Today is July 4th, a great day in American history that marks the day some 233 year ago the U.S. broke free from England to become a separate country. The original settlers and great waves of subsequent immigrants have come here in pursuit of economic, political, social, and religious freedom. This still remains true. As we have noted in previous blogs about foreign investorswho pursue opportunities to buy homes in Las Vegas, California, Florida, Arizona, and other areas, the United States is regarded as politically stable and despite current economic turmoil, offers good long term investment potential.
Independence Day is a good time to reflect on the economic freedoms that citizens and other residents enjoy here from a real estate perspective.
Freedom to own your own home. Home ownership is the American dream. Today it is even more possible given the affordability of homes in the current market. A few years ago, some would-be homeowners got caught up in questionable "creative" financing schemes that put them in homes they quickly found they could not afford. As inflated housing prices abruptly came down to earth, housing has once again come within range of families. Today in Las Vegas, the median home price is $125,000. For this price, you cannot buy the Taj Mahal, but you can buy a good, nice looking home for your family as long as you have a steady job and decent credit.
Freedom to prosper. Owning rental property is attainable to people who want to buy a duplex and rent out the second floor or buy several homes to fix up and resell. There will always be people who by choice or by circumstance will need rental housing. At the moment, Las Vegas offers a wide selection of properties for investors to buy, renovate, and rent out and later resell. Many of the properties are bank owned and available at prices that may be below market value. Some investors who caught up in the speculation a few years ago, but properly financed investment property offers an opportunity to make money after spending some to buy the property and make it appealing to renters.
Freedom from economic tyranny. Some Nevada homeowners are currently in economic bondage due to excessive debt and spiraling mortgage payments on property that has lost its value. As a result, many have lost their homes or currently face foreclosure. Though this is a complex situation with no one-size-fits-all solution, there is help available to free homeowners from this vicious cycle. Some might find help from Federal programs like Making Home Affordable, by calling the Hope Now Hotline, or by working out other types of loan modification with their lender. Other legal remedies such as short sale or deed in lieu of foreclosure might be a better alternative than foreclosure or bankruptcy to many homeowners.
Whether you are looking to buy a home for your family or investment property to ensure your future or whether you need help to prevent foreclosure, the N&Y Team can help you exercise your economic freedom.
N & Y Team
Nebi Adhanom Direct: (702) 277-9922
Yonas Woldu Direct: (702) 236-8997
Fax: 702-898-9738
P.S. We value and appreciate your referrals. As always, we promise to deliver such outstanding service that your family and friends will thank YOU for referring them to us. Give us a call if you know someone who needs a dedicated real estate consultant for life!
"Life is what happens while you're making other plans." Richard Dreyfuss in Mr. Holland's Opus
No one moves into a home planning on foreclosure. Even if 9 out of 10 people would have told you the big house in Las Vegas was too expensive for you or that you were making a bad decision when you bought it, you probably would have sided with number 10 and thought things would work out. If your decision did prove unwise, you lost your job, you got sick, or your rich wife left you, you might have to resort to foreclosure or short sale. If your bad luck is temporary, you might miss a few mortgage payments before bouncing back.
People are resilient. If any of these things happen to you, you can recover, especially if your family and your health are intact. However, there are credit, legal, and tax consequences to any action you take once you are liable for the mortgage payment.
If you go through foreclosure or give the house back to the bank with a deed in lieu....
• Your credit report will take a hit of 250-280 points.
• You'll have to be on time with all payments for about three years to qualify for another mortgage with good interest rates and terms.
• Your lender could try to collect what they lost but probably won't.
• The relief you got could be taxable, though that is off the table through this year, thanks to the Mortgage Forgiveness Debt Relief Act of 2007.
• If you used a 1031 tax exchange and bought your home or less than two years ago or using tax-deferred capital gains, you might have to pay capital gains.
If your bank agrees to a short sale...
• Your credit report will take a serious hit, thought not as much as if you did a foreclosure.
• You will have to be on time with payments for 18 months in order to get decent mortgage rates.
• Your debts from mortgage and lien holders on the house will disappear, without fear of a lawsuit to recover any shortfall.
• As noted with foreclosure, you won't be taxed on forgiven debt through the end of 2009.
• There could potentially be the same issue with capital gains and 1031 exchanges so see your CPA if this pertains to you.
If you are late on payments....
• If your payment is made within 30 days of the due date, you won't be reported to the credit bureau though you may have to pay a late fee.
• A payment that is 30 days late can lower your credit score from 50-100 points.
• If you miss a payment but then start making payments without making arrangements for the one you missed, the missed one will be considered 30, 60, and 90 days late and the late fees will mount as well.
• Even one late payment in the past 12 months can disqualify you from refinancing and subject you to higher rates.
• Late payments will show up on your credit report for seven years though the weight fades over time.
If you find it increasingly difficult to make your payments on time, it's time to do some thinking and some careful planning. Is your problem temporary? Could you pick up an extra job or shift your spending priorities so you can keep up with your mortgage? Have things changed to make the mortgage harder to pay than when you signed up for it? Do you want to stay in your current home?
Before getting into a cycle of late payments, talk to your lender about options that might give you relief. Seek help from one of the many free resources in Nevada - including the N&Y Team. Whether you need to discuss selling your home before your finances reach crisis proportions or whether you are trying to stop imminent foreclosure, we can help you reach a solution you can live with.
N & Y Team
Nebi Adhanom Direct: (702) 277-9922
Yonas Woldu Direct: (702) 236-8997
Fax: 702-898-9738
Click here to get a market snapshot of your home value!
In the wacky world of short sales and REOs, finding the home trashed by former owners or vandals calls for new levels of salesmanship. The foreclosure crisis has resulted in a rash of trashed, smashed, and stripped-bare homes for the next set of owners to deal with. Many homeowners, strapped for cash, have ripped out counters, appliances, light fixtures, or cabinets to sell and may have intentionally damaged what's left, out of anger. Vandals have often come into to finish the job of gutting the home of anything of value. It takes a buyer with vision and sometimes deep pockets to overlook the damage and see a liveable home underneath. It takes a real estate agent with the ability to help buyers see past the missing parts.
There was a time when people had more common sense and even in the absence of that, an innate sense of what you should be packing up when you move from your home. Whether you are going by choice or moving after foreclosure, the same rules apply.
Even people who are not moving because of foreclosure have liberalized the definition of what should go, what should stay. In the old days, the rule was basic: anything that is attached to the house should stay.
This would include:
You can hardly read this list without alternativeely snickering and shaking your head. Doors and windows taken? Walls? Unfortunately, we are too used to homes being gutted for copper piping to react much to that.
If you as a seller want a favorite light fixture, you should be swap it with another suitable fixture before buyers come in. Make sure to tell your agent if free standing appliances, custom-made drapes, or other appointments are included in the house, available for sale, or going with the seller; these exclusions should be noted in the contract so there is no misunderstanding.
On the other hand, owners can take
Maybe some people think they are only getting back at the bank, so don't care about the condition of the home. If sellers take more than they should or if they damage the home and take the bathtub and copper pipes, they or their insurance companies can face consequences Banks often file claims against the home owners' insurance of former owners who have damaged the home - or come after the former owners.
Regardless of why you're moving, the last thing you want following you to your new home is a lawsuit or an angry insurance company. Even if moving is not your choice, do the right (and LEGAL) thing. Leave your home intact for the next owner. You may not care about the bank, but the next owner is a person just like you who only wants to be a homeowner.
N & Y Team
Nebi Adhanom Direct: (702) 277-9922
Yonas Woldu Direct: (702) 236-8997
Fax: 702-898-9738
Life goes on for Las Vegas residents. Another month, another set of depressing foreclosure figures in the midst of some glimmers of hope in the housing market. Though foreclosures decreased in the last months, Nevada has the nation's highest foreclosure rate. This rate is up 111% since April, 2008. Properties in Nevada, Florida, California, and Arizona, along with six more high foreclosure states, account for 75% of foreclosures in the country. On a local level, Las Vegas has the highest foreclosure rate of any metropolitan area with a population over 200,000 - in 56 homes received a foreclosure filing in April.
Recently, the Nevada Association of Realtors interviewed a sample of participants who have experienced foreclosure since 2007. The study noted the fact that there was little data available on people who experienced foreclosure. Many foreclosed homeowners do not have a current phone number on file; in Nevada, foreclosure can happened quickly so many in this situation moved quickly as well, which made it even harder to track a last known phone number. Nonetheless, the 307 interviewed provide some insight into the crisis.
We will present the raw data from the report another time but the conclusions advanced in the report about who was likely to experience foreclosure are reveal no magic answer about who was likely to do so; basically, anyone from any economic, political, ethnic, or educational class could suffer foreclosure if something changed in their life. The report referred to this as "Plus One Factor," a change in income, debt relationship that made paying the mortgage out of reach. Some respondents indicated that they may have contributed to the problem by getting into loans for homes they could not afford, but the group showed a poor understanding of the responsibilities of home ownership, the types of loan they had, or the options available to them to avert foreclosure.
The report challenges two major assumptions that form the basis of public thinking about the foreclosure crisis. People who go through foreclosure are often considered greedy and/or naïve. The fact is, most people interviewed did not knowingly borrow more than they could pay, but something changed. It's easy to assume that the change is due to job loss, but often unexpected medical bills, divorces, caring for a loved one, or an increase in dependents in the home, became the Plus One factor. Some people might not have read the fine print on the contracts or thought out their purchase thoroughly enough, but respondents were from all income levels and educational backgrounds have been caught up in the mess.
If the conclusions of this report are representative of what nationwide results would be, were a broader study conducted, this means that a lot of the "moral hazard" arguments advanced against the new programs offered foreclosed homeowners are groundless. Most people personally know of someone who scammed the system and may be getting an "undeserved" break; the media always picks up on the part time daycare worker who bought a $500,000 home. A few cases might not represent the true picture that would emerge if a broader study were done.
Data from other sources might support an argument that the most likely foreclosure "victims" are poorer and more likely to be black or Hispanic; this study does not show that foreclosed homeowners are any more likely to be trapped in bad loan or more unlikely to seek help, based on race, ethnicity, or income. This means that information on how to avoid foreclosure needs to be widely disseminated.
The report does not probe underwater mortgages caused by falling home values.
The whole Face of Foreclosure Report is available on the Nevada Association of Realtors' website.
Need foreclosure alternatives? Want to buy distressed property? Contact us for concrete help.
N & Y Team
Nebi Adhanom Direct: (702) 277-9922
Yonas Woldu Direct: (702) 236-8997
Fax: 702-898-9738
At the same time that Nevada is again leading the pack in foreclosures, existing home sales have increased 68% through April of this year. Prices are down 43%. It's a good time for people to buy affordable housing. Now more than ever before, this a time for Realtors® to educate buyers as to what is affordable and to discern who is likely to be a "healthy" buyer vs. and "unhealthy" one. More foreclosures are on the way due to sometimes careless lending in the past; as Realtors®, we want sales that will result in long-term homeownership, not foreclosure in 12 -24 months.
According to Devin Reiss, Realtor® and president of the Home Builders' Research, a Las Vegas company, "The key to understanding the foreclosure crisis in Nevada is the ability to distinguish between a healthy and unhealthy homebuyer. In order to re-establish homeownership, we have to stabilize the market by avoiding situations with a high risk of foreclosure."
Healthy home buyers are well informed about what is involved in buying a home. They have a stable income and buy something that they can make on the payments on, even if circumstances change slightly. Even if they pay no more than they would to rent, home owners have additional costs for repairs, maintenance, lawn care, etc. They understand the seriousness of making the mortgage payments on time.
Unhealthy home buyers may cut it so close that a minor change in life events would render them unable to pay. Often, they enjoy a lifestyle above their means and may want a house to match. Many "unhealthy" buyers don't understand their financing or the seriousness of the commitment they make when buying a home.
No sales person, Realtors® included, want to turn away a person who wants to be a homeowner. In the past, we may have encouraged marginal buyers to stretch to buy homes they might not be able to afford for the long run. Now, a responsible agent may encourage an unprepared buyer to wait 6-12 months before buying, look at least costly properties, or know the questions to ask the lender.
As Reiss notes, "The Realtor is not providing the loan, so they don't ask all the personal finance questions, but they make you aware of the loan itself so you know what to ask your lender and you're not going into it in the dark. The quicker we can get back on our feet with healthy homebuyers moving into these foreclosed homes, the better off our communities and economy will be."
Nest time, we will share with you the results of an interesting study on foreclosures done by the national Association of Realtors. In the mean time, if you are in the market for an affordable home, we can help you. Looking to buy or sell your home? Call us!
N & Y Team
Nebi Adhanom Direct: (702) 277-9922
Yonas Woldu Direct: (702) 236-8997
Fax: 702-898-9738
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We keep your real estate purchase simple and fast! Our philosophy: Buy what you can afford now. Our goal is to serve you in Greater Las Vegas whether you seek a suburban home or downtown condo.
My name is Yonas Woldu. For the past 6 years,my colleagues and I at Prudential Americana Group, REALTORS® have served the Clark County, Nevada area - specifically, Green Valley, Henderson, and Las Vegas. Though like the rest of the country (and in particular, the State of Nevada) we have been hard hit by foreclosures and falling home values, Las Vegas and surrounding communities have vibrant economies that makes them great places to live and work. I have a passion for helping potential homeowners find a home in the area that is right for them now - at this point in their lives, for the circumstances they are in.
Though I am relatively young, I grew up in the real estate industry, often observing my mother (and current partner in the N&Y Team), Nebiat Adhanom. As a college student at the University of Nevada (UNLV), I obtained my real estate license and sold 7 homes my first year - above average for new agents. Once I realized that real estate was a career where I could use my finance background and help families, I knew I had found my niche.
Once out of college, I started in real estate in the boom times of 2004. I immediately noticed my mother was overwhelmed with sales that stalled at closing as lenders were overwhelmed as well. This caused me to assume a different role for several years - that of a lender. I wanted to make sure our clients received the best rates and the best loan product in a timely manner. While working in the loan industry, I was able to help over 200 clients over a span of 3 years.
Now serving once again as a full time realtor, my goal is to continue the growth of our real estate operation and work with as many buyers and sellers as possible and provide everyone the best service imaginable in regards to all real estate matters.
Our N&Y Team serves the Greater Las Vegas area, an area where I grew up and know well. When people think of Las Vegas, they think of only glitzy night life, but Henderson, Green Valley, and many nearby communities are great places to live and work, set in beautiful, park-like settings.
With my background in real estate and real estate lending, plus a thorough understanding of finance, I know how to prepare people to buy a home - whether it's a luxury condo near the Vegas strip or a home in Henderson, Nevada's third largest city. I feel strongly that the key to a stable economy is having a stable real estate industry; the key to a stable industry is having first time buyers or buyers with low debt and a strong employment history. As I saw first hand, permitting buyers to overextend themselves or encouraging them to agree to a loan not in their best interest will help neither them nor the local economy in the long run.
In this new world of real estate, advising sellers of the best way to position their home for a timely sale at a fair price is crucial. We work with sellers to find appropriate buyers who are preapproved and ready to buy.
As an unfortunate sign of the times, there are many properties in Clark County offered as foreclosures or short sales. Many of the available homes offer excellent values for qualified homebuyers, but often the process to obtain these properties is lengthy. I work diligently to make sure that these transactions are processed as quickly as possible so that both buyer and sellers can move on to the next stage in their lives.
"Yonas Woldu with the N & Y Team has been handling all my Real Estate and Loan needs for the past five years. I will keep using Yonas for my future needs. He provides outstanding creative loans and makes my closings quick and easy. I will continue recommending him to my friends and family."
- Edna Bartlett
"Nebi Adhanom and the N & Y Team with Prudential Americana were very productive! I had two homes listed in Southern Highlands and Nebi listed and SOLD both than a month-and-a-half! They were efficient in every step of the process and made sure the transactions went as smooth as possible. I highly recommend her and her team for anyone who is looking to buy and sell property".
- Matt Knox
SEE OUR WEBSITE AT WWW.VEGASREALPROPERTY.COM FOR MORE STRONG CLIENT RECOMMENDATIONS
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