Beth Ellyn’s 2015 Las Vegas Home Buyers’ Guide: The Six Things YOU Need to Know Before Buying Real Estate in Las Vegas in 2015
This is not my first home purchase. Why do I need a buyer’s guide?
The real estate Apocalypse in Las Vegas affected more than just prices. The Apocalypse rocked the entire structure of the industry.
What does that mean for you? The buying process is radically different today. Sellers have a new attitude. Lenders are requiring almost everything except a strip search. And the Homeowners Associations—don’t get me started!
If you haven’t purchased a home since 2012, you need this guide as much as the newbies buying their first property. Use this guide as a road map for the brave new world of Las Vegas real estate.
Big Change No. 1: Your First Stop Is Your Lender If You Are Not Paying Cash
Pre-Apocalypse, you found a home you loved in your price range. Then you took the signed (the legal term is “executed”) contract to your lender, where you unfolded your prayer rug and begged for a mortgage loan.
You filled out the lender’s required paper work. You dusted off two years of tax returns (hopefully unaudited!). You printed out 12 months of all your bank statements. You gave them your systolic and diastolic blood pressure reading. (Just kidding.)
Then the nice person you were working with sent all your paperwork to a block hole they call “underwriting.” You have to appease these people and answer all their nonsensical questions. Once you got their stamp of approval, the nice person you were working with calls to say “Congrats.”
Not today. Today you have to apply for the loan FIRST.
Here’s why. Las Vegas homeowners (and banks) who tried to sell their properties all too often got burned during the Apocalypse. Buyers would sign a contract, tying up the house and literally taking it off the market. Then, when their loan went to underwriting, the underwriter discovered they just forget to mention X. Wipeout! No loan.
The poor seller had to put the house back on the market, losing four weeks of selling time. For some reason they didn’t like this.
Note from Beth Ellyn: I’ve been working with buyers since 1980. Loans fell out before the Apocalypse, too. But this was a rare occurrence, not an every day one.
So sellers got smart. Now they insist any buyer who deigns to buy their homes must have completed the entire loan process first. That includes getting by the gauntlet of meanies in underwriting. This is called pre-approval. Today you have to have loan pre-approval before you can write a contract.
Sellers in Las Vegas in the year of our Lord 2015 will not even look at your contract unless you have a pre-approval letter from a lender. Your Realtor (hopefully me) has to submit it with the original contract offer.
This is actually a good practice because the lender tells you exactly how much house you can afford before you start shopping. This saves many tears and lots of hours.
Big Change No. 2: You Get to Find Your Dream House!
In 1980 when I got my real estate license, there was no MLS. We had great biceps muscles because we carried around books of printed black and white photos of the front door of houses for sale. You, the consumer, had no idea what houses were available.
Now you know as much as we do. The only difference is our data is real-time and yours has a day or two delay.
This is a good thing because I have no idea what you really like. So now you get to show me!
Here’s how I can help you in your research. I can set you up on an automatic search on the MLS. Just tell me all the key parameters that are important to you.
The MLS will automatically email you every house that meets your criteria when it first gets listed or when there is a price change. This is real time 411. You can also set up a search on my web site, bethellynrosenthal.nv.exprealty.com or just use this QR code:
Email me the addresses or MLS numbers of the homes you want to see. I will do the research to see if there are any contingencies (like they want you to pay all the closing costs or rent it back for six months).
I set up appointments and voila! We go shopping.
Big Change No. 3: Beware of Over-Priced Homes
Sellers refuse to believe (or just don’t want to) that the Las Vegas real estate market has turned on a dime. Just as fast as you can say Elvis has left the building, we went from a seller’s market to a buyer’s market.
During the Apocalypse, there was a three-week supply of homes for sale in Las Vegas. (A normal market has a six-month supply.) Since there were so few homes for sale, sellers made up prices and then there were bidding wars.
In 2013 my buyer was No. 26 in a bidding war for an OK-not-great track home! I used to tell buyers to budget at least $10,000 above the listing price to stay in the game.
Today Las Vegas home prices have recovered quite nicely, thank you! But some sellers long for the Apocalypse days. Currently I’d say 30 percent of the homes in the Las Vegas MLS are significantly overpriced. Dream on sellers!
Of course, a house is worth what you are willing to pay for it. There are certainly times when paying more than the appraised price is worth it to you.
For example, last summer my buyers found the best house in Las Vegas ever. (I told them if they didn’t buy it, I was going to.) The house had a large attic. The seller has done a terrific job of fixing it up so it added 1831 more square feet of living space.
But to save money, the seller did not include that square footage in her property taxes. According to Clark County, that 1831 square feet didn’t exist.
The listing agent, however, included it in both the MLS and the house price. The appraiser said “Nay. Nay.” That slashed the price of the home by $80,000.
My buyers were getting a mortgage loan. The lender can only lend against the appraised value. And the seller refused to lower the price by a dime. The only solution was to walk or pay the difference in cash.
My buyers wanted the home, so the wife’s father lent them the $80,000. A year later, they say would have paid $180,000 over the listing price because they love the house so much.
I would have passed. But that’s why there is chocolate and vanilla ice cream. Only you can decide the correct price to pay. Just don’t pay more than the appraised price out of ignorance.
Big Change No. 4: Ask Your Realtor for a Comparative Market Analysis
Sellers always ask their listing agents to complete a Comparative Market Analysis (CMA) to determine what the house may be worth. CMA include current listing and recent sales, complete with photos.
CMAs are a great tool for buyers, too. I always prepare one for my buyers so they can determine a fair offering price based on data not emotion.
Big Change No. 5: Always Ask for a Home Warranty
I don’t know of one good reason why you wouldn’t have a home inspection. Hire the meanest, most knowledgeable inspector you can find.
But mechanical and structural things break and sometimes they just wear out the day after closing. Here’s how to fix that. Always ask the seller to pay for a one-year home warranty from the company you like in the sales contract.
Then, if the air conditioning compressor is older, pray for failure! You just have to pay the service charge in exchange for a new unit.
Big Change No. 6: Buy Some Garlic Before You Deal with the Homeowner’s Association
Nevada is the only place on the planet where your HOA lien comes before your mortgage lien. That means if you default, the HOA gets its money before Wells Fargo.
If the seller hasn’t paid any portion of the HOA dues, you cannot buy the house until you do. That’s right. It’s the seller’s debt that you have to clear up before that dream house becomes yours.
The sad part is you typically have to pay for those seller dead beats. GRRR!
This information is not readily available. Your lender (or the title company if you are paying cash) will send the HOA a demand letter. This is the only way to discover if you are going to have a problem.
In my humble experience, the HOA management company takes great glee in letting buyers know at the last minute they have to come up with hundreds of extra dollars to close their transactions. You have the moving truck packed when you get the bad news, so you hold your ankles and write a check.
There is nothing proactive you can do here. Just hope you are lucky enough to buy a house from a faithful HOA dues payer.
Now you are in the know. On your mark. Get set. Let’s go house shopping!
Lessons from the 2015 Las Vegas Home Buyer’s Guide:
- Get pre-approved for your mortgage loan. You must go through underwriting before you do anything else.
- Ask your Realtor to set you up on an automatic MLS search.
- Don’t over pay for home unless you really, really want it!
- Get a comparative market analysis before you make an offer.
- Insist on the seller providing a one-year home warranty.
- Be prepared to pay your seller’s back HOA dues if you really want the house.
Call, text, email or send a message by carrier pigeon if you have any questions or I can help you buy a home in Las Vegas.