The inventory is very low. The most recent statistics from the Greater Las Vegas Association of Realtors, put the inventory of single family homes at 3,800 for June 1st, 2012. This is 66.3% lower from the previous year and 8.7% lower from the previous month! The reason for the change is Assembly Bill 284. AB284 was passed October 1st, 2011 and has severely limited the ability of the bank to foreclose. The lack of inventory has created multiple offer situations and appraisal problems again in certain segments of the market.
New taxes are headed your way beginning 2013 if there is not an expected extension of what has been known as the Bush tax cuts. In addition, even without the recent U.S. Supreme Court decision for Obamacare the new health care plan tax provisions were ready to be instituted starting in 2013 and now is the time to talk to your CPA to determine how these changes will affect you. Some of the key changes are long term capital gains going from 15% to 20% (as part of possible increase, if the Bush tax cuts are not extended in 2012), a new 3.8% Medicare Tax (as part of Obamacare) on “net investment income” (which includes taxable real estate sales) for taxpayers as adjusted gross income exceeds $200,000 depending upon filing status (married/head of household or single).
Homeowners considering a short sale should know the following. The attorneys are jumping right into the game charging hefty fees upfront and then making clients use “their” agent. I recommend you interview & select your Attorney & Realtor, separately. Secondly, the non-recognition/exemption of Form 1099 debt discharge for primary residence real property is still set to expire this year without year end 2012 adjustments to law provisions. This means that for individuals that receive a Form 1099 in 2013 for the short sale or foreclosure of their home could be liable for ordinary income recognition and corresponding tax on their realized transaction, including debt discharge in excess of fair market value. It is possible this debt discharge/exemption provision could be extended for 2013 and close attention should be provided by individuals and professionals as to current status . So if you are on the fence about a short sale, I would recommend you get it done this year with close attention to expected bank delays for approval that consistently apply.
We are here to help whether you need assistance with selling or buying your home – call us anytime!
Rob Jenson and Tisha Black give you tips on getting your money back if the seller is not releasing it to you. If you have tried to reach out to the seller and offered to settle for a different amount, you might need to take them to court. Tisha and Rob talks you through a hypothetical situation with realistic options.
Rob: Hello, I’m Rob Jenson with the Jenson Group here today with Tisha Black with Black & LoBello. We’re here to talk to you about the Nevada Foreclosure Mediation Program. So, Tisha, it’s good to see you again.
Tisha: Good to see you again, Rob.
Rob: Can you tell me a little bit about what this process is and then I’ll ask you some questions?
Tisha: The Nevada Foreclosure Mediation Program is a program that was designed by our state legislature and is one of only a dozen states that implements a mechanism for borrowers to interface with their lenders prior to the foreclosure process.
The program started in 2009 and it is a continually evolving program. It’s had approximately seven different iterations of the rules related to the program. In essence, it involves homeowners that are being foreclosed upon. It must be your primary residence.
After you receive a notice of default, which is really the first official step in a non-judicial foreclosure in the state of Nevada, you have 30 days to opt in to the Nevada Foreclosure Mediation Program. You opt in by using information that is sent to you with the NOD in a package from the bank. Once you opt in, the bank has to opt in. To opt in, you have to pay $200.
Rob: So you’ve got to do this within 30 days of your notice of default. Who would want to do this?
Tisha: A lot of homeowners do it who are interested in trying to get a face-to-face contact with the bank, people who are interested in a short sale, a modification, even discussing a deed in lieu. It’s a program that promotes alternatives to foreclosures for homeowners and for lenders.
Rob: Would you say that, no matter what, it’s a good idea to go to mediation or filing for it?
Tisha: It’s oftentimes a better way to gain a resolution. Not everybody can participate in the mediation program because there are some qualifications, but it’s often a good way to get ahold of your bank one on one if you’re having trouble getting through a short sale or negotiating a short sale or working out a modification. I like to tell my clients it’s really your first chance at eyeball contact with the bank.
Rob: So to recap a little bit, it’s got to be a primary residence and you’ve got 30 days to file and send them the money and the forms. How long does it usually take until you get to go to mediation?
Tisha: It depends on the volume that we see in the program. In the beginning, it was several months because they were trying to work out the program and it was a learning process. They were working on this program as they were getting people through the process, which makes it much more difficult, but it would be several months. Then it got down to between four and six weeks of opting in the program you would get in. Now it’s probably much shorter than that because there’s not such a deluge of NODs and foreclosures that we used to have.
I am a mediator in that mediation program. I was one of the very first classes of mediators who have been in quite a long time. We used to have at least ten mediations apiece to resolve and now we’re down to two. There are quite a few mediators in the program. You have to be invited back. I guess they will probably resolve the supply issue with the demand of mediators and it should be much faster now and shorter than it was in the beginning.
Rob: Let’s just say I get my notice of default, I send in my paperwork and I’ve got a date for mediation. What should I expect and how should I prepare?
Tisha: When you opt in to the program, you’re going to get a packet that you have to fill out that relates to your financials. That gets exchanged with the bank and the bank also has to provide you certain information. After you opt in and turn in this paperwork, you’ll be assigned to a mediator. You’ll then be contacted by the mediator, who will begin to schedule the actual mediation.
In the NOD packet, you’ll be provided the rules that relate to the program, the items that you need to bring, the items that the bank is required to bring, and the timeframes for those. Essentially, you’re providing your financial information, or information related to a short sale if that’s what you’re doing, and any other information the bank might request, which changes from bank to bank. It kind of evolves over the time period.
In the beginning, they were asking for different or more information than they’re asking for now, but it’s two paystubs, two months’ worth of bank statements, two years’ worth of tax returns, and then information related to your hardship and what your monthly expenses are. Those are the things that you need to provide to the bank, and of course, it has to be your primary residence.
The bank, on the other hand, needs to provide you with information regarding their ability to be at the mediation on behalf of the lender, or the person claiming to be the lender now on the deed of trust and the note. They need to bring certified copies of a note, a deed of trust, a copy of a Broker’s Price Opinion and some other information.
Usually where the bank gets stuck is they don’t bring the appropriate documentation related to the note and an assign fee and endorsement of the note, or more specifically, an assignment of the deed of trust or substitution of the trustee that relates to that deed of trust.
So this is when it gets kind of tricky, and a lot of times, unfortunately, laymen or non-attorneys don’t understand the documents. It should be very simple. It should go A, B, C, D, but sometimes it goes A to F and then you have a Q thrown in and a four and that’s where a lot of people lose defenses they might otherwise have had if they knew what to look for.
Rob: We should make a list of this and I can put it out there on our website, as well.
Tisha: I can provide you with a copy of the forms related to the mediation program so that your audience can have a better idea of what it is.
Rob: For example, at the mediation I went to, I know that they didn’t have the Broker Price Opinion, or I was pretty sure they didn’t. Let’s say you go to mediation and they don’t have some of this stuff. Then what?
Tisha: First, you have to supply the documentation ten days before the mediation is scheduled. Both the parties have to supply it to each other, so the lender to the borrower and the borrower to the lender, and then also, copies to the mediator.
This program requires strict compliance so mediators are given the authority to deny or recommend that the certificate, which enables a lender to foreclose, be denied to a lender who doesn’t bring all the paperwork. If they are denied that certificate, then they can’t foreclose and the process has to begin again. Then what happens is they’ll come in with better paperwork.
Rob: They got their certificate in this case.
Tisha: If they were missing documentation and the certificate was allowed to issue, within ten days after the mediation, the mediator will give his opinion and he will circulate that to the parties. If there’s information on that opinion that people disagree with, they have a time certain to appeal that.
Or, if the certificate issues and they don’t think that the mediator allowed the certificate to issue and they have an issue with the foreclosure mediation program issuing the certificate, they only have a certain amount of time within which to appeal that. I don’t want to give dates on that, but those are things that they need to speak about immediately because the dates change.
Rob: Okay. Well, I think this gives everyone a pretty good overview of the process. We’ll take those copies and we’ll make them a PDF because this will be a blog post with a link to those.
Tisha: It’s a great program for borrowers. I know that lenders have had a lot of problems with it because they’ve been—I think rightfully so—caught off guard with it, but really what the program aims at is making sure that the right parties are together and have an opportunity to negotiate.
It’s in response to, previously, the banks’ inability to properly address these things with either getting their paperwork straight or addressing lenders that need such desperate help in these times.
Rob: Well, thank you very much.
Tisha: My pleasure. Thank you.
Did you know that Nevada is considered a Landlord Friendly State? Carla and Breese from Centurion explain the relatively quick eviction process in southern Nevada. The ladies share with you recent situations where they dealt with tenant issues and how the resolved them. They also delve into disputes, tenant difficulties, court produces, plus more.
Breese: Hi, there. We’re here to talk today a little bit about the eviction process here in southern Nevada—actually, the whole state of Nevada. My name is Breese Glennon. I’m the broker at Centurion Management Services and this is Carla Kurtz. She’s our property manager.
Breese: The good thing is that Nevada is one of the few states that has a very, very fast eviction process. The process involves two notifications. The first is called a five-day pay or quit notice and that involves having a constable serve a document on the door of the house where the tenant lives requiring that they pay the rent, usually within seven to nine court days. Generally speaking, most of the time tenants will pay their rent by that time because if they don’t, then step number two, the eviction process, can begin.
Generally speaking, seven to nine days are court days, and if there is no dispute, then we would move forward to the eviction process, but sometimes there are disputes. Do you want to talk about that?
Carla: I can. Thank you. The dispute would be if the tenant has paid their rent and we haven’t received it, or if they haven’t paid the rent because there’s a habitability issue. You would go to court and tell the judge your side of the story. The tenant would say, “Judge, I didn’t pay my rent because the air conditioner was broke,” or, “Because I have no water.” The judge would ask the owner to make the repairs before the tenant had to pay the rent.
Once the repairs were done, then you have to prove to the court that they were done and then the tenant pays the rent, or sometimes the tenant pays the court and the court holds it and then the court releases it to the management company.
Breese: But sometimes the tenants choose not to pay the rent. Even when we have tried to make payment arrangements—possibly split payments, something along those lines—sometimes the tenants will opt not to do that. At that point, we move to step two, which would be the eviction process. In this state, it’s called a 24-hour eviction but it’s not really 24 hours. We have to file an application and ask the court to consider the eviction. If there was no dispute, then the judge will rule yes, that we can evict.
But sometimes there is a dispute. The tenant has a right to call for a hearing. Maybe you can talk about that.
Carla: With regards to the 24-hour eviction, once the judge has issued the order, there’s a period of 24 hours that the tenants can file a stay with the court. During that period, the tenants have to write down their response on why they get to stay even though they haven’t paid the rent. The court reads their explanation and then makes a decision. Either they go ahead and move forward with the summary eviction or they grant the stay and set the hearing date.
Once the hearing date is set, we’re notified, the property management company is notified, the tenant is notified, and we go to court. That’s about a four-hour process going to court over that sort of scenario. Then you have to stand up. The tenant says, “I don’t want to leave the house. I don’t want to go because I want two more weeks to pay my rent,” or, “I don’t have any place to go,” or, “The dog ate the cat,” or something. Once that happens, then the judge gets to decide whether we’re going to go ahead.
We just had an incident that happened two days ago where we were in court and the folks that were living in the home didn’t have a lease with our owner, but they had a lease with another person who said that they were the owner. We had to go to court on the owner’s behalf and we had to prove that they didn’t have a legitimate lease and they had not paid rent for two months.
It took that long to get on the court date and the judge did approve that they would have to be out. They gave them a stay of just seven days and then the constable will come and change the locks and evict them.
Breese: Of course, what happens at that point is we will get a call from the constable’s office and we will then meet the constable with our locksmith because the locks are changed. The constable will enter the home and have anybody who is in the home come out on the street. Hopefully, people have already moved out but that doesn’t happen all the time.
Sometimes people are still in residence, but the constable will generally be the driving force in removing people from the premises and having the locks changed with the locksmith. The keys are delivered to us. We make sure we’re there so that we know the building is secured, and then if there are still belongings, personal property that belongs to the tenants, we will then begin to make arrangements with the tenants for them to come and pick up their belongings.
There’s a whole other set of guidelines for that about how long you have to hold the belongings, how you store them, how you inventory them, but hopefully, that won’t be your experience.
Primarily, that’s how the five-day eviction process works and the 24-hour eviction process works.
Carla: Because we’re still a landlord-friendly state here in Nevada, we at Centurion are usually fairly good at getting the tenant to pay or get them out within 30 days. That’s a big plus for the property management company.
Breese: Part of that process really is—especially in this day and age with the economy being the way it is—trying to work with the tenant. If they can only make partial payments and we can get the owner to approve that, if they choose to approve that, that oftentimes is more cost-effective and more reasonable and more successful than an eviction process, which can then put the property at risk.
Carla: Give us a call if you have any questions. Centurion Management, (702) 435-7368. You can ask for Breese or myself, Carla.
Tips on different polices offered to home buyers which include information on deductibles, multiple costs in case of unforeseen events. Make sure you have as much information and knowledge before purchasing any insurance policy.
Debi: Hi. I’m Debi Graham with Country Financial, a multiline insurance company.
As part of a home purchase, you’re going to be required to secure a homeowners’ insurance policy and I just wanted to go over a few of the things you might want to look for and be aware of when you go through that process. You’re going to be asked to choose a liability coverage and that is different for every person. A lot of agents will just give you a cookie-cutter policy and you won’t be covered satisfactorily, so they really need to go over your assets and look at your personal situation and choose the coverage that is right for you.
The next thing you’ll need to do is choose a deductible. They usually start at about $250. I find the best, most comfortable deductible to be $1,000. It keeps your premium a little more in line. The policy is not to cover everyday little losses; it’s for a catastrophic event, so a $1,000 deductible is usually suitable for most people.
The next thing you’re going to do is cover the dwelling and there are several different types of coverage for that. There’s what’s called guaranteed replacement cost, replacement cost, extended replacement cost, and actual cash value. You definitely do not want actual cash value. The best thing you can get is guaranteed replacement cost. That’s hard to find. Country Financial actually does have guaranteed replacement cost, and as far as I know, we’re the only ones in the Las Vegas area that actually have that coverage.
You’re going to cover the dwelling for the rebuild cost, not the market value. In this market today, your coverage is going to be a little bit higher than what you paid for the home because you want to make sure you can have enough money to rebuild it. If you do get the guaranteed replacement cost, then there won’t be an issue. They’ll insure it properly and there’s no cap on what they pay out if you had a total loss.
The package also has a list of automatic coverages like your personal property. Let’s say you have a home insured for $100,000. You get 75% of that dwelling coverage to cover your personal property, so you’d have $75,000 to cover personal property.
Another automatic coverage is auxiliary private structures. That would be your pool, gazebo, storage shed and things of that nature. Another one would be additional living cost. If you’re ever put out of your house because of a loss, this coverage would pay for your lodging to stay elsewhere, food and things you would be paying out of your pocket that you wouldn’t normally.
You can raise the coverage amount on any of those coverages if need be. If 75% of your dwelling coverage isn’t enough to cover your personal property, then you can always increase that for a small premium increase.
There are policy limits on a lot of the automatic coverages like jewelry, firearms and computer equipment, so you might want to schedule those. If they’re scheduled separately on your policy and something happens to them, there’s no deductible. They actually have better coverage. If you just have mysterious disappearance of a piece of jewelry, that’s covered; however, if it’s not scheduled, that would not be covered. You can schedule your cell phones and that works out to be quite a bit cheaper than buying the coverage through the cell phone company, so that’s something to keep in mind.
Also, a lot of people don’t realize that if you have a car in your garage and your house burns down and that car is not insured on an auto policy, it’s not covered. If you have cars in your garage, you need to have them insured on an auto policy to have them covered. Also, with ATVs, liability is not covered off premise. If you let somebody borrow your ATV and they take it off your property and use it and something happens, there’s no liability coverage, so the best way to cover those is also on an auto policy.
Some coverages that you may not be aware of that are not covered would be earthquake, flood and sewer backup. All of those are things you can add on to your policy. A flood policy would be a separate policy. You can’t put an endorsement on your homeowners’ for that, but if you’re not in a flood zone, it’s relatively cheap to insure it for flood.
Earthquake is an endorsement you can put on your homeowners’ policy. Sewer backup is probably $30 or $40 a year to add that to your policy, and that is probably a good coverage to add because that does happen from time to time.
When you’re choosing a company, make sure you choose a company that is at least A or A+ rated. You can check their ratings on ambest.com. You want to make sure they’re going to be able to stand behind their policy come claim time. A good agent will sit with you and discuss your personal situation rather than just writing a cookie-cutter policy for you. Everybody has different coverage needs, different assets and situations.
When you move into your home, once you get everything settled, it’s a good idea to go through with a video camera and video everything you have, because if you ever have a catastrophic loss and you’re sitting there with the adjuster, it’s going to be very difficult or impossible to remember everything you had. If you videotape everything, store that video offsite so that it’s at your disposal at the worst possible moment. If you don’t video it, you can get a checklist. Most agents have a checklist that you can write down what you have and the value.
Another thing when you’re doing your coverages on your personal property, make sure you have replacement cost, not actual cash value, because if you have a television that’s five years old and you have actual cash value, you’re going to get about $100 to replace your TV when it’s really going to probably cost you $1,000 to replace a good TV.
I think those are about all the tips I have right off the top of my head. You can feel free to contact me. Again, I’m with Country Financial and I’ve been in the business for ten years. My office phone number is (702) 566-1035 and you can call me anytime. My cell phone is (702) 375-5200.
If you are looking to work with a property management company – Breese and Carla give you tips on selecting a property manager. They help you with tenant applications, pricing, dealing with difficult situations, and much more. Remember experience and knowledge is key!
Breese: We’re here today to talk a little bit about how to choose a property manager. My name is Breese Glennon. I’m the broker at Centurion Management Services. This is Carla Kurtz, our property manager.
What really matters when you’re talking about how to choose your property manager? Well, I think experience in the business locally is a really big point. This is a specialty field and it requires not only a special permit, but also a real estate license and it also requires a really good working knowledge of the processes in the local courts. You also need to talk to somebody about whether or not they have adequate staffing.
There are so many things that go on behind the scenes at a property management company—HOA violations, for example. How are they processed? The accounting systems, do they have enough people to do that? Is it done accurately? Is it done timely? How about people to answer the phone and answer your questions?
Those are really important things. What do you think, Carla?
Carla: Well, at Centurion Management, we have a live front desk person who answers the phone and directs everybody to the right people. One of the things that is very important to ask is how long the brokers have been in business and how long the property managers have had their license and been in business. Centurion has been in business for about 30 years.
Breese: Since 1985.
Carla: I’ve been a property manager in real estate for almost 20 years. It’s really important to have the experience. That counts for a lot here because a lot of companies are just startup companies and they can’t really have the full effect for you.
Breese: It is kind of challenging, and of course, everybody wants to go and compare fees and charges. You should do that always, but don’t forget to ask about what is not included in the management agreement. Some companies, for example, will retain late fees that are collected and some companies will only take a management fee from the late fees and the balance of those funds will go to the property owner. Those questions are worth answering.
Some companies will have additional fees and charges for copies or phone or adding fees on top of vendor invoices, so you should ask about that. Spend some time going through the contract. Read it and ask the questions. How are inspections handled and who handles them? Do they get copies of the inspection? Are there photos? What happens if there is something wrong in the inspection? All of those questions are good to answer.
Carla: Another key question for you as an investor or owner is when do I get my money? Do I have any backup and what’s going to happen at the end of the year? Am I going to have anything to give my accountant?
Knowing when you’re going to have your deposit, either check or ACH, and knowing the maximum time that the management company has to get it to you is information you need to know up front. There are some companies that don’t give the owners their funds until the next month so you’re always a month behind. Some of them don’t give the funds until the 20th of the month. Those are important questions to ask.
Breese: You may also want to place a lot of value on the people that you talk to at the company when you’re interviewing them. One of the things we strive for is to try to set up a good business relationship with the owner.
We try to give them as much information as they need so that they can make decisions they’re comfortable with starting with pricing the property. It’s important to know what the real rental values are and not what you would like the rental values to be. It only causes a problem when you’re in the marketplace overpriced and you thought maybe you were going to be receiving rents at this amount, when in reality, you end up receiving rents at this amount.
Be sure you can establish a good business relationship with the property management folks. Get all the information that you need.
When it comes to tenant applications, it’s also good to inquire about how tenant applications are handled. What kind of information is collected? How does the owner make a decision? How does the company make a decision? Is there a rating system? How are fair housing guidelines resolved and adhered to in that company? These are all good questions.
Carla: I think at the very least, you should find out about the tenant deposits and how that’s going to be handled and if the brokerage firm knows what the Nevada statute says and requires. In our company, we have a deposit for the tenants, which is separate from the operating funds for the owner.
We make sure that we have a dedicated individual who does the move out inspections, makes a list of repairs and comes back and talks to the owner about what repairs the tenant is going to be responsible for and what repairs the owner should be responsible for regarding painting or carpeting or whatever the case may be.
It’s important that the company that you hire have enough staff and enough qualified people to handle the whole realm of your property management.
Breese: And, one final discussion about marketing and advertising because that is important. Ask in the interview how the property will be marketed. What kinds of signs? What kinds of lockboxes? Where is the database? Who are the licensees that are going to be showing the properties? How do they show them? What kinds of commissions are going to be paid?
All of this is important, including what kind of advertising is going on and if that is going to cost you anything. Be sure to ask all of those questions. Anything else?
Carla: I don’t think so, except you can call Centurion Management at (702) 435-7368. We’re happy to help you.