Where can you buy a house for less money than it would take to build a new one? Why, Las Vegas, Nev. of course. National Public Radio’s Jude Joffe-Block tells the story of an Asian investor who last year picked up a Las Vegas home for $55,000. When the real estate market was humming along a couple of years ago, this home was worth $200,000.
International investors aren’t the only ones snagging deals on houses for sale in Las Vegas. Buying a foreclosed home, at current low interest rates, is attractive to first-time buyers as well. Although the competition from cash-rich investors presents a challenging obstacle, buying foreclosure houses in Las Vegas is entirely within anyone’s grasp. Investors buy only 30 percent of foreclosures at auction, leaving the bank with a hefty amount of real estate on their hands – properties known as REOs (real estate owned).
Foreclosure sales slowed markedly in late 2011. This is due to both the seasonal slow down and new laws on the books that forced banks to stop foreclosure filings while they cleaned up their acts. Still, as of August 2012, foreclosure sales accounted for 45 percent of all Las Vegas home sales.
In the meantime, foreclosure filings are piling up and become part of what is known as the “shadow inventory.” It sounds a little like the name of a horror movie character, but, basically, shadow inventory is a term used to describe all the homes that will likely go through the foreclosure process in the near future, but aren’t yet on the market. Estimates vary wildly as to how large this inventory is – some experts claim there are 1.6 million shadow homes nationwide. Here in Las Vegas, claims of upcoming foreclosure sales run from the hundreds to the thousands.
Now, here’s why this inventory may be so large: banks. New Nevada foreclosure laws went into effect in October of 2011, essentially halting new foreclosure filings, so that lenders can clean up their acts. It’s a long story, full of bad news for banks, but good news for buyers waiting in the wings to purchase a Las Vegas foreclosure.
The Las Vegas Sun and Review Journal are full of stories lately about the tightening inventory of both equity and foreclosure sales. Multiple offers and rising prices seem to be the valley homebuyer’s biggest complaints right now. If you plan on jumping into the battle, do so armed with information. Take these initial steps so that you can confidently shop around for foreclosure houses for sale in Las Vegas:
- First, realize that purchasing a foreclosed home is quite different than the traditional home buying process. The transaction runs slowly, with banks and middle-men and items that fall through the cracks, causing delays.
- Next, understand that the bank is not required to disclose any problems with the house – it is strictly an as-is sale. When purchasing a foreclosed home, a home inspection is a must. However, sales are moving so quickly right now, people are buying foreclosures sight unseen. Requesting an inspection may just get you kicked out of the process.
- Now, if all this hasn’t scared you off, the next item on your to-do list is to make sure you know how much of a loan you can get, and see a lender for a strong preapproval. This still may not put you in front of the line when investors are involved, but it gives you a leg up over those who neglected to take this step.
While foreclosed homes typically sell for less than comparable homes in the area, most sell for asking price. Keep this in mind if you had hoped to submit a lowball offer. Doing so puts you at risk of losing the home if there are other offers.
Recent forecasts include the news that Las Vegas home prices are up for the seventh consecutive month. In fact, according to the Las Vegas Sun, August home prices were up 15 percent from the year before. If you’ve been waiting for the Las Vegas market to hit bottom, you have waited too long. Your best of hope of getting a bargain at this point is to jump into the market now, before prices increase even more.