[lvmensch]

Originally Posted by eventusstultorummagister

Please refer to post #285 (above)

An acquaintance who was a CMBS/Commercial Mortgage Lender for 20+ years told me:

All the mortgage loan servicers have to continue paying the Investors (big hedge funds, insurance companies, pension funds, other countries, etc.) who buy the MBS Bonds when the Homeowners are defaulting and in forbearance on their loans. If the Homeowner doesn't pay, the interest to the investor on the MBS Bond is still due. The Bonds are owned in a Trust, they tranche out AAA, AA, A, BBB+, BBB, BB, etc. Each tranche owns a slice of the bonds and is priced on the likelihood of that piece of the bond defaulting. The AAA tranche is the best, so that one is the least likely to default. The UNRATED (Junk Bond and below) pieces are likely to default, so they may be yielding 15% to reflect the risk. The servicers have to continue to please the Bondholders (they don't care about the homeowners) and if they don't have the money to pay the bondholders their interest, then each bond tranche that is getting impacted is making the call on what to do with the underlying collateral until that bond tranche is eliminated. When the market drops and the homeowners start defaulting, it eats away at these bonds and the tranches GET ELIMINATED through defaults. The investors GET WIPED OUT and the Bondholders complain to the gov't for a BAIL OUT. The BONDS, because the market dropped, are now ILLIQUID. They can't be sold. There is no market for them. Many tranches are wiped out. There is NO MARKET.

So that means, without a market, then there can be NO FINANCING of houses. The Liquidity has dried up! No banks can make loans because there is no market to buy the bonds to offload their balance sheets. Prices should be dropping like crazy but the Fed has actually bought JUNK BONDS because nobody else was buying and the market would have collapsed! NEVER HAVE THEY DONE THIS BEFORE!!!

What the Fed is doing is setting the price (unfairly) and buying the junk bonds, and setting the price of the bottom of the market. They have effectively BAILED OUT the bondholders, billionaire hedge fund holders, insurance, pensions, etc. If a bond was $100,000,000 but couldn't be sold for $50,000,000, then the bondholders/mortgage REITs, etc. have to mark-to-market down to $50,000,000 which erases all their NET WORTH/CAPITAL, effectively making all these investors, mortgage REITs, etc. insolvent/bankrupt.

The Fed effectively came in and bought them at $75,000,000 (which mitigates their loss substantially). There is no price discovery mechanism because the bottom of the market was not set by the market, but by the Fed itself. These IDIOTS in this business model do this every 10 years or so, chasing yield and chasing fees and run only with the economy, and they do not manage their risk. They are in a risky business model. They should not be getting our tax money for bail outs. Prices should be dropping like crazy because there should be no loans available in the market. The FED is providing the liquidity and bottom of the market. What would normally be happening is for interest rates to RISE and the price of homes should fall in order to deflate the bubble that false low interest rates created.

The Federal Reserve is propping up the housing market - no matter what the consequences.

Talk about colonic glossolalia.

[strato58]

Realtors are in a sales business. It is what it is, do your own DD.

[lvmensch]

Originally Posted by strato58

Realtors are in a sales business. It is what it is, do your own DD.

Indeed. But also an agent with the fiduciary requirements that being an agent imposes. The basic is that you take care of the client and not yourself.

[Mike from back east]

Disappointed to see this thread turn into bashing realtors, so I'll resort to facts. Please correct me if I'm wrong on how it works in NV.

Listing agents have a fiduciary responsibility to their client, i.e., the seller.
Buyer's brokers have a fiduciary responsibility to their client, i.e., the buyer.

When buying a home my wife and I will not trust the listing agent to look out for our interests.
When buying a home my wife and I use a buyer's broker with CRS credential. We've always been well served.

Some people feel they've been poorly served by one or more realtors, we moderators get it, but many have also been poorly served by other types of businesses and people. We mods will not allow broad-brush attacks on any profession or peoples or areas. When someone attacks with "all realtors are ____________ bad dudes" or "City or state __________ sucks and all its people suck" that's when we pounce and issue infractions for violating the TOS. This is not the thread to post anyone's case of bad service ... by realtors or anyone else in the business (builders, banks, etc).

Now, I'd like for everyone to stop discussing realtors and get back to what you expect LV real estate prices to do. If it sticks in someone's craw that badly they can go start a new thread, but must not name anyone's name as that violates the TOS regarding this not being a consumer complaint site.

IMO there will be downward forces on home prices that will ripple through as X% of people fail paying their mortgages and some will be foreclosed. I wish it weren't so but that's what I think will happen in most of the country. Maybe a soft landing can be achieved but we'll have to see how it plays.

[OmegaSupreme]

Originally Posted by lvmensch

Indeed. But also an agent with the fiduciary requirements that being an agent imposes. The basic is that you take care of the client and not yourself.

Exactly....

Dual representation is legal in Nevada and acting in the best interests of the client is a crock of poop. Get the signatures, be friendly, don't break the law, rinse and repeat.

[ddrhazy]

There's too much chaos to know what is going to happen going forward. I have a rental right now that is going vacant soon and I got a lot of calls from zillow/realtor/etc that showed interest in it. Plenty of people want the rental, but nobody has any verifiable income.

All the properties for sale that I looked at over the last week went into pending status. Bargains are still being snatched up. I think there has been some overreaction by some sellers and they are listing too low.

[Mike from back east]

Originally Posted by ddrhazy

There's too much chaos to know what is going to happen going forward. I have a rental right now that is going vacant soon and I got a lot of calls from zillow/realtor/etc that showed interest in it. Plenty of people want the rental, but nobody has any verifiable income.

All the properties for sale that I looked at over the last week went into pending status. Bargains are still being snatched up. I think there has been some overreaction by some sellers and they are listing too low.

As always, the devil is in the details which are hard to come by. What I'm getting at is are these sellers just plain citizens selling their owner-occupied houses, or are these the big investor firms, like REITs, that bought up millions of homes after the Great Recession. If these sales are by the latter, that tells me they see big trouble ahead and are taking profits while they can.

[WisconsinVegasHeights]

Originally Posted by airics

Considering 28 days ago the virus was around, and in 6 months it should be gone, I’d be expecting a 20% increase.

I was able to lock in my rent until 08-2021. Makes me wonder if I should have negotiated a reduction.

I read normally rents go up 6 or 7 percent which is a lot in my opinion.

[lvmensch]

Originally Posted by OmegaSupreme

Exactly....

Dual representation is legal in Nevada and acting in the best interests of the client is a crock of poop. Get the signatures, be friendly, don't break the law, rinse and repeat.

In 20 year we have played dual twice. Both family situations where everybody agreed and got a substantial commission reduction. Both also involved an outside purchase so we generally did fine.

Note that going dual requires a specific form which informs the clients that the agent is conflicted and will not be able to provide the normal services to either. Basically the agent ends up a doing a transaction process which is otherwise not legal in NV.

I continue to believe that the dual should simply be banned. It is simply incompatible with agency.

[lvmensch]

Originally Posted by Mike from back east

As always, the devil is in the details which are hard to come by. What I'm getting at is are these sellers just plain citizens selling their owner-occupied houses, or are these the big investor firms, like REITs, that bought up millions of homes after the Great Recession. If these sales are by the latter, that tells me they see big trouble ahead and are taking profits while they can.

We probably examine a few hundred homes every year. We tend towards a mature costumer base. For instance we regularly rent a couple of homes in Sun City Summerlin for various clients. These renters virtually all have 800+ Fico scores and trouble free histories.

We see a few HUD homes. Just had a client buy one in Aliante. Likely driven by the death of the mortgage holder. They are a nuisance procedurally as they use a weird hybrid of the normal process and pages of forms of their own creation.

Otherwise corporate ownership is rare. It may be that they move the properties in groups which will not hit the normal buyer. In the last year we have come across a couple that were rentals but they appeared to be singular or small count investors. Nothing looking like an REIT or similar.

So in general the market appears mostly the normal ebb and flow of private owners with little corporate activity.