The market is feeding on bank-owned properties and short sales. While more than half of all home sales in Las Vegas have been reported as foreclosures or short sales, the figure is actually closer to 80 percent in the past few weeks, a home loan consultant said.

About 26 percent of available inventory in Las Vegas, or 5,800 units, are listed as short sales, reported Applied Analysis, a Las Vegas business advisory firm.

Because short sales must be approved by the bank, they can take up to six months to close escrow.

Most buyers get frustrated and go looking for another house, Jo-Anne Guderian of Coldwell Banker Premier Realty said. Fewer than 30 percent of short sales in her office close escrow, she said.

"I had one property in escrow for three months and the buyer walked away," Guderian said. "They got tired of waiting. I put it back on the market at $325,000 and got an offer immediately."

The problem, she said, is that the lender, Countrywide Mortgage, keeps coming up with a higher price than the market will bear.

It would be nice to have preapproved short sales by the bank, Guderian said. If Countrywide will take $345,000, the company should put it in writing and that would be the list price, she said.

Looking at comparable sales in the Iron Mountain Ranch subdivision, Guderian thinks the true value of the home is around $315,000 to $325,000. Countrywide just sold a two-story, 3,758-square-foot model match in the same area for $295,000, she said.

In a normal real estate transaction, the buyer and seller agree on a price, sign a contract and close escrow usually within 30 days. It's simply a "meeting of the minds," Nicole Gordon of Windermere Summerlin said.

A short sale involves a lot more people, she said. It starts with the seller and buyer, then goes to the bank. That can take a while to work through the loss-mitigation department, especially if there's a high volume of short sales.

"They're handling a lot of cases and it's a department that's losing money, so they just don't have a lot of staff," Gordon said.

"The short-sale process can be time-consuming, confusing and misunderstood," said Arthur Marvin, who teaches state-approved courses on short sales and foreclosures. "The process requires patience and confidence in what you're doing."

Sellers must prove financial hardship from unforeseen circumstances such as divorce, illness or loss of employment. Lenders aren't keen on bailing out owners who simply paid too much for the house or can't sell it before their short-term mortgage rate adjusts.

The bank will request a broker's price opinion, or BPO, from a trusted real estate agent to get a rough estimate of what the property is worth in the current market. The lower the BPO, the more likely a short sale will get approved.

The bank will also consider how many properties it has in default and how many other properties the seller has in default.

"Anytime you ask a lender to take a discount on the amount they're owed, it's a difficult situation because once the collateral is released, the lender typically has less leverage to recoup the amount owed," Applied Analysis principal Brian Gordon said. "Certainly lenders will do their due diligence on the seller to see if they could pay that shortfall."

If sellers are unable to negotiate terms with their lender and can't make payments to keep their loans current, the home is likely to enter foreclosure. It may be cheaper for the bank to simply foreclose on the home, make necessary repairs and sell it through a real estate agent.

The research analyst said there's a "disconnect" between the 26 percent short-sale listings and the 6.7 percent short-sale closings over the past three months.

Many agents believe the closing ratios for short sales under contract could be as low as 10 percent to 20 percent, Thomas Taylor of Desert Classic Properties said.

"If this is the case, or anywhere near the case, there are hundreds of buyers being put on hold from a very clogged-up, nonperforming system," he said. "There is a rumor that Countrywide has decided to not do any short sales for four to six months. This can have a big impact on the market."

Other factors, such as restraints on mortgage lending, have hurt the market, he said.

"However, more buyers are out there and others are waiting, but need to be told that the current market may be approaching the bottom," Taylor said, "and if they are not in the process of getting ready, they may have missed the bottom."

Real estate instructor Marvin said completing a short sale requires an understanding that all parties are negotiating a strategy to solve a problem for the seller.

"There is no exact science in doing a short sale," he said. "There are many variations and methodologies that are pursued very similar to processing a listing or an offer."

Agents who submit short-sale offers should scrutinize the seller's information, including a hardship letter, tax returns, pay stubs, bank statements and credit reports.

It's important for the seller to be honest about his or her financial status.

If the seller has $40,000 in liquid assets, makes $100,000 a year with a credit score of 680 and has never been late on a mortgage payment, the short-sale proposition obviously won't be as strong as if he was seriously broke.

A home loan consultant who asked not to be identified said an agent spent weeks working with a seller and developed a great relationship with the loss mitigation specialist. They were confident the deal was secure.

Upon reviewing the seller's credit report, the bank noticed he had leased a new Mercedes-Benz three months earlier for $1,100 a month. The seller had said he had the car for a year.

"Needless to say, the deal was denied and my agent friend wasted a lot of valuable time," the loan consultant said.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.