Properties Repossessed by Mortgage Companies in August 2008

Just a couple quick notes on the current state of Las Vegas repossessions for August.  A national analytics company , First American CoreLogic reports that ” The Q3 2008 Core Mortgage Risk Index (CMRI) has risen 12% above a year ago and increased for eleven of the last twelve quarters. The CMRI—which forecasts delinquency risk—is currently 55% above the base period of Q1 2002, a period near the end of the last U.S. economic recession. Although significantly higher now than during this base period, the CMRI is likely to continue rising nationally over the next 18 months.” 

“An elevated CMRI signals the increased potential for financially disruptive and costly economic consequences for consumers, their local community, and mortgage financiers.”

So it appears that the information gleaned from the finance industry calls for an increasing number of foreclosures for the next 18 months before things start to subside in the housing industry nationally.

 As you can see from the picture above, (Courtesy of First American Title) the Banks took back 2,847 pieces of real estate in Clark County in August 2008. While the total number of real estate transactions sold in Las Vegas was 2,704 units.  Both of these figures include all real estate transactions including land , homes, condos, etc.

As reported in the Las Vegas Sun. Patty Kelly,  president of the Greater Las Vegas Association of Realtors said the number of bank owned properties (R.E.O.’s) accounted for nearly two-thirds of the Las Vegas real estate sales for August 2008.  That would mean that if the number is actually 61% as reported by other experts then the number of R.E.O.’s (repo’s) sold was 1,649 units.  If the Mortgage industry took back 2,704 units and sold 1,649 units and lets assume that they sell an additional 300 units at auction they took back 645 more units than they sold.  A wopping 21% deficency just for this month August 2008.

I once again reiterate that the Mortgage industry is holding back inventory from the market in an effort not to slow the price depreciation in this market.  If all the available inventory were put on the market in Las Vegas we would probably go from 22,700 units to 36,500 units. This would mean there would be a 22 month supply on the market. Not the 14 month supply based on the Greater Las Vegas Board of Realtors data.

How do you take advantage of this current market? Find a good Real Estate Agent and hire them as a Buyers agent.  Pay them to get you the best deal they can find. Make sure they know how to buy from the banks and not just through the MLS.  You can make fantastic deals in this market with a good agent.  By signing a contract with a good agent you give the agent the freedom to find you the best deals without the need to use the MLS which can sometimes have some of the highest priced homes.  The money you pay a good Buyers agent to find you a home or investment property may save you 5% in auction fee’s and 3% to the listing agent of the auction property.  It can save you 3% for the Selling agent commission if the property is bank owned but not listed.

So why use a good Buyers agent? Because they have the ability to show the Selling Mortgage Company what similar homes are CURRENTLY Selling for and have sold for in the neighborhood and can help negotiate for your best interests to get you the best deal on a particular property.  A good Buyers agent works full time helping you find an excellent property.  Yes you may have to add the commission (example 3%) to your closing costs.  If the agent saves you 15 to 20% on your purchase is it worth paying them their commission?  What most Buyers don’t realize is that when an agent sells them a home that is listed the Buyers agent commission is all ready added into the price of the home.  The only difference is that the Buyer doesn’t see the commission on their side of the closing statement but they still pay for it when they buy the home.

Play it smart call an agent, sign a Buyers Agency agreement and let them find you the best home. If the home is over the MLS then the seller generally pays anyway.

Max Schmidt is nationally syndicated through his web blog and video reports. Licensed as a real estate agent since 1977 he has seen many markets and economic cycles throughout his career and been in thousands of  home transactions. He has also been a licensed general contractor, re-modeler and developed subdivisions. Max currently sells Las Vegas homes, Henderson homes and real estate.