When my clients (those who choose to work with me exclusively) are buying new construction, it can take hours on the phone and previewing (visiting sales offices before showing the buyer) to find the best incentives. (Time well spent in my opinion!)
As for your situation, Blaze...realistically, there are only a few new homes selling for around $100 per square foot. I have not seen 4 BDs over 2000sf for under $180k. The closest to that would be KB in the northwest 1812 sf for $179k, but you'll pay extra for the 4th br option. Signature homes in the east has a 5 br for $178k but it's only 1715 SF. Go under 1500 Sf and you'll have a few more choices.
Were you at the New Homes Auction on Saturday the 3rd at Palace Station?
BTW, Talk to your lender about using the 3% down payment from the seller on an FHA. You may run into some problems there.
I know exactly what you mean about the banks dragging their feet, but some will, some won't, and may react differently even with their own properties. Moving quickly isn't a sure thing, but if a bank, owner, or builder wants to get a home off their books, hesitating can often automatically take you out of the running.
Really, it's not much different than what you can run into anywhere in the market, not just REOs. Builders can stand firm, then for whatever their reason decide to offer greater incentives or go lower price. Resale owners rejecting offers can have a sudden change of heart and trim their asking for a quick sale. Once there's a great deal it's bound to attract attention. Some will wait to see what comes in, others are ready to go. It's why you have to stay on top of what's happening, and why I tell my buyers not to limit themselves, especially to "only foreclosures". That label doesn't necessarily mean more choices or a better value. I think it's good idea for you to consider the builders, just in case.
That home I mentioned in my last post is a perfect example. The buyer had an offer in on a short sale and no response from the lender for weeks. Then a builder's model home came on the market one night. Professionally decorated, upgraded, furnished, and on a landscaped over-sized lot in the area they wanted to be. Best of all it was 40k under their previous bid and didn't need the additional investment of the other property. No, it won't happen every time, but a good reason not to restrict the possibilities.
Sure it's a bit of luck, but mixed in with some perseverance, a little creative thinking, and staying tuned in to everything out there. I was making my own move to Vegas when the market was crazy. 6 months of searching and so many offers above asking accepted before mine could be presented, missing some by just an hour. Builders were struggling to keep pace with demand and new homes meant waiting months. Some places had you wait for lotteries just for building lots. Having sold everything on the other side of the country, the pressure was on and yes it was frustrating. Then I found a home that also turned out to be an REO. It was larger than I what I had been bidding on and yet below the increased price range I began using to increase my own chances. A really tough find, especially in a sellers market.
In this business just like any other, if you give up, guaranteed nothing happens. Work harder for a solution to overcome the hurdles and you're still in the game. Lowering the size of the home opens up more selections in your price range, and still doesn't eliminate what your looking for should it turn up.
I was also looking at Richmond homes, where the square footage was smaller -- but the incentives were pretty great. Right now they are offering $25K in free upgrades with the purchase of a new home, priced around $180K for a 1600 SQ ft, 3 bed home. The layouts weren't as nice as KB, but they were still nice. The problem was the location of these properties and lots. Many of the lots they had open contained eyesores from nearby commercial properties, noisy freeways and backyard odors that crept every so often with the smell of Pig Manure (from the farm.)
With the market the way it is, I think I will wait patiently. I will not force myself to buy into the whole idea of "You have to buy now to get a great deal." The market is over saturated with REO's now -- and many buyers are standing at the sidelines making the same offers I am, which is actually making the REO home prices go above what they were asking for due to multiple offers. Eventually, however, the buyers will settle down and disappear. I don't believe there will be lots more buyers this summer and I suspect there will be better deals towards November, as I do not see things "picking up" for the market -- but more so a "delayed" reaction as to what the "real inventory" is out there. Many banks haven't foreclosed yet because they are just so busy -- I should know because my dad is unfortunately a prime example, and he even contacted them to tell them to foreclose, and that was 3 months ago (totaling nearly 7 months thus far), but they still haven't foreclosed yet. It's still in pre-foreclosure status. They call practically everyday trying to work something out. Short sales won't work either because he has a second mortgage lien on the property, which isn't worth it to any buyer.
Sooner or later, there will be lots more REO homes on the market with fewer buyers, and Newer Homes will likely be offering all kinds of great incentives if they want to stay in the game. This is when I will likely get the home I need. For now, I will continue to look -- but I am very doubtful I will get what I "Need" right now. There is just too much competition in my price range. Lucky for me I can wait. I can also live anywhere I want since I work from home and own several online businesses. I am also looking in Indianapolis, Arizona and Ohio regions. I love Las Vegas because of the 24/7 atmosphere and excitement, but I certainly don't need it... I just need a good home.
You're right, builders have been offering more upgrades as incentives lately. The reason is the builders have cleared so much of their excess inventory and scaled back on construction, leaving limited standing inventory. They've trimmed their costs and prices already dropped, from lows of roughly $185 a sf during the peak, to around $120 - $125 a sf, and few that drop below that.
Those prices combined with the large inventory of resales is why Las Vegas is called a buyers market and also why there's an increase in activity. One reason I believe you'll find it difficult to find what you're looking for, is with the 6% seller contributions you're asking it works out to around $85 a sf. That's normally less than builders cost today.
What you're running into with the multiple offers on the REO's in your range is another issue with a buyers market...desirability in a price point. I just touched on this in another Trulia thread.
There are a lot of buyers looking for the same as you. Unfortunately there are some that can go a little higher with their offer. So while it is generally a buyers market, the great deals are attracting a lot of interest and you have to act quickly. I recently found a great home at a super price for one of my out of town clients. The morning after it was listed I was there taking pictures and video and they made an offer based on that. If they hadn't, they would have lost it to the other offers that came in. You have to be prepared to move on the exceptional homes, similar to when it was a sellers market.
As Damon mentions, it takes a lot of time staying on top of builder's "quick sales" and even listings. You never know when that one property may come up that could work. Communication is key and I also spend a lot of time previewing and photographing homes and neighborhoods for buyers that have committed to me. I've found it the best way to find the home that's right for them. There's a small sample of some of my recent visits found in my blog just as an idea of what it takes.
I'd also suggest talking to your agent and have them look at a little less square feet to expand the available properties you'll both have to work with. If something turns up that suits your needs, be ready to make your move. Good Luck!
Yes I have negotiated some great deals for my clients on new homes ... in fact I will be talking a client out to show her new home on Tue..Price of the home with the upgrades is $409,000.00 oversized lot,with 55k in upgrades and over 3,000 sq ft ... and we should probably get our offer accepted at $92.00 a sq ft.
The builders In town I have relationships with keep me updated on their inventory and appreciate me bringing in qualified buyers to negotiate great deals.
many of the builders in town will negotiate with Realtors... I suggest you find a Realtor and let them negotate for you and you also have great representation.
Helene M Moore
I respect your opinion about the market. If you can't find what you are looking for in this market, then it is a great idea to wait and see if anything comes up in the future. As you know, waiting could be worse, but it may also be better in your situation. If only we could predict the future, right?
Why is your dad not trying to do a short sale on his home? Just because there are two liens on the property, it doesn't mean that it's impossible to short sale it. Most properties have two liens. Are both liens with the same mortgage company? If so, it is much easier to do a short sale. If not, it is a bit harder, yet still possible. If your dad lives around Las Vegas or Henderson, have him call me. I specialize in short sales. I would be more than happy to try and get his property sold. Let me know.
"Short Sale Specialist"
Prudential Americana Group
Some incentives I saw out there were pool incentives. Pool companies must be having problems...What used to be a 50-60K option is now just 5K at most any new home I saw.
As for non new homes...I found small 1200-1600sqft two story homes dropped the most from the orig selling price. Anything is this area can be had for less than 180K. A REO is this area may even drop to under the 150 mark.
It sounds like you will be using the Nehemiah program for your FHA loan. It is extremely difficult to compete with multiple offers in your price range of $180K while asking for 6% contributions from the seller. You need to find a home that has either been either sitting on the market for a while or put in offers on a property that is brand new on the market. The problem with the REO properties that are brand new on the market is that the banks will usually want to wait a few days before receiving any offers after the property has been listed. You just need to find one that doesn't want to wait. It is a fishing game.
I have a client right now that we had such a hard time trying to find a home within their criteria. We finally found one that they like and it was on the market for about 3 months. My buyer was in your price range and they ultimately had to make a few sacrifices to get what they wanted. Instead of buying a home in Green Valley, we ended up finding one in Southern Highlands that he was happy with. It was definitely a fishing game though. We ended up throwing 5 offers out there all at once and 2 came back accepted. He chose one.
Thanks for the explanation. I keep hearing "You have to act quickly" -- but in all honesty, from my experience, acting quickly doesn't matter that much in REO properties, because they wait anyway just to see what other offers might come in. I say this because I submitted two offers already where NO ONE had submitted an offer -- I was the first and both were done on the first day it came out in the MLS. The home was listed at $159K, so I offered $180K (with the 6% the seller would cover.) Of course, we didn't hear back from them for TWO WEEKS, and my agent called them everyday and sent emails. When they finally did contact me, they suddenly gave me a notice saying there were now multiple offers and if I wish to raise my offer, I could. But I couldn't, as I was maxed out. Needless to say, I didn't get it.
The second property I made an offer on I didn't even see it. I just saw the photos and rolled the dice. But the same thing happened. No offers were made when my agent called... I submitted the offer that day, about $20K above listing, and another two weeks later -- guess what happened? My agent tells me they want to know if I wish to raise my offer as there are multiple offers.
Getting in on it early is not helping for good properties -- it's the HIGHEST offer. My agent told me that the banks are not really setup to handle so many REO foreclosed properties, especially now... so there is a large delay for getting back to people -- which results in more offers appearing on the table during that time. She said the only true way to win is to either get lucky, know someone who can push your offer faster through the chain of command, or else make higher offers that other people just compete with. Obviously, I just seem to win.
It is very discouraging to me as well. I am exhausted physically and mentally, my agent is exhausted too and has told me to perhaps lower my 4 bedroom count to 3 bedrooms and sacrifice the Square footage. I will play ball, but it's hard to play with others who have more money. The diamonds in the rough belong to the investors because they have the cash flow to scoop up a great deal and out bid most others. The MLS had something like 20K listings last month I believe, yet that number has dropped to around 16K this month (so I have been told)... so the supply has gone down.
Oh well, I will continue to press on I suppose. I will continue to view properties, submit offers and wait. Hopefully, sooner or later, something will eventually come my way. Thanks for your response. :-)
Do you think the new home developers are more willing to cut deals now? It just doesn't seem that way to me -- perhaps it's because I am naive about the new home market, but from what I have seen thus far, I haven't really seen too many price cuts, just free upgrades and homes with furnishing deals, etc. These are great incentives no doubt, but still, I think the majority of people looking for homes are in the same price range I am in, which is the $180K range and not quite the $200K range... or at least it seems that way to me with all the foreclosures having multiple offers with the homes in that range.