During the financial downturn toward the end of the last decade, Las Vegas had become practically synonymous with distressed real estate. But according to recent market research, the number of so-called distressed property sales in Nevada have fallen rapidly in recent years. This news coincides with reports that the median sale price of Nevada homes continues to rise.
According to figures compiled by the Greater Las Vegas Association of Realtors (GLVAR), distressed properties accounted for a mere 2.5% of all property sales in March of 2019. This represents a small drop from 2.9% from a year ago. It also represents a major drop from the 9.8% of all sales that distressed properties represented just two years prior.
The data compiled by GLVAR was obtained from MLS records of property sales. These figures are not comprehensive, as they don't account for newly constructed homes sold by the builder or properties sold directly by their owner. However, the data gives a good picture of the number of distressed property sold, as those are typically sold through brokers.
What are distressed properties?
So what do distressed properties mean according to the statistics cited by GLVAR? Distressed properties include home sold through either the foreclosure or short sale process. These include homes that have been re-purchased by banks after an eviction as well as homes being offered on short sale by homeowners hoping to avoid a foreclosure.
What is a short sale?
A short sale is an agreement between a homeowner and their lender that allows the homeowner to sell the property for less than what is owed on the mortgage. These sales typically include a waiver of the remaining debt by the lender. This allows a homeowner to escape an underwater mortgage without going through foreclosure or being saddled with a deficiency balance from their loan after the home is sold.
For homeowners that can't afford their house any longer, there are major benefits to a short sale. The short sale process allows the homeowner to avoid the lengthy foreclosure process and the corresponding hit to their credit score. The biggest potential advantage is the waiver of any remaining loan amount, however. With a traditional foreclosure, the homeowner could walk away without a home but still owe part of the mortgage debt.
There are negatives in a short sale for homeowners as well. For starters, a short sale is much longer than a standard home sale. That's due to the requirement that the bank signs off on the purchase price. Before they will do that, the bank will have an independent real estate agent appraise the home to ensure the short sale price is fair. If the price doesn't work for your bank, they can reject the sale. Sometimes, it can be months before the bank makes their decision, too.
In many cases, a buyer won't qualify for a short sale to begin with. Every lender approaches short sales differently, but most will only consider a short sale for homeowners who are significantly behind on their mortgage payments. The short sale process can be complicated and fraught with unexpected delays. An experienced Nevada short sale attorney may be able to simplify the process. To learn more, contact Vohwinkel Law today.