Las Vegas Sun

March 29, 2024

Q&A: Linda Rheinberger, Nevada Association of Realtors

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Justin M. Bowen

Linda Rheinberger, president of the Nevada Association of Realtors, works with lawmakers in Washington and Carson City on behalf of her organization.

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Linda Rheinberger, president of the Nevada Association of Realtors, says today's problems have fixes.

Linda Rheinberger is Nevada’s top advocate for the residential real estate industry.

As the president of the Nevada Association of Realtors, the self-described largest trade organization in the state, Rheinberger serves on the board of directors of the National Association of Realtors.

Rheinberger talks with lawmakers in Washington and Carson City about issues facing Realtors and what can be done to help the housing market through legislation and other methods.

IBLV: How did you get involved in real estate?

Rheinberger: I moved here in 1986, and I had worked for Fortune 500 companies (before I came here) and there weren’t many Fortune 500 companies in Las Vegas at the time. I sold business opportunities for the Business Investment Group of the West. You needed a real estate license because you were negotiating a lease or the purchase of a property.

Where did that lead?

I started selling new homes for Signature Homes, and I was with it for four years. I went from Signature Homes to (my current) company in May 1991. I have owned it since December 2004. It is Las Vegas No Ka Oi Realty Inc., doing business as One Source Realty and Management.

Why did you buy the firm?

The owner was in a position to sell, and I was a likely choice since I managed and ran the day-to-day operations.

Given what happened in the industry, does it make it hard to enjoy it?

It has been very, very difficult. And honestly, had I known what I was about to embark on when I purchased the business, I don’t believe I would have. However, in retrospect, most of the bad things are in my rearview mirror. And since the beginning of this year, every month is better and better as far as profits are concerned and the direction the firm is going.

How did you survive all this?

I had to make some tough choices. I had to cut my salary. I had to cut personnel. That is one of the reasons I moved my business — it’s a lessee’s market at the moment, and I moved and lowered my overhead in rent by 50 percent.

How many do you employ now?

Instead of five full-time staff, there are three people. We had to redistribute the workload, and I had to take on a lot of things myself. I have always diversified even before it was cool. I was involved in property management, which gave a steady cash flow, and now I teach, do expert-witness work and consult for some of my peers to open their own property management companies because many people have found that they needed to diversify. They thought it was a dirty business before and couldn’t believe I was involved in it, and now they are all in it. It is not just sales-driven out there now.

How many agents do you have?

I have six sales agents. This company had 35 sales agents at its peak. When I bought it, I would say we had nine, and half were part time.

How has your business done?

We were very profitable right out of the gate. When I purchased it in 2004, I paid a fair price, but a high price relative to the activity inherited. I knew it because I ran the business on a day-to-day basis. I thought I knew what I was getting into before the other shoe dropped – 2007 happened. And I had no real inkling because I didn’t deal with people who required or requested subprime mortgages. We were in the dark.

Have you ever thought about getting out of this business at some point?

I will always have an exit strategy. I love real estate. I am diversified. I was named as (Greater Las Vegas Association of Realtors’) instructor of the year last year, and I have only been teaching about a half-dozen years. I will be teaching, mediating and consulting and speaking. I found this is something I love, and people will pay me to do this. I don’t know if I will be required to leave the business I am in, but I will always be in pursuit of other things besides just managing a brokerage firm. Law school is something I am considering as well.

What would you do with a law degree?

Politics is a possibility as is being a judge or a practicing attorney. I have found there aren’t as many good real estate attorneys as I would like to see, and I have a wonderful background in real estate. I have options. And I still don’t know what I am going to do when I grow up. I love everything that I do and am excited about the possibilities ahead.

You were president of the Greater Las Vegas Association of Realtors in 2006 and now you are president of the Nevada Association of Realtors. What does it do?

When somebody applies for membership in the local, it is a trilogy. You belong to the local, the state and National Association of Realtors. You have three different memberships. At the local level, it is more operational, and at the state level, it is more policy-driven – government affairs and political advocates.

You just went to Washington. What was that about?

I was representing the Nevada Association of Realtors at the midyear legislative updates. I wore a few hats while I was there. I serve on the National Association of Realtors board of directors by virtue of my office as state president. I went to Capitol Hill with 65 of my closest friends from Nevada and most of whom are Realtor members and governmental affairs personnel. We spoke to the Nevada contingent, the senators and the members of Congress about some of the issues that are important to us as a national entity – 1.2 million strong.

What were some of the issues you brought up?

It had to do with hazard and flood insurance — to make sure we have expanded coverage. With the (Federal Housing Administration), we tried to impress upon it that we needed larger (loan) limits and some of the rules needed to be kept because it maintains safe and affordable mortgage coverage.

What about the federal tax credit that has expired?

We thanked them for their support. We know we are not going to get that tax credit expanded right away. We had one shot at it and had a second shot with the expansion. And now we know there are other areas that they need to support.

And what else?

What we did push that’s important to Nevada is the appraisal issue. We are trying to help our housing recover here because the appraisers and the appraisals are hindering our recovery.

How?

We have a shortage of inventory. We have record-low interest rates. We have valuations that are below replacement costs. We know that can’t continue forever because of the multiple offers that are occurring on just about every product that you can name out there. Typically, all of those things contribute to an increase in value, but because we are considered a declining market, we are stigmatized to some degree. And that is keeping our valuations low, and in some cases people are only selling to cash buyers. Some people have reached a level of frustration when they do have financing. (When appraisals come in below the agreed-upon price, consumers must come up with more cash as a down payment to make up the difference).

Is it hurting new-home sales more than existing or both?

I think it is hurting both sectors, but especially the new-home sector because (many builders) can’t go below replacement cost.

Why is this happening?

I think a lot of the banks — and I don’t want to be bank bashing because they are not all created equal — the bankers are aware that we are the No. 1 undervalued market in the country. And I believe they are doing to some degree or accepting some of these appraisals that they know are not reflective of the true market value. They are accepting it because it gives them additional equity in the transaction. That is a bold statement on my part and I realize that.

Where are these appraisers from?

Several of them are out of state, but federally there is a new law coming about that is mandating that people have some buy-in to the local area – that they have some local knowledge. New Mexico and Utah have passed laws where the appraisers have to be from the state themselves. We are going to use a (newly formed) work group to make some changes and if we have to make them legislatively as well, we are prepared to do so.

Do you want a law passed in Carson City?

If we need to, but we are doing a study first.

Is that the No. 1 problem?

I believe that it is based on what I stated earlier about record-low inventories, multiple offers, record-low valuations and then record-low interest rates. All of these things would normally encourage activity and valuations upward and that’s not happening.

What do you think are some of the big issues that need to be addressed in Carson City?

I believe the appraisal issue is bad. I also believe fraud is a problem, whether it is mortgage fraud or just people involved in loan modifications. There are consumers out there trying to get relief. That is a huge issue. Common-interest communities are always an issue and anything to do with property management. There are people trying to regulate it too tightly where it not making sense and would cause problems for the consumer in the end.

What do you think of the state’s loan-modification program enabling homeowners to sit down with banks before a home is foreclosed upon?

I love the fact that we have mediation. It is forcing the banks and consumers to come together face to face and talk about their specific concerns. It is making a difference. It is allowing people to get modifications where banks were holding a tight line, and it is forcing them to talk and work things out.

It is also providing hope. Hope is a big problem right now. There are people who feel because of the valuations in our area, they are asking why should they continue paying on a home that may never see the light of day. They feel that even though they can afford the mortgage or promised to pay the mortgage, what’s the difference? Why should they be the schmuck, if you will, paying this house at something valued up here when their neighbor bought the house down here. There is a lack of hope.

As for myself, I got involved in an option (adjustable-rate mortgage) in a house I am living in as an investment property. My responsible husband and me put 40 percent down and that 40 percent equity is gone. My husband is questioning why can’t we get a modification because we are part of the 7 percent where we are not Fannie Mae or Freddie Mac conforming. They won’t give us a modification, even on the interest rate. It is all I can do to keep my husband from pushing me in that direction, but I am the type of person who will get third job if necessary to continue with my promises. That’s how I am. We have six mortgages that are completely on time.

Are you worried about people walking away?

I am worried because I get calls from people asking for my advice as a leader and as somebody they know in the real estate profession that they trust. I go back and tell them there will be relief along the way and our values will come back. But again, real estate is supposed to be long term, and this is the cycle that we are in. We are trying to reverse the trend.

Do you think you can get help from the state to help with your agenda?

We are the largest trade organization in the state. I think this a timely opportunity to speak to our representatives and have their ear.

Does your association endorse?

We do endorse candidates. There are many races we are staying away from because we see a lot of competition in the primaries, and we may stay out of them completely. Our Realtors Nevada Political Action Committee makes those decisions. That committee runs autonomously from the leadership of the state association.

What about the U.S. Senate?

The National Association of Realtors endorsed Harry Reid, and I believe Nevada has, too. It was an interesting discussion and that was not a rubber stamp. We, typically, as an organization both nationally and on the state level and for local for that matter, we go with the people that have supported us – people who we call our friends who have helped us … Sen. Harry Reid and Sen. John Ensign have helped us tremendously. Many people could take a page out of our book because we do work across the aisle with Republicans and Democrats as long as they support our issues.

Are you going to be pushing for more federal involvement when it comes to helping facilitate short sales?

We are trying to work with the programs that are out there and to see if they truly are taking hold. We are seeing some inconsistencies with certain lending institutions, and in other cases we are seeing some positive signs. We believe no matter what happens to valuations, we will be in a short-sale environment for at least two to three years.

Are short sales a key to helping deal with foreclosures?

That is one of the alternatives to foreclosure. There are other alternatives such as converting it to a rental property. Sometimes, it’s just hanging on. Sometimes it’s a matter of hope. We have seen some scenarios that are not just people who were subprime who are going into the foreclosure route. It is people who have good credit who have thrown their hands in the air and feel that is their only option.

Where does the Las Vegas housing market stand right now?

I would say it is trying to find itself. In years past, we were fortunate that there were maybe one or two years that were not in a decline, but a plateau. Other than those two years and 1991 being one of them, we were in growth mode. Values were going up, maybe not astronomically, but I would say an average of 4 to 5 percent. That was something we could bank on. Since 2007, we have had to find the new normal. We are trying to identify issues for recovery and not have quick fixes, but also find solutions to some of these issues.

How will the market fare without the tax credit that expires June 30 on sales that were required to be signed by the end of April?

I know especially in the new-home sector it provided some real opportunities and some short-term solution to some sales. It also created a lot of excitement. What we did ask for in Washington because we are a short-sale marketplace — sometimes through no fault of the consumers — we asked for an extension for all of our members, and it was very well received. We understand that only those loans that are processed by April 30 would be eligible, but we asked for an extension to help those close.

Is the market in recovery?

It is trying to find itself. Just when we think we got something solved, then another issue surfaces. We are trying to figure it out and find a new normal.

Will sales go down with the expiration of the tax credit?

We believe interest rates are going to be stable. They may go up slightly, but we are not expecting a large increase in the interest rates because of the economy. The two factors that we think will make a difference on the number of sales is the amount of inventory and the valuations. Those two factors will set the tone for sales. The interest is there, and the demand is there.

Is that declining inventory posing to be a problem for the market?

It is a problem. It’s posing as a problem for those people who rely on financing. We think it may put us in a position where we were in the early 1980s when we saw a lot of seller financing or alternative financing arrangements.

Do you think more people who were holding off over the past couple of years will put their homes on the market now?

We have seen that recently people who have owned their homes prior to 2000 and are satisfied with the valuations through that time, they are not in a position where they have to sell short.

How will that affect the market?

It is helping our marketplace because it is giving people more options for purchasing.

Why isn’t there enough inventory?

We see some of the foreclosed homes left on the sidelines and in some cases the banks don’t want to show them on their books as homes that they are trying to get rid of or placed in a portfolio to market. They are also treating it as any other consumer where they may not want to sell them at such low valuations. In some cases, they are opting for short-term rentals and taking some of those foreclosures out of the marketplace for sale.

Are there any areas of the valley that are faring better when it comes to sales?

It is more of an economic situation. It has to do more with the median price. Homes around the median price or below seem to go quicker than those above the median. That has to do with affordability for the buyers who are out there.

Is real estate a good investment?

It is a great investment, but you have to look at your personal situation and see what is best for you. I think if we learned anything from history is that not everybody should be a homeowner and that was a hard lesson for a lot of the proponents such as myself who have always believed in the American dream of homeownership. You should never go for something you can’t afford. That is a lesson learned.

But what about buying now as an investor?

People are going to look at this time period as a real opportunity. Anytime you can buy homes and cash flow them for very little relative to the return on the investment, both residential and commercial, you are going to say, “My goodness, if I didn’t buy, I missed a real opportunity.” You are not going to be able for long to buy homes below replacement cost.

Do you see prices going up the rest of the year?

I don’t know if it will be the rest of the year, but I think from an economic standpoint and common-sense viewpoint they are going to have to rise.

What about 2011?

We hope that we have some of our issues addressed and some of the solutions already in place. That is a real possibility — that we are going to see a turnaround.

How are Realtors surviving this environment when their commissions have been cut in half?

I think at our peak statewide we had over 21,000 members, and now we are looking at around 16,000. We have lost Realtors and some of them have gone into other industries. As far as how people are surviving, the good news is the industry is not that expensive to enter compared with other ones. People don’t want to give up. An overwhelmingly number of us believes in what we do and enjoy it. And it helps to diversify like getting into property management.

Are you seeing a lot of interest out there in becoming a Realtor?

I can only speak for my local organization. New Realtors who are being inducted are a steady flow. I think people are optimistic, and we are not going to be in the bend of the cycle for long.

What do you say to someone who comes up to you now and says he wants to be a Realtor?

I am very honest as I always would be. Whether it is this time or three years ago, I tell them that to be a Realtor is a big responsibility. It is a privilege. You have to have enough reserves to know that you can be properly trained and learn so you can be an effective Realtor.

What is the one word that describes what Realtors need to be today?

I would say realistic. Be realistic with your expectations about the marketplace. Don’t view it as you wish it were, but view it as it is and get as much education and training as you possibly can. Get ahead of the curve. Get involved in technology and continue to keep your finger on the pulse, no matter what your age is.

The Legislature regularly wrestles with the question of whether Nevada’s tax base needs to be broadened so that more businesses contribute to state revenue. What has been the Realtors’ position on taxation reform in Nevada and should real estate agents, brokerages and developers contribute more in taxes?

Taxation in general — I don’t think any consumer, let alone a Realtor, would be in favor of any increase in taxes. We are very concerned about how the budget is going to work out, and we want to have a seat at the table. And we do understand that compromise is necessary. We still don’t know what next year’s plank is.

Another perennial big issue is economic diversification. Do the Realtors feel Nevada should maintain its low tax rate for most businesses, or should taxes go up and be broadened so we have better schools and government services that will make Nevada more attractive to companies considering moving here?

I know some of the legislators are talking about a zero-based budget because they think the structure may need to be revamped. Before we go talk about increasing revenue or cutting programs, I think that might be a good direction to go in. But that is a personal viewpoint and not reflective of the Nevada Association of Realtors. We think jobs are always the key and raising taxes on businesses, especially small businesses, may not be the answer.

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