Home > Blogs > TRR's Blog
31,326 views

TRR's Blog

By TR Realty | Broker in Las Vegas, NV
  • Brad looks forward into the 2014 Las Vegas real estate market.

    Posted Under: Market Conditions, Home Buying, Foreclosure  |  January 21, 2014 11:32 AM  |  311 views  |  No comments

    Brad looks forward into the 2014 Las Vegas real estate market.

    Date posted: January 5, 2014

     

    As I prepare for my annual “looking forward” blog, I always go back and read the post from the previous year. And after doing that this time, I feel like I could almost cut and paste last year’s blog into this one, and simply change the date.

    With all due humility, I must say: last year’s predictions were really accurate. But what about 2014?

    A few years ago, the Las Vegas real estate plunged into a deep, dark abyss. We really crashed, and hit absolute rock bottom. The climb out of the hole has not been a fast or an easy one. But we have been climbing out, and in 2014, that will continue. After radical adjustments and a firm push on the reset button, and after a few wild swings of the pendulum, the market continues its trudge toward normalcy.

    In fits and starts, the Las Vegas real estate market will keep improving in 2014. There will be fewer foreclosures; fewer short sales; fewer investors; more traditional sales; higher prices; and quite possibly, higher interest rates. I predict that sales activity will remain at a similar level to 2013. But that activity, once again, will be handled by fewer and fewer real estate professionals.

    I also think that inventory will increase in 2014. There should be a slight tightening of supply from March through August. But inventory levels this year will be closer to a normal market. We should not experience the incredibly short supply that occurred for the better part of 2013. And even though the quick run-up in prices in 2013 was interesting to watch, and good for some sellers, it was not healthy, and not indicative of a solid, dependable, stable real estate market.

    The wild card in the equation, once again, is interest rates. They have been ticking upwards, and I expect that trend to continue. I don’t expect a major rise in rates, though. And from a historic perspective, rates are still quite low and borrowing money to buy a house is an inexpensive proposition these days.

    As of this writing, the Mortgage Debt Forgiveness Act has expired (December 31, 2013). It is likely to be reinstated somehow in the coming weeks, but that is not a sure bet. If it is reincarnated in some fashion or another, the number of short sales may bump upward in the very short term, but that will not last, and by the end of the year, short sales will constitute a smaller percentage of transactions than in 2013.

    For the real estate professionals who may be reading this blog, you already know that our business has gotten tougher and tougher. I know that many of you are suffering financially. And I know that some of you will not make it this year. But I encourage you to seek out a Broker who can provide excellent, topical training and ongoing support. Keep your costs low by switching to a 100% office that does not charge monthly fees (like TR Realty!) Those factors are more important than ever before. Real estate is very different than it was even five years ago, and many seasoned professionals make the mistake of resting on their laurels, and letting their pride and egos get in the way of seeking out training and support. Those agents are destined to fail. Believe me: past performance is in no way a prediction of future success.

    Today’s market conditions are tough and unpredictable. The days of simply taking orders from uber-eager buyers and cashing five-figure commission checks are over. Real estate is a full-time, serious profession (as it should be!), not a hobby to be practiced part-time or on the side. And the disparity between the agents who are succeeding and those who are failing, or merely subsisting, is growing greater each year. Commissions have to be earned. And each transaction is like a work of art. Closing one can no longer be taken for granted. And the success in our industry is rightfully in the hands of those agents willing to be trained and coached, those willing to work harder than ever before, and those willing to dedicate themselves completely to the pursuit of real estate excellence.

    From my own perspective, I have virtually unbridled optimism about TR Realty’s outlook for 2014. Our sales were up 20% in 2013 over 2012, and I expect that number to be repeated this year. Our property management division is on fire, and my expectation is an increase of 30-40% this year in the number of managed properties. TR Realty will launch a commercial property management division early in 2014, with an increase in commercial sales sure to follow. Our web site is better than ever. Our infrastructure is rock solid. Our office staff is the best in Las Vegas. Our location cannot be beat. Our training classes are amazingly popular and incredibly beneficial, and getting better all the time. Our market share is growing constantly. We are financially strong, environmentally friendly, technologically savvy, internationally diverse, and a true market leader in Las Vegas real estate. 2014 looks to be an incredible year for TR Realty.

    To subscribe visit: http://www.thetrteam.com/brads-blog/1278/

  • Brad comments on the decline of the short sale.

    Posted Under: Market Conditions, Home Buying, Foreclosure  |  September 3, 2013 9:50 AM  |  360 views  |  No comments

    At the start of this year, 2013, I predicted that short sales would be on the decline. The reasons I stated were: home values on the rise; lower unemployment; most mortgage resets already passed; and a decrease in the number of “available” properties that have not already been through a short sale or foreclosure. Today, I would like to update on this prediction.

    As we look at the most recent statistics, short sales have, in fact, been on the decline. While once approaching 50% of resale activity in the Las Vegas area, short sale transactions now account for approximately 30%, and falling.

    Home values have been rising at an alarming (albeit unsustainable) rate. Yes, again. This time, after pushing the reset button from 2007 through 2010, we are starting from much lower numbers. But some prices have risen 30% or more in the last year, and that includes condos and townhouses. A few neighborhoods have even risen 40% year-over-year. Mathematically, as values rise, fewer properties are underwater, or have mortgages that exceed fair market value.

    Unemployment, an absolutely fundamental driver of real estate market conditions, has been slowly and steadily dropping, and for all intents and purposes, has now been mitigated. Folks have accustomed themselves to the new economy: many have a household member either unemployed or underemployed. But most employers who needed to cut staff have already done so. Therefore, the impact of unemployment on the real estate market has now been greatly minimized, and will not be much of a factor going forward.

    Prior to 2007, many new mortgages were written with adjustable rates (ARMs), teaser rates (artificially low introductory rates), pick-a-payment plans (allowing homeowners the option of paying what they wished), interest only, and even negative amortization (NegAm). And in addition to these wishful-thinking creations, qualification requirements were nominal. Consequently, within a short time, homeowners got into financial trouble with these mortgage products, and this contributed substantially to the wave of short sales.

    Since 2007, short sales have dominated our local real estate market, peaking, by my calculation, in 2011. Tens and tens of thousands of debtors opted with varying degrees of hesitancy to wade into short sale waters, and emerged with varying degrees of success. Tens and tens of thousands of others watched as their lenders took ownership of their homes, voluntarily or by force. Properties that have experienced either a short sale or a foreclosure are highly unlikely to go through one again, at least for the ensuing few years.

     Others continued to make payments on their debts, maybe for ethical reasons, or maybe because they simply loved their homes and wished to keep them. And still others had no mortgage debt at all, and have been affected by the precipitous drop in prices only on paper. With a finite number of residential properties in the Las Vegas area, fewer and fewer homeowners remain inclined to go through the short sale process in the near future.

    A few lucky homeowners (and I mean a few!) were helped by loan modifications, and were able to adjust their payments down to a level they could afford. Even though a majority of debtors who successfully complete permanent loan modifications eventually go into default again later, some do not. And those homes are most likely not headed for a short sale any time soon.

    Recently, we have seen another group of homeowners: those who might be qualified or well-situated for a short sale, but choose to add some cash to the mix in order to complete a traditional sale. This strategy avoids the pitfalls, stress and credit hit associated with doing a short sale. As prices have risen, the difference between the mortgage and the resale value has decreased, which makes it easier for homeowners with some available funds to bridge that gap with their own money.

    There is another reason, a psychological and intangible reason, that short sales have declined this year. In a rising market, there is the expectation that prices will continue to rise. And many homeowners are hanging on and continuing to make mortgage payments, waiting for market value to catch up to their debt. So they keep paying their lenders, which makes their debt go down as values go up. When the two numbers are in the same ballpark, they may then decide to put their homes on the market for sale. This is not only a reason why short sales are decreasing, but also a reason why inventory is so very tight right now.

    In my opinion, we may see at the end of this year that short sales only accounted for roughly 25% of resale transactions. And the vast majority of those will be “strategic defaults”, meaning that homeowners are able to make the payments but choose not to. As we head into 2014, unless there is a significant drop in prices (there will not be) or a new law that greatly impacts the real estate market, short sales will continue to decline.

  • Brad Says: Nevada Foreclosures Could Be Grinding To a Halt

    Posted Under: Market Conditions, Agent2Agent, Foreclosure  |  November 13, 2011 2:23 PM  |  869 views  |  No comments

    What? Possible good news for the Las Vegas real estate market?

    On October 1, 2011, Assembly Bill 284 took effect. The bill was designed to ensure that mortgage lenders and servicers play fair. In an attempt to mitigate the tremendously negative consequences of robo-signing and other dubious conduct on the part of financial institutions, Nevada lawmakers sought both transparency and full disclosure throughout the foreclosure process. And in my opinion, this bill is a great step in the right direction.

    I don’t think this new law has gotten as much press and attention as it deserves; therefore, I find it to be an excellent blog topic.

    Notices of Default (NOD), which lenders may file in the county in which a delinquent property is located, are required prior to scheduling a sale date. They are the first real legal step in the foreclosure process, and may be filed when a borrower falls three payments behind. Once a Notice of Default has been (properly) filed, Nevada law mandates a three month and 20 day period that commences with the filing, during which the lender may not sell the property. When the NOD expires, the lender is then legally able to proceed with the sale, by serving proper notice and scheduling an auction. In other words: no NOD, no foreclosure sale.

    The new Nevada law addresses the filing of the NOD. Lenders are now required to submit, along with other documents, something new called “Affidavit of Authority”. It must state the identity of the party that owns the loan, the identity of any beneficiaries and servicers, and it requires the lender to be completely honest and forthcoming. Failure to shoot straight will consequently result in penalties, even the possibility of felony charges brought against the lender.

    So, if lenders can no longer forge, or should I say “fudge”, documents, they will be, in many cases, out of luck. Some experts are predicting an unprecedented drop-off in the number of foreclosures in Nevada.

    How will this affect the local housing market?

    Any NODs that were filed prior to the new law taking effect have been grandfathered in, meaning that those NOD filings are not subject to the new law. Those earlier NODs can still lead to foreclosure sales for many homeowners. But once those NODs are disposed of, either through short sales, loan modifications, deeds-in-lieu or actual auction sales, the inventory of new REO (real estate owned) listings is likely to dry up.

    Long term, if the law changes, or if some loophole is found to exist, there could be a new wave of NODs, followed closely by a new wave of bank-owned properties flooding onto the market. But if the law stands, and is found to work as planned, then the housing market could find the momentum it needs to improve, finally.

    It has been roughly four years since the housing market in Las Vegas began its free fall. Could the tide be turning?

    If foreclosures drop substantially, then inventory drops substantially, since REOs have constituted roughly a third of all sales activity in the Las Vegas area over the last few years. And if inventory is down, then prices might begin to inch upward.

    Successful short sales, as well, should be on the increase due to the new law. If banks are finding it difficult to file NODs, then they will be much more likely to acquiesce to short sales. It may even be easier for real estate professionals to get their short sales approved, if the threat of foreclosure, which is often used during the short sale negotiation process as a weapon against us by the banks, is dramatically lessened.

    Several months ago, I blogged that short sales could reach 50% of Las Vegas real estate transactions. That prophecy could finally become truer than ever.

    Another thought on home values: often, when real estate professionals are attempting to evaluate a property doing what is referred to as “comps” (comparable sales), foreclosed properties are responsible for dragging down values. This has made comps for short sales difficult and for regular (non-distressed) sales almost impossible. But if foreclosures are taken out of the mix, values should be easier to determine, and more representative of fair market value.

    It is my opinion that by and large, banks will have great difficulty complying with this new law. They have never before had to jump through so many hoops in order to commence a foreclosure. And, since this is state-specific (just Nevada), it will make it even tougher for banks to follow our laws. No more lying about who actually owns the mortgage, or who the actual beneficiaries are. No more robo-signing. No more playing fast and loose with the documents. No more obfuscation, misrepresentation or outright fraud. And if they try it, they will be sorry, at least inside Nevada’s borders. Now, we have transparency, honesty and fair dealing, or we have no foreclosures at all.

    With foreclosures on the way down, short sale approvals on the way up, and traditional sales once again able to move forward at fair market values, the Las Vegas real estate market could very well be in for recovery. I am not expecting boom times like we experienced several years ago, but rather, a more modest, healthy real estate market. Assembly Bill 284 could be just what the doctor ordered.

    If you enjoyed today's post, please subscribe to my blog: www.TheTRTeam.com/Bblogs.

  • Brad comments today: short sales vs. foreclosures.

    Posted Under: Market Conditions in Las Vegas, Agent2Agent in Las Vegas, Foreclosure in Las Vegas  |  December 17, 2010 4:57 PM  |  616 views  |  1 comment
    Some people use the terms "short sale" and "foreclosure" in the same breath. But really, they have little in common.
     
    True, in both cases, the homeowner will not be able to keep the house for very long. But the similarities stop there.
     
    One illustrative way to think about the differences would be this: Think of your car, running out of gas (means, you are unable or unwilling to make your mortgage payments). If you are able to safely steer your car over to the side of the road, that's a short sale. If you crash, that's a foreclosure.
     
    Let's talk about the difference in how your credit score can be affected. If you are already experiencing charge-offs, repossessions, collections, etc, the difference might not be significant. But assuming that your credit is not already trashed, then a short sale typically reduces your FICO score by approximately 100 points, while a foreclosure cuts it by about 250 points (on average).
     
    Taxes? When your home goes to foreclosure, the lender might choose to issue a 1099 form, which means that the lender has written off the debt, and it is now taxable income to you. You might be liable for the income taxes due on the entire amount of the write-off. In a short sale, the lender may also choose to issue a 1099 for the balance between the short sale payoff proceeds and the outstanding mortgage balance. But if the home was your primary residence, then an IRS form 982 should waive tax liability on the deficiency.
     
    Another difference: the amount of time that a lender can legally pursue a former homeowner for any unpaid balance. If the home was foreclosed, then the time period is six months for the first lien holder, six years for the second lien holder. But if the home was sold short, then it is six years.
     
    That's why, when choosing a real estate professional to list and handle your short sale, it is imperative that they do everything in their power to negotiate "full satisfaction" as part of the short sale approval. This is becoming increasingly difficult, by my observation. But it can still happen. Another way to ensure that a lender will not pursue a short seller is to negotiate some sort of financial contribution to the short sale. This could include a small amount of cash at close of escrow, but more commonly, a small promissory note. Sometimes, we can successfully negotiate a promissory note for a tiny fraction of the mortgage balance, with zero percent interest, no money up front, and small payments spread out over several years (typically up to six). If a lender agrees to accept a note of this sort, then a combination of the short sale proceeds along with that note constitute settlement in full, and no further pursuit of the former homeowner would occur.
     
    Another benefit of doing a short sale is that the homeowner can have some control as to when he moves out. It is typical that during the time a short sale is being processed and negotiated, the lender will halt any foreclosure proceedings, or at least suspend them pending the result of the negotiations. Short sale negotiations might continue for several months, while the lender requests and reviews numerous pertinent documents, orders a BPO (broker price opinion) and/or an appraisal, processes the short sale package, and negotiates the approval. Once the approval is granted and accepted, close of escrow normally occurs in 30-45 days. And during this whole time, the homeowner can stay in the house without making any mortgage payments, largely uninterrupted, and with peace of mind.
     
    A factor with varying degrees of importance is also embarrassment. With a short sale, it looks to most neighbors and friends as if you are simply selling your house. But if you allow your house to go through pre-foreclosure, and ultimately, foreclosure, the process could involve visits to your home by representatives of the lender, notices taped to your door, and possibly, even an indiscrete eviction process.
     
    Another consideration when deciding between a short sale and foreclosure is the fact that in two to three years, if you sold your property with a short payoff, you might be able to obtain another mortgage. If you have a foreclosure on your record, it will remain there for at least seven years, and very few lenders will consider your mortgage application with a foreclosure on your credit report, for all intents and purposes preventing you from buying another property with a mortgage for at least five to seven years.
     
    Completing a foreclosure is very expensive for the lender, which could result in the lender pursing the former homeowner not only for the unpaid debt, but significant legal costs and fees, as well.
     
    All things considered, foreclosure is really the worst option of all when a homeowner is not making his mortgage payments, and it should be avoided. Some folks complain that the paperwork and complications of a short sale seem overwhelming. But considering how long they will suffer after a foreclosure, the short sale is clearly the better option: a controlled stop vs. a crash.
     
    Regardless of which option you may choose, I highly recommend that all concerned parties check with an attorney and/or a tax professional, to see how their personal situation may be affected by their decision.
     
    TR Realty has a notably high percentage of success conducting short sales on behalf of our clients, and we welcome inquires in this regard.

    If you enjoyed today's post, please subscribe to my blog: http://www.Toyoda-Roberts.com/Bblogs.
  • Brad updates the foreclosure debacle today.

    Posted Under: Market Conditions in Las Vegas, Agent2Agent in Las Vegas, Foreclosure in Las Vegas  |  October 20, 2010 5:43 PM  |  483 views  |  No comments

    Here we go into the second inning. But if this wasn't clear to you where things stand when I blogged about it a few day ago, it will most assuredly be less clear now.

    What we know:
     
    - Some lenders have discovered "spot irregularities" in their foreclosure process, but no widespread problems.
     
    - Surreptitiously, HUD has been investigating several lenders behind the scenes for about five months, because HUD suspected something was amiss. If it comes to a readjustment in the way lenders are doing things, HUD has a lot more sway over FHA lenders than the rest, though.
     
    - Bank of America has resumed foreclosures way ahead of their projected schedule, because, they allege, mistakes were few and far between, and isolated. In other words, they found no systematic problems.
     
    - Investigations continue in all 50 states, initiated by Attorney's General.
     
    - Some individual jurisdictions have frozen foreclosure auctions.
     
    - President Obama has called for further investigation into the matter, but has not instituted a nationwide moratorium on foreclosures. He is not in an easy position.
     
    - HUD Secretary Donovan has assured the public that in cases where fraud was committed or mistakes were made, consumers will be made whole. Donovan also said that a complete foreclosure freeze would only delay the inevitable, meaning that the recovery in the housing market would be postponed.
     
    I am certainly not an economist, but I'm not so sure that delaying foreclosures would hurt the real estate market. When it is phrased "delay the recovery", it sounds as if a freeze would only knock off track what is a normal, natural rekindling of the housing market. But is that what we are experiencing?
     
    Three years ago in the Las Vegas area, approximately 5% of purchases were made with cash. Today, that number is around 45%. I understand that falling prices have put cash purchases in reach for some people, but I think the biggest reason for the change is that investors have been buying up properties, especially foreclosures and short sales.
     
    I really think that for the housing market to turn around in a sustainable way, we will need more buyers who intend to occupy the properties, not just investors looking to "buy low". And in order for that to happen, the employment ship must be righted. Here in Las Vegas, we have not seen any improvement in the employment picture for quite some time. If someone in the family is without work (and this crisis has hit almost every family in town), then the entire family feels uneasy and reticent about making any large purchases and taking on any more debt. So if we are able to stall foreclosures for a while until the job market recovers a bit, or at least heads in the right direction, it might be a good thing, in my opinion.
     
    Another byproduct of this mess is flailing consumer confidence. Over the last few years, homeowners have felt very pessimistic about real estate, as they have watched their neighbors foreclosed on, driven down streets lined with "For Sale" signs, and been inundated with media stories about mortgage fraud, short sales, falling values and the like. And now if we add the latest lender mess to the equation, it only exacerbates the ubiquitous negativity.
     
    There is some speculation that former homeowners might be able to recover their properties if it is determined that the foreclosure action taken by the lender was fraudulent. In fact, in California, an attorney even advised his clients, who were foreclosed on, to break into their former Ventura-area home. Who was really trespassing: the former homeowners or the bank that (allegedly) repossessed the home illegally? My guess is that the vast majority of former homeowners have no claim, and that the errors, if any, were more technical than anything else. I don't see a Pandora's box here, although some remain hopeful.
     
    Today's blog is only an update; there really are no answers or solutions yet. But I can't help but wonder about the upcoming elections. Many races across the country are tight. Polls show Democrats regaining some momentum of late, but will it be enough to tamp down voter dissatisfaction with the current administration? If Obama wants to retain control of Congress, then he might just think about pulling a rabbit out of his hat (and quick!) to address this issue definitively, succinctly and expeditiously, and in a manner that reinvigorates confidence in the entire system. 
     
    I will blog about further updates when they break.

    If you enjoyed today's post, please subscribe to my blog: http://www.Toyoda-Roberts.com/Bblogs.
  • Brad comments today on the foreclosure debacle.

    Posted Under: Market Conditions in Las Vegas, Agent2Agent in Las Vegas, Foreclosure in Las Vegas  |  October 13, 2010 5:45 PM  |  424 views  |  1 comment
    A quote from my blog on October 8, 2010:
     
        "Therefore, I predict that next week, . . . other banks will follow BofA's strategy, and also freeze their foreclosures."
     
    I guess I was right because news came out yesterday that several major lenders and mortgage servicing companies are expanding their investigations into their own possible mishandling of foreclosures.
     
    To me, nothing reeks more than the proverbial fox guarding the hen house, and if ever there was an example of this . . . .
     
    So, let me get his straight: banks are going to investigate themselves? Maybe they should even pay themselves some bonuses for doing it. What do you think?
     
    At least Ally Bank, formerly known as GMAC (don't let the name change fool you), has retained an outside accounting firm to look into their mess. Small kudos for that.
     
    Wells Fargo is also on the self-investigation bandwagon, but neither Wells Fargo nor Ally has yet to freeze foreclosures. I guess it will depend on the screaming they hear as to whether they will follow BofA's lead and stop foreclosures all together, unless and until they can verify that those foreclosures are legitimate.
     
    Other smaller lenders, such as Litton (part of Goldman Sachs) and PNC, have already instituted partial freezes.
     
    In some states, such as Florida, Michigan and Rhode Island, foreclosures have represented about a third of all recent sales. Here in Nevada, about a quarter of all homes purchased this year were repossessions.
     
    Temporarily, I presume, prices will stabilize, or possibly even increase. Foreclosed homes typically have the lowest median sales price of any category. So fewer foreclosures means those lower priced listings will not be flooding the market, and that should result in level or moderately higher prices in the interim.
     
    However, when the banks resume foreclosures, we could see the opposite effect, especially if several banks reinstate their auctions nearly simultaneously. At that point, a new wave of foreclosures might be in the cards. Personally, and I may be in the minority here, I don't have much fear of a foreclosure avalanche, but of course, I could be wrong.
     
    Although foreclosures have been frozen by some lenders, the foreclosure process continues. The only difference is that the final judgment and auction steps will not be undertaken at this time. But if the banks release the entire backlog of foreclosures at the same time, they would only be shooting themselves in the foot by depressing prices across the board. So I am skeptical that they would opt do that.
     
    Attorneys General in all 50 states have now launched investigations into lending practices within their borders. I guess the self-investigations didn't sit well with the government. And rightfully so. Being led by Iowa, the states intend to expedite their research into the foreclosure crisis, and attempt to determine the degree of lenders' culpability.
     
    Senate Majority Leader Harry Reid has called for a total freeze pending the outcome of these investigations, but some government officials have expressed concern that an all-out ban would depress the housing market even further.
     
    Another concern that might arise is regarding title insurance. The vast majority of purchases involve what is commonly referred to as an owner's policy (also called a seller's policy). Title insurance is meant to protect the new owner in the even of fraud or other complications with the chain of title. If it is determined that at least in some cases, homeowners were unfairly evicted, or the foreclosure process was tainted in some other way, title insurers might be reluctant to issue new title policies. That could create yet another problem for the already battered housing industry.
     
    I cannot predict the outcome of this mess; no one can. But I think it is safe to assume that we are only in the first inning. BofA is hoping to resume foreclosures next month, but I sincerely doubt that will happen. Too many federal government offices, too many states attorney's general, too many bureaucracies are now involved, and this could take some time to sort out. Time might be one thing that the real estate market would consider to be a benefit.   

    If you enjoyed today's post, please subscribe to my blog: http://www.Toyoda-Roberts.com/Bblogs.
  • Breaking News: Bank of America stops all foreclosures!

    Posted Under: Market Conditions in Las Vegas, Agent2Agent in Las Vegas, Foreclosure in Las Vegas  |  October 8, 2010 5:31 PM  |  451 views  |  No comments
    The news came out around 9:30AM Las Vegas time: BofA is halting all foreclosures for the time being.
     
    Before you think this is some act of kindness or compassion, realize that there is one reason that they did this today: freezing foreclosures will be a less expensive option than the myriad lawsuits they could be facing if they continue with their current way of doing business. This is no philanthropy, for sure. It is a business decision, plain and simple.
     
    Let's examine this:
     
    One week ago, BofA announced that they would be pausing foreclosures in roughly half of the states, due to "robo-signing", or the process of signing off on documents without reviewing them. In other words, as I understand it, when files came to manager's deals for final approval to pull the auction trigger, managers were signing off without making sure that files were compete or accurate. Because of that shoddy work, it is theorized that many homes were foreclosed on improperly. So rather than face lawsuits that would most certainly make headline news and further tarnish their already sullied reputation, they made the decision that they would not auction any homes until those files could be further scrutinized. But after more careful review, and intense pressure from lawmakers on both sides of the aisle, they decided, as a precautionary measure, that they would expand their "foreclosure recall" coast to coast. How many corrupt files are we talking about? I think we don't know and may very well never know.
     
    Keep in mind that although actual foreclosures are being stopped, the foreclosure process is not. That means that Notices of Default will still be issued, and collection calls will continue, but actual auctions will not happen.
     
    For those of us in the real estate industry, especially those of us mired in the muck of short sales, it is obvious that Denmark had no odor problem compared to these mega-banks. In fact, I have blogged about them before, and I pleaded with them to clean up their act and just get it right. Someone other than me, apparently, was upset at their modus operandi, because now, comes this.
     
    After all: we are talking about people's homes here. 
     
    While we ponder this news over the long holiday weekend, with some of us sleeping much better than we have recently, it occurs to me that BofA is not alone. While certainly leading the pack of laggards (huh?), BofA is not alone with their misdeeds. Therefore, I predict that next week, after the barbecue grills have found their way back into garages from Portland to San Diego, other banks will follow BofA's strategy, and also freeze their foreclosures. It does, if nothing else, make for good news headlines.
     
    Who knows how long this temporary freeze will last. A month? Two? Until additional legislation can be passed? Really, as I write this blog, it's anyone's guess.
     
    But how will this effect the Las Vegas real estate market? 
     
    Las Vegas is the foreclosure capital of the United States. Therefore, nowhere will this have a bigger impact than right here.
     
    I was remembering this morning when a student in one of my classes two years ago or so asked me about the impending flood of bank-owned properties, and I predicted that it would not happen. Since that time, it has not happened. REO's did come, but not in droves. They have been on the decrease for a while, and the much-predicted onslaught never happened. Now that foreclosures are being completely frozen, the standing inventory should dry up fairly quickly. And where does that leave the Las Vegas real estate market? The answer can be summed up in two words: short sales.
     
    I have long predicted that foreclosures would decrease, while short sales would dominate. Does anyone want to argue that point with me now?
     
    Who wouldn't at least attempt a short sale, regardless of how close the auction date is now? What's to lose? I have blogged many times about the benefits of doing a short sale, at least compared to walking away. And that has never been truer than it is right now.
     
    So, if anyone you know, maybe even you, is behind and facing pre-foreclosure or even has an upcoming auction scheduled, the time to list the property for short sale is right now. If, or should I say when, foreclosures resume, it will not have a very positive effect on prices. And the longer the freeze, the more properties will be coming on the market when the ban is lifted.
     
    At some point, the banks will resume foreclosures, no doubt. But until then, this temporary freeze could pump a little B-12 into the arm of the Las Vegas real estate market.
     
    When more news happens on this topic, you can read about it right here.

    If you enjoyed today's post, please subscribe to my blog: http://www.Toyoda-Roberts.com/Bblogs.
« Read older posts
 
Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer