Reality 2014 in the Las Vegas Residential Rental Market
In one word-CANCELLATION.
Here comes a 2014 reality check. Cancellation or rejection of short sales that have been in escrow for months. Residential values have increased, peaked and are now starting to soften. This creates a tight spot for short sellers.
This is an actual scenario with the names changed to protect the guilty. Owner of rental property lists home for sale January 2013. Market price offer of $80,000 accepted by owner January 2013. Short sale process started January 2013. Final approval pending October 2013. Loan sells to new bank November 2013. New bank revalues property at $140,000. New bank does not counter existing buyer and puts the property up for bid on hubzu.com December 2013, opening bid $108,000, reserve $140,000. No offers are received on Hubzu.com after 3 consecutive auctions. Current market value February 2014, $105,000 due to physical condition and required rehab. The original buyer has walked away and buyers using FHA cannot purchase the property because repairs cannot be completed to meet appraisal condition. Seller now being controlled by bank and unable to sell.
A second scenario was listed June 2013 at $160,000. Investor put the property in escrow July 2013. Short sale in process when note sold in December 2013. New bank provided short sale approval at $180,000. Buyer cancelled. Foreclosure sale is February 14, 2014, property back on market, cash only at approved short sale price of $180,000. Current value February 2014, $165,000. Chances are it will go to foreclosure sale after the Seller has played by the banks rules. So I’m sure you see the problem from these two examples. Banks aren’t taking physical condition into consideration or adjusting to a softening market and discounting appropriately. They must not be reading the news like this article about US homes sales down 8.7%. Or the comments by the National Association of Realtor’s Economist about how home prices are growing quicker than incomes are causing buyers to hold off on purchases,See Here.
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