have been "upside down" or "under water" for the last 4 years or so or anyone who has bought between 2008 and 2011 all of a sudden now have equity. Check out this chart showing a break down of the sales types in August of this year.
 68% of all sales in August were regular tradition equity sales while only 25% were short sales. This is a drastic change from what we were seeing in 2008-2012. REO's (Real Estate Owned) or bank owned came in at 7%. This number will begin to change and increase. Why? Well, to keep it simple, because the number of NOD's (Notice of Defaults) has increased tremendously as well in the last few months. Basically NOD's are sent out to home owners who are in default and then the next step is foreclosure and trustee sale. Simply put, the more NOD's that are filed then the more REO properties we will begin to see on the open market. I skipped some steps here to generalize and give you a overall understanding but I think you get the point.
Well that's all I got for this one folks. I hope this found all of you well and please, as always, feel free to contact me with any questions and/or concerns you may have. Also feel free to send this along to anyone you know who has a general interest in the Greater Las Vegas & Henderson real estate market. Take care and hopefully talk with you all soon! 
Important Issues & FAQ's
**If you haven't heard, FHA has changed their guidelines effective August 15th 2013.
Now even if you went through bankruptcy, foreclosure, or short sale you can still get a loan as long as you are one year out. Your credit has to be built up a bit but the qualifications are not as strict as you may think. Call me for all the details.**

Assembly Bill 284:
I'll try to keep this short, sweet and to the point. Back in October of 2011 Assembly Bill 284 took effect. This bill  requires a lender seeking to foreclose in Nevada to record a notarized affidavit of authority to foreclose that includes information showing that they have the legal right to exercise the power of sale. What does this really mean? Well, in order for a bank to properly foreclose on a property they must first file a "notice of default." This assembly bill, more or less, makes it extremely difficult for lien holders to do so. There are specific notarized signature requirements that need to be absolutely perfect in addition to a laundry list of other necessities that must be completed prior to a notice of default to be completed.  Therefore the number of  notice of defaults has dwindled down to almost nothing and the foreclosures have just about stopped for the time being. This is why you see so many vacant houses that are not yet listed. They have to funnel through the system before they are available to purchase. Bottom line, record high sales with not a lot of new inventory being released makes for a very competitive market.

Short Sales:
* Short sales are complicated so I'm going to give you a quick crash-course in how they actually work. Again keep in mind that I am scratching the surface and want you to just understand the basics.  
What is a short sale? A short sale is when the bank allows a seller to sell their home for less than they owe.
How does it work? The lender requires proof of financial hardship of why the owner cannot afford the current payment. (It's not as difficult as you would think to qualify). As a agent I provide my clients with a packet that walks them through the process and tells them exactly what they need to do. Then after the bank decides the owner qualifies they will send out a third party agent to do a "BPO" (brokers professional opinion) of the current market value. After this is completed the real estate agent and the asset manager who works for the bank will decide on what the sales/listing price will be.
End Result? The owner sells their home and the bank forgives the debt and releases them of any liability of paying it back.
Why do a short sale? There are many benefits to completing a short sale. One is that if you lose your home to foreclosure the bank can actually go after you for the deficiency. The deficiency is the amount difference of what you owe vs. what the home eventually sells for. There is also a possibility that if you lose your home to foreclosure the deficient amount will be used against you as taxable income. So basically if the deficiency is $50,000 then that may be counted as "taxable income" and you will have to pay the IRS taxes on that amount. Death and taxes... can't escape em' !
So now that you are short sale "expert", I use the term loosely, here is another fun fact. Banks are beginning to be a lot more flexible with the approval process of letting owners complete these transactions. Why? Well that little assembly bill I spoke about a minute ago is a huge motivator for the banks. The banks know that they are going to have a hell of a time foreclosing on properties in the future so they are willing to do whatever they can to avoid the foreclosure process.
**In addition to getting the banks to waive the deficiency, we are getting a lot of our clients extra cash at closing for relocation assistance! That's right. Not only are you able to walk away from this with no debt attached but the bank will often grant the sellers cash at the close of escrow. So far this year we have gotten almost $30,000 for "relocation assistance" for our short sale sellers!!!

Another issue I would like to briefly discuss is the "Value" of any given property. When it comes to knowing a properties "worth" there are a number of criteria that need to be addressed before one can decide what a good selling or purchasing price is. Let's face it, that's all anyone really cares about at the end of the day. The sellers want to know that they are not undercutting the market because then they simply get screwed. They also do not want to be too high because then the home will not be shown as much and the time on the market will more than likely be lengthy. Fact. The longer a home sits on the market, the less desirable it is in the eyes of a buyer. If a home sits on the market for too long, buyers assume there is something wrong with it or that the sellers are asking for too much. This is why it is extremely important to price a property right the first time. Admittedly easier said than done. Any agent responsible for listing a property or representing a buyer and assisting in finding a property must consider the following:
First is the location of the property. Where on the map is it located? What amenities are within close proximity? (schools, parks, shopping, dining, airports, prison, etc...) Second is the condition of the property. This requires no explanation. Third is the content and layout. How does the home flow? Was the home built to satisfy most consumer's wants/needs?  What are the features and benefits for resale? Fourth are the comparables. What are similar homes within a close proximity selling for within the last 90 days? If you are a investor, what are similar homes within the are renting for? These are a few of the main points that drive what a home is "worth." These main points determine what price per square foot a house would and should sell for. So, unfortunately there is no easy quick answer to the question, "what is this home worth?" But as long as you get someone good that is willing to put in the time and effort, you'll be in good hands...
 What my past clients have to say...
Ø  Jeffrey Savage (Seller)
“Thanks Sal Martines for selling my house. If you’re considering putting your house on the market in LV, I HIGHLY suggest using Sal Martines from RE/MAX. You might be surprised how much equity you actually have in your property, I was.”
Ø  Amadore (Real Estate Investor)
“I'm proud to say that having Sal Martines as my agent is one of the best decisions regarding buying a house in Las Vegas. I live here in California and if there are documents needed, he will do it right away and he works on my mort. loan application as well. I am more than happy to recommend Sal to anyone looking for a house to buy in Las Vegas. You won’t be disappointed!!!!!”
Ø  Lewis (Buyer and Seller)
“A true professional. Our house search was frustrating, until we met Sal Martines. He is a problem solver who knows how to speak to banks and other agents. He put us in our dream home and then, using his relations with the investment community, sold our condo lickity-split. His Personal Assistant Karen Drexhage adds a second level of confidence. Sal is the best.”
Ø  Robert (Buyer)
“Sal knows the areas well and takes pride in helping his clients through the process of choosing the right property through the closing. He went above and beyond what we expected and would highly recommend Sal as your Henderson real estate professional.”
Ø  Georges (Buyer)
“Sal Martines is one of the best agent in town, he was able to finalize the short sale within one month.”
Ø  Tomas (Buyer)
  “Very detailed when it comes to organization, always finds a way to help one in need regardless of   circumstance and has a unique sense of humor  ...”
Ø  Cody (Buyer)
Top qualities: Great Results, Expert, High Integrity
  “There is no other real estate agent I'd even consider using. Period. Do yourself a favor. Call Sal. Cody   Weiss.”
Ø  Christopher (Seller)
  “Sal is highly motivated and understands the trends of today's market.”
Ø  Jay (Buyer)
“He has a lot of good characteristics, perfect and professional gentleman in this field. A very kind and patient expert in real state. We were very comfortable with him during his job to find out a property for us. You can always trust him. Again, thanks to him for finding our property.”
Ø  Travis Streck (Buyer & Colleague)
“I work with Sal day to day with mutual clients. I also used Sal for the purchase of my own home. Excellent customer service and superior professionalism.”

Salvatore Martines
Broker Associate
RE/MAX Advantage
10075 S. Eastern # 103
Henderson, NV 89052