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Nov
18

No Fault Short Sales

By LasVegasShortSales

Its Not My Fault…a common phrase which comes up in conversation when consulting with our short sale clients.  For several months more and more homeowners have come forward gasping for information about short sales…and NOT because they lost their job or their mortgage rate adjusted higher.  While there are still so many challenged with such financial dilemmas, the face of short sellers is truly evolving…increasingly the only dilemma for some is that their home value may NEVER recover during the time they own it.  They are tied to a non-performing, money-sucking asset.  They want to know how this happened to them and what they should do.

THE HOW…

 “Supply Creates Its Own Demand”

For years the Las Vegas real estate market had a steady appreciation rate.  Chatter could be heard among those in the industry speculating that as land became more scarce, property values would increase at a more rapid pace…a classic case of supply and demand.  This environment paused briefly after September 11th because such a national tragedy created a sense of hesitation in making large decisions and buying a home was no exception.  Then…slowly at first…in late 2002 and 2003 buyers returned in higher numbers, but our housing supply didn’t keep up.  Suddenly, January 2004 hit and buyer demand exploded while the housing supply was simply anemic.  The perfect storm of a seller’s market occurred and some Las Vegas zip codes values shot up by 50% by June 2004.  The measurable peak for most areas didn’t occur until sometime in 2005 or 2006.  For an extended instant, it seemed as if everyone who bought anytime before early 2004 was financially set with massive growth in their home equity.  As for so many who bought after 2004, well, Las Vegas was becoming (and some would say actually is) an eastern suburb of Los Angeles and the higher prices were both justified and sustainable. 

Risks and Rewards

In that long moment of perceived prosperity, who complained?  Did you?  Were you a homeowner who cashed in some equity to buy a car or another home or a pool?  Did you prudently choose to not touch your loan or only refinance into a lower interest rate with no cash out?  Remember, the “free market” – the capitalist system that allows individuals to freely seek a credit card, a car loan, or a home loan – is a system where participation is voluntarily and based on choice.  When you buy a home, you buy into this system, and when the system helps increase your home value, you accept the reward freely, don’t you?

The Market Giveth and the Market Taketh 

In late 2006/early 2007 the Las Changing Face-MarketsVegas real estate market stalled, then with each surprise revelation of the lending and financial systems, the market dropped.  With each adjustable rate mortgage adjusting higher, increasing numbers of homeowners could not refinance because their home values dropped below their loan amounts.  Eventually foreclosures came on like a torrent and some home values appeared to measurably decrease in only 90 days by as much as 20%.  Suddenly, the housing supply exploded and buyers tippy-toed under cover…they didn’t want to be exposed to the uncertain mess that seemed to pervade our economy.  When this first wave of homeowners lost their homes – and the machinations of some “too big to fail” institutions did just that…failed – the system that all other homeowners bought into erased the equity and home values they took for granted.  The risk was exposed.  Who’s fault was it?  While that has been, and will continue to be, a source of study and debate, homeowners still look at us and say, “It’s not my fault…I have a good job…good credit…I pay all my bills…I have a great loan…I bought my home before the huge rise in prices…why do I have to pay for other people’s bad loans and bad decisions?”  In the most direct way, fault has little to do with it.  Remember, the markets giveth and the markets taketh.  Once you buy into the market – into our “free market” financial system – you are by nature a participant.  The rewards are easy to accept, and the risks, a potential outcome few are guaranteed to avoid. 

THE ACTION…

The bottom line – currently in Las Vegas home values have decreased to levels not seen since the 1990’s, and in some areas, arguably since the 1980’s.  As a result, most Las Vegas homeowners have no equity in their home or are upside down.  If you need or want to get rid of your home, regardless of your motivation or financial situation, you must first determine your current home value.  Referencing the taxable value from the Clark County Assessor’s Office give a clue as well as online resources such as Zillow.  Your best reality check, however, will always be a market analysis created by a REALTOR®…from someone who lives and breathes the local real estate market full-time.  If your REALTOR® confirms that you are upside down, then you need to work with them, your accountant, and an attorney or qualified advisor to determine your best course of action.  Ultimately, you are looking for the best of the worst options – short sale, foreclosure, and/or bankruptcy.  Get used to associating these words and concepts in the scope of your life and your reality.  The sooner you understand which option be applies to you, the more proactive you become, the better off you will be in moving forward towards your future.

Are you considering a short sale?  Do you want to know how much your home is worth?  Contact Stephanie at 497-7705 or stephanie@realtyaccess.net to proactively investigate options for your future.

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