FCT’s Market Condition Report – December 2012

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Our friends at First Centennial Title have released their Market Condition Report (MCR) for December. (Click on the report below to enlarge.)

December 2012 Market Condition Report

Commentary from December’s MCR…

The [top] table represents the last 13 months of activity. Notice that all price trend indicators remain positive (green) which means prices are rising at an increasing rate. See the upper side of the price schedule (average price) is moving in lockstep with the median price scale. Observe also that demand is moving up at the rate of 4 closings per month. This rate of increase in demand is down from last month by 2 units, and is behind last year by 25 units, signaling a slowing in demand in the short run. Because the ratio of supply to demand remains very tight (and still in decline), the current rise in prices will most likely continue.

Related post: FCT’s Market Condition Report – November 2012

About Guy Johnson

I am a licensed Nevada REALTOR® living and working in Reno, Nevada. Give me a call at 775-722-4011. My team and I will be happy to assist you with your real estate needs.
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7 Responses to FCT’s Market Condition Report – December 2012

  1. RG3 says:

    Good info. Guy I’m curious of your opinion on all the short sale flips that are taking place and how it’s effecting the data. More and more it seems the listing agents and local lenders are involved(6331 Park Place). As a realtor do you have some sort of duty to your client to get them the best deal possible even if it’s a short sale? Seems to me the sellers of these properties are the ones getting screwed because even if the bank waives a deficiency the seller still has an artificially increased tax liability since his/her trusted realtor decided to cram through a lowball short sale to his existing investor. The realtor gets paid 3 times-the seller gets a higher tax liability if they don’t happen to fall under the debt relief exception-real buyers get screwed out of a fair deal because the house was never really put on the market until the investor owns it-and the house gets counted twice in the sales data. How many fraudulent short sales are happening and what liability do these participating realtors and lenders have if/when the seller gets a larger IRS bill because the trusted realtor was only looking for a larger commission instead of what was in the best interest of his/her client? Should be fun once the attorneys get involved.

  2. Guy Johnson says:

    RG3,
    Thank you for your comment. I believe counter-measures exist to keep what you describe from happening. Here are a couple that I see:

    1) The banks have a good handle on our local market. They realize that Reno-Sparks is a market of rising prices and very tight supply. As such the banks are countering offers on short sale properties with greater frequency. And this includes good offers at market prices. Perhaps their thinking is that if the current buyer walks when presented with a higher counter offer, a new buyer, who will pay the higher price, is waiting next in line. And this strategy seems to be working.

    2) The conditions of the short sale approval have become more restrictive. With a recent short sale I closed the lien holder had language in the short sale approval letter that read: The purchaser cannot resell the property within 30 days of the short sale settlement date. The purchaser cannot resell the property for greater than 120 percent of the short sale price within 90 days of the short sale settlement date.
    These were terms to which the buyer had to agree in order to purchase the property. …after also having had agreed to the lien holder’s higher price.

  3. Rudolph says:

    Can’t resell the property for a whole 30 days. Wow. That’s just a staggering prohibition on short sales flips. What flipper would ever be willing to wait a horrendous 30 days before flipping??

    A 30 day prohibition on flipping is a joke. All it does it prevent simultaneous escrows.

  4. RG3 says:

    Actually it happens quite often and is becoming more prevalent. Take 6331 Park Place for example. Comes on the market as already pending short sale for $131,000 on 10/4/2012 – closes escrow for $140,000 on 1/24/2013 – and is relisted on the MLS for $167,950 on 1/26/2013. The same agent represented the buyer and seller in the first deal and is representing the new seller on the “flip”. The buyer is a local mortgage lender so everyone involved understands the scheme although I doubt the original sellers got a full explanation of how they’re being taken advantage of. Did the property magically appreciate $28,000 in 2 days or is it a fraud against the original seller and short sale bank to purposely devalue the property by not marketing it in order for the listing agent and lender/buyer to fill their own pockets? These short sale “flops” are now rampant in our market and highly unethical and illegal in most cases. Lenders/Agents are being prosecuted everyday for the same actions (mortgagefraudblog.com). This same agent/buyer team has pulled off 5 in the past 45 days so I can only imagine how many are happening marketwise.

  5. RG3 says:

    Q: What are the legal problems with a fraudulent short sale flip?
    A: Depending on the specific circumstances, the legal claims that may be raised a fraudulent short sale flip include, but are not limited to, the following:
    • Mortgage Fraud: Sellers, buyers, agents, and others who misrepresent or actively conceal a short sale flip may be liable for, among other things, mortgage fraud, common law fraud, misrepresentation, and unlawful business practices. Under federal law, mortgage fraud includes anyone who knowingly makes a false statement for the purpose of influencing a federally-insured mortgage lender or other financial institution as specified (18 U.S.C. § 1014). A violation of federal mortgage fraud law is punishable by 30 years imprisonment, plus a $1 million fine (18 U.S.C. § 1014). For example, concealing the BC transaction from Seller A’s short sale lender or concealing the AB transaction from Buyer C’s mortgage lender may constitute mortgage fraud, among other things.
    • Breach of fiduciary duty: Agents involved in fraudulent short sale flips who fail to exercise due care may be liable to their clients for monetary damages suffered. If, for example, a listing agent both convinces Seller A to sell to Buyer B for $300,000, and facilitates Buyer B’s simultaneous resale to Buyer C for $350,000, the listing agent may have serious difficulty explaining why the seller only deserved the $300,000 Buyer B, not the $350,000 Buyer C procured during the listing agent’s listing period.
    Q: If a seller (Seller A) receives no sales proceeds in a short sale anyway, how does a short sale flip harm the seller?
    A: Regardless of whether a seller receives any sales proceeds, the seller’s involvement in a fraudulent short sale flip exposes the seller to criminal and civil liability. Furthermore, the sales price in a short sale may have financial, legal, tax, credit, and other implications for the seller. For example, obtaining a higher sales price benefits the seller if the lender requires the seller to repay the shortfall or the lender reserves its right to pursue the seller for the shortfall. Also, a higher sales price benefits the seller if the lender forgives the shortfall and the seller is not exempt from debt relief income tax consequences.

  6. Sully says:

    I too wonder about that 30 day hold on reselling as it takes about 30 days for escrow to close and most flippers take about 2 weeks to repaint and ready the house for sale anyway. I have run into a 30 day wait for investors to bid (FHA related) which seems to do more good than a 30 day hold on reselling, from an owner/occupant point of view.

  7. Pingback: FCT’s Market Condition Report – January 2013 | Reno Real Estate Blog

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