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How Not to Make An Offer In Today’s Market

November 17, 2009 By Leave a Comment

SSRadio_-_crying_girlThe market is surely not what is used to be despite Austin’s general resilience to national economic turbulence.  Buyers are out for amazing deals and expecting sellers to give the world.  A deal requires a happy medium from both buyer & seller.

The Anatomy of a Healthy Real Estate Transaction

  • 2 parties who are both getting what they need
  • 2 parties who can understand what the other is going through
  • realistic initial offer price & terms
  • reasonable earnest money
  • reasonable time frames for both parties

Step 1: Do you want this house or the best deal?
Why are you in the market?  Are you looking for the right house or the best deal?  I’m finding that those looking for only the best deal are coming up short in the end.  They’ve waited for the bottom of the market which is long gone, they’ve waited for rates to take yet another dive which they won’t, and now they’re left empty-handed.
• Don’t wait for something that isn’t there.  Don’t forget to look for a quality home that fits your needs even if it’s not the cheapest one out there.
• Do get off the fence now if you are looking to move, but think about what you really want in a house and look for the best home for you, not the best deal on paper.

Step 2: You’ve found the house, but do you really want the best price?
Because barging in on an already stressed seller with a low offer puts them on the defense.
Make sure that your offer is based on good SOLD comparisons and be realistic.  Just being nice to a seller in a sea of negativity will get you a long way.  A defensive seller will come back with a higher counter-offer than a friendly one.  Your seller needs a reasonable price sell as well as reasonable terms (earnest money, perhaps a lease-back).  Threat your offer as a give & take; find out what is important to the seller based on their situation and find the medium with your needs.
Don’t base your offer on overpriced homes that haven’t sold, what the seller is making on the deal, what the seller’s loan amount is, or anything other than reasonable facts about the market and the property.
Do put yourself in your seller’s shoes & make a reasonable offer.  Who would you give a better deal to, a friend or a bully?  Be realistic, sellers are a potential partner to your transaction, not your enemy.

Step 3: Keep it together, or else!
Inspections can be the death of healthy transactions.  These days so can loans.  Keep up with the progress of repairs as well as your loan.  Excitement is natural, but keep it under check and out of your transaction.  Use your agent as your negotiator and make sure yours can keep a level head.  Again, be sure to put yourself in the seller’s shoes.  How would you really feel if a buyer asked for that?  How would you really feel if your loan delayed their sale (and in effect, your seller’s new purchase).
Don’t panic!  Calm heads find the best solutions and a creative idea may be needed.
Do prioritize safety issues rather than cosmetic ones for repairs and keep in mind the age of the home.  Make sure your lender is on track, they are likely overworked with refinances and tax incentive transactions.

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Study Estimates $8,000 Tax Credit Added 357,000 First-Time Buyers

October 5, 2009 By Leave a Comment

Study Estimates Tax Credit Added 357,000 First-Time Buyers

unclesamBy AUSTIN KILGORE
September 22, 2009 10:16 AM CST

[Update 1: Clarifies location of Campbell Communications]

A new study estimates the $8,000 first-time homebuyer federal tax credit resulted in 357,000 additional home sales so far in 2009.

The study, released by Campbell Surveys, a division of Washington, DC-based marketing and public relations firm Campbell Communications, conducted surveys of real estate agents and calculated the figure by comparing the rate of first-time buyers during the first two months of the year both before and after the tax credit was instituted.

The monthly rate of first-time buyers increased from 32% in January and February to 43% every other month of the year except July, when it was 42%.

Click here to continue reading

First time home buyers really have it make this year, especially in Austin.  Historically, the current “even market” is the closest we’ve had to a buyer’s market in Austin.  Pair great deals (not half-price deals like Las Vegas & Pheonix, but great deals for Austin real estate) with $8,000 free from Uncle Sam then add amazingly low interest rates beginning in the 4%-5% range… if there is anyone out there who has been considering buying their first home in Austin, now is definitely the time to buy.

I’m happy to go over the numbers with anyone to see how much money you are really saving.  Here’s a rough idea:

  • 5-10% off the price of the home of what we would have seen if homes had continued to appreciate at their pre-2008 rate coupled with the motivations of frustrated sellers
  • $8000 from Uncle Sam that can be used toward your downpayment in most cases (you no longer need to save as much)
  • Interest rates in the 4%+ range instead of the early 2000′s or predicted 2010 6%+ range means lower monthly mortgage payments which can be $200 or more each month, or $2400 for each year you spend in the home

What you need:

  • A decent credit score (sub-prime/high-risk mortgages are a thing of the past)
  • Some cash for inspections & earnest money
  • An income that can support mortgage payments – lenders prefer that your mortgage be less than 28% of your monthly income and total payments (mortgage + car, etc) to be leww than 35% of your monthly income
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$8000 First Time Homebuyer Credit Expires Soon

August 26, 2009 By 2 Comments

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If you’ve been wanting to take advantage of the $8000 First Time Homebuyer Tax Credit don’t put it off much longer!  You must use this credit by December 1st, but don’t wait until the last minute because you must CLOSE on your new home by December 1st!

Here’s the basics, you can read more in-depth details here.

  • “First Time Home Buyers” have never owned a home or have not owned a home for the past three years. Some previous homeowners will qualify.  If you are married, you must both qualify.
  • You can now use the $8,000 credit in the down-payment. This was added to this stimulus package after the fact.

Here’s why you need to act soon:
The typical real estate transaction used to take 30 days.  Used to.  We are seeing clean transactions, with over 20% cash down payments and credit scores over 800, taking 60-90 days.  I recommend allowing 3 months for first-time homebuyers if you are depending on the $8,000 credit!

And what does three months look like?
Contact a Realtor® NOW to get your finances
in order because you need to get shopping soon!

september 2009 October 2009 Picture 5

I would love to help you in the Austin area or help you find a great agent (not just any agent) in your area through my networks!

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The New Stimulous 2009 Federal Housing Tax Credit

February 27, 2009 By 2 Comments

Rumors aren’t facts and you need facts.  The National Assocation of Home Buiders wants to help you understand the new legislation.

obama housing stimulus plan

Here are the basics of the up to $8,000 tax credit for first-time home buyers:

  • Only “first time home buyers” are eligible, but if you or your spouse haven’t owned a home (“principal residence”) in at least three years, you now re-qualify as a “first time buyer”.
  • If you co-purchase with another individual, such as a parent, only your eligibility matters.
  • You can purchase a new or resale home, but you must purchase the home as your principal residence (where you live).
  • You do not have to repay this tax credit, it is not a loan like the previous legislation!
  • You must purchase a home on/after January 1, 2009 and before December 1, 2009.  Purchase your new home this year January – November.  Don’t wait until 2010 or even December 2009!  2008 home purchases are not eligible, but may be eligible for 2008 credits/deductions.  You can use your 2009 purchase on your 2008 taxes.
  • Your tax credit is 10% of the cost of the home, up to $8,000.  If you purchase a $200,000 home, your tax credit is $8,000.  If you purchase a $60,000 home, your tax credit is $6,000.
  • To qualify for the full credit, a single person must make no more that $75,000 and a married couple must make no more than $150,000.  Partial credits are available if you earn beyond this limit.  If you earn beyond this limit, I can help you determine your potential credit.
  • Claim your credit on IRS form 5405 & Line 60 of your 1040 when you file your 2009 taxes early in 2010 or when you file your 2008 taxes this year (this can be used on your 2008 taxes!).
  • If you owe less in taxes than your credit amount, the IRS will send you a refund check.
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Keep It Simple

July 30, 2008 By Leave a Comment

Keeping Austin’s Real Estate Simple

“There seems to be some perverse human characteristic that likes to make easy things difficult.”

Warren Buffett

keep austin's real estate simpleI was reading some Warren Buffett quotes today and this one caught my latest thoughts on the world beautifully.  It is always with the best of intentions that we inadvertently outsmart ourselves, leaving us to feel the price in the end.  With a heavy science background, I always try to keep the KISS principle in mind.  ‘To paraphrase, The simplest solution is usually the best.’

How do we apply the KISS principle to buying, selling, and understanding real estate?

  • Hire a professional if it’s not your dig.  If you’re an accountant, do your own taxes, it is a good use of your time.  If you are an accountant who needs plumbing work done, hire a plumber.  If you are an accountant who needs some real estate work done, hire a real estate agent.
  • Sellers, clear your clutter.  It may but be clutter too you, but KISS your property for buyers.  They are busy looking at many, many properties (too many if they have an inexperienced agent).
  • Sellers, clean, clean, clean!  KISS your property by cleaning way more than you usually do, even the corners of your ceilings, baseboards, and doors.
  • Buyers, make a straight forward offer.  KISS you contract by keeping confusing terms out of it.  If you want to offer $465,000 for a home listed for $475,000, don’t offer $475,000 with the sellers paying your closing costs and for extensive repairs.  Just offer $465,000.  Your offer is much more likely to be taken, and your closing will run much more smoothly.
  • Sellers, so your home is in sale-ready condition.  Make a routine to make your home both functional and show-ready.  Close the curtains and get out the kitchen utensils or toiletries at night, but take 5 minutes in the morning to put these items back to their show-ready spot.  Don’t make it hard on yourself, find convenient places that are out of sight for commonly-used items.
  • Buyers, don’t let your agent show you 20 homes in a week or two.  Sit down with your agent, make them make the phone calls, do the previewing, and select your 5 favorites based on your agent’s preview, descriptions, and photos.  If you are shopping in more than one area, pick your 2-3 favorites for each area.
  • Agents, don’t waste so much time and money on what the vendors tell you that you need.  Each agent works differently and will attract different clients.  Focus on your strengths and hire only help for tasks that you can’t or do not like to do — and only those that you truly need.  Not just the ones that might make you look good but that you cannot follow through on.  With my background, I focus on internet marketing and graphic design which leads me to primarily sellers with the same anal-retentive attention to detail.

Keep it simple and enjoy the rest of your week!

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Homeowners & Renters See The World Through Different Lenses

June 4, 2008 By Leave a Comment

Renters have a different view of real estate economy than homeowners.


Source: PEW Research Center

It seems that renters are much more pessimistic about rising home prices. I’m not sure of the participants in this study were planning on buying a home in the near future, but this study does show something interesting about how you see the market when you own property versus when your at the mercy of a landlord.

More renters believe home prices are rising.

Are they pessimistic about their buying power? They may be feeling left out of the prosperity homeowners found during the boom years leading up to our current conditions.

Renters aren’t worried about the housing economy.

Renters expect prices to climb more than homeowners do. So why aren’t they buying? First-time home-buyers are seeing harder times with mortgage woes. It takes some patience and hard work to get a home loan, and perhaps renters aren’t willing to go through with it.

Americans are not optimistic about the economy.


Source: PEW Research Center

Yet this study is extremely interesting. We saw some of the greatest appreciations in Austin real estate in 2006. Many people sold out to collect their equity while late-comers created a building and flipping surge, especially in central Austin real estate. 2007 was much slower than 2006, especially in the last two quarters. Yet, the number of those who believe the economy is in poor shape has not increased as dramatically as I would expect. I think this shows how pessimistic people are about the economy anyway. We live in a fairly prosperous country and Austin has a steady growth rate which leads to steady real estate prices, yet I would expect similar numbers on a local study based on the fears and questions I receive.

Is this thing on?

I still wonder if anyone can actually hear me. Don’t be afraid to buy. We are currently in a RARE buyer’s market here in the Austin real estate market and at the same time, interest rates are at HISTORIC lows. I’m shopping for real estate in Austin now so don’t blame me if you don’t get in on this buyer’s market! Get your head out of that national news paper, turn off CNN, and get real. We’ve seen studies showing that people think the bottom is falling out of the American economy for years and it hasn’t. In fact, the primary reason for the housing slowdown and the buyer’s market here in Austin is the attitudes of people, not actual economic fact. Now that sellers are getting real, take a chance and think about investing in Austin’s real estate market. I’ll show you how!

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Sellers DETACH!

May 19, 2008 By Leave a Comment

Although Austin isn’t seeing the horror of many other markets (like southern California), the nervousness and hesitation of Austin’s buyers still has us in a buyer’s market.  So in a buyer’s market, what should you do differently, as a seller?

One of the best things a seller can do in any market is detach from your house completely.  This is your most important strategy in a buyer’s market as well.  We know you have more than money invested in your house.  It’s been home to you in the best and worst of times, and you’ve worked hard to improve it and make it the best that it can be.  But in these times, you need to be objective and detach from the house to make it not your home, but a place someone else wants to live.

Don’t take it personally.  Any offer is good.  If you get an offer, it means you beat out your neighbors no matter how low or complicated it may be.  You may not be able to accept the offer, especially if it has a ton of strings attached, but don’t take it personally if you get a low offer.  The buyers chose your house over all the others — keep that in mind.  It could be low for a number of reasons, but it’s not because they don’t think the house is great.  Sure, they will likely make a great deal of changes, but not until it’s their home.  Many buyers who have previously been priced out of the home of their dreams are fishing for a great deal from someone who needs to move on.  You may be in this situation or you may not be, but always remember, any offer is a good offer.  Even low offers open a dialog of negotiations that can result in a sale.  You can always have your agent draft a counteroffer.

Don’t over-price thinking that it leaves you room to negotiate.  Over-pricing puts your house in a pool with other houses that are likely larger with more features so which house in the price range would you pick?  Always put yourself in the buyer’s shoes.  Sellers who over-price end up in a cycle of reductions to actually get their homes sold several headaches later.  Save yourself the stress, it’s worth it.  Price reasonably and competitively to get your house sold more quickly than the competition.  You will be making fewer payments which saves you money even if you don’t actually see the savings.

Be patient with your buyers.  Loans are tough right now and under-writers are struggling to approve many who could have received a loan for almost nothing down not too long ago.  Even pre-approved buyers can be sent through seemingly endless waits for final approval.  Your buyers want to buy a house; it’s an emotional time for them as well.  Don’t panic over financing.  Wait it out.  The deal may not work out, but financing is really out of your control as a seller.

Sellers in Austin may have had it easy a few years ago, but times have changed.  You can still sell your home if you get your house completely ready for sale, price it competitively, detach emotionally, and don’t take it all personally.

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Is Your Realtor®/Real Estate Agent Screwing You?

April 22, 2008 By Leave a Comment

If they are not giving you all the facts, YES!  A big part of the concept of our industry is cooperation.  If I have a seller, I want to cooperate with an agent with a buyer for my seller’s property since most buyers are represented.  Likewise, if I represent a buyer, I need the cooperation of the seller’s agent.  I represent my client’s best interests, and the other agent should be representing his or her client’s best interests, but I still find that many are really only after their own interests.  So what’s the point?

You should hire a Realtor® to represent you and your best interest using their expertise in the real estate industry and in real estate transactions.  Sure, you call buy or sell a house yourself, but Realtor®s are here because most people don’t have the time or energy to invest in learning how to market or search for properties, writing and negotiating contracts, how escrow works, how to do a title search, researching market trends.  It seriously is a great time and energy commitment.  Since most people have day jobs, hiring a Realtor® is generally worth it since their knowledge typically brings you 17% more for the sale of your house (easily offsetting their fee).

So what’s up with the market these days?  A Real Estate Agent’s job just got a whole lot tougher.  Everyone and their mamma wanted to buy, sell, flip and invest in 2005 & 2006 so when national news hit that we are in a slump coupled with this election year, naturally things in the real estate market slowed.  Those of us in the industry are battling misconceptions from national news (Austin still has a strong economy with a growth rate of at least 4%/year), fears of paying too much, buyers waiting for exactly the right moment to try to get the best deal, and now other Realtor®s who are not cooperating.

If your Realtor® isn’t giving you all of the information including what to expect from each step in a transaction, RUN, don’t walk to interview other agents to find one with the knowledge you need to stay ahead of the game.  The real estate agents of the 90′s are a dying race now that over 80% of homebuyers start their search online.  We are not the only ones with the information now that the internet is around.  What we do have is experience of transaction after transaction and creativity from working in this industry day in and day out.  Your Realtor® should really be a tougher, stronger negotiating, more experienced in real estate transactions version of yourself.  If you’re a technology lover, hire a technology-loving Realtor® (that’s me).  If you are everyone’s best friend, hire a Realtor® that’s everyone’s best friend (not me).

Just DON’T hire someone who will leave you high and dry, liable to a law suit, and without getting the best deal.  As predominately a seller’s agent, I am always looking for the cooperation of a buyer’s agent to bring me qualified buyers.  That means buyers who are a) actually committed to a home purchase, b) financially qualified to buy the home they are looking at, and c) trusting enough of their agent to let them see the transaction through.

So don’t hire an agent just because they are your cousin’s best friend’s boyfriend or your mother’s boss’s daughter.  Hire them because they are the real estate expert version of yourself, someone you can trust, and someone with all the answers.

These are tough times in the Real Estate Industry, but I believe in survival of the fittest.  This is where I need the help of you, the consumer.  Don’t hire that bad agent and they will find a job that they are more suited for.  Otherwise, you are wasting your own time and the time of all of those who are working hard to make these transactions happen.  Find a good, honest agent and all real estate transactions will run more smoothly with better informed consumers making better deals.

My sellers deserve the best, and I will continue to advise them against screwy offers that will tie up their property, hopes, and time — and only when they are motivated to sell.  My buyers deserve the best, and I will only show them properties they are qualified to buy when they are ready to buy.

If you hated your last real estate transaction, don’t give me the opportunity to say “I told you so” next time!  And I know some of you will know who I’m taking about.

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Most Expensive Home Sale for 2008 (so far!)

April 14, 2008 By Leave a Comment

I’m at it with my numbers again! While I was logged into MLS to update my listings, I decided to do a quick search for the most expensive home sale for 2008 to date (as of 4/14/2008). With so much unfounded real estate panic floating around, wouldn’t the rich and famous be weary of making a home purchase right now? Of course not! Those in the know are taking full advantage of this buyer’s market before it turns. And at the rising rate of multiple offers that my office has seen this year, another seller’s market could be just around the corner. Of course, I still recommend buying if you need to move closer to work or find a larger home for your growing family, not as an investor unless you are really up for it. Like buying stocks, real estate goes up and down and it’s best to be in it for the long hall.

Anyway, the most expensive home sold so far this year was listed at $3,800,000 in Northwest Travis County. The sales price was under asking, but I don’t believe in revealing those details! This home was one of two homes to sell for over $3 million so far this year.

5 homes have sold for $2,000,000 to 2,999,999 and 37 have sold from $1,000,000 to $1,999,999 this year alone in the 4.5 months we’ve had so far.

According to my ABOR MLS search, 4858 homes total have sold so far this year by Austin’s Realtors.

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Where to watch out for bad foundations

April 10, 2008 By Leave a Comment

CenTex Foundation Repair has released data of where they have been hired to repair foundations in Austin.  These areas may be some to watch out for when buying a new home.  Of course, always hire an inspector before closing!

CenTex Foundation Repair’s Top 20 Zip Codes List:

NOTE: Inspections from FY 2007

North Austin
78758   53 homes
78759   41 homes

Central Austin
78702   98 homes
78703   83 homes
78704   127 homes
78705   39 homes
78751   82 homes
78753   56 homes
78757   57 homes

East Austin
78722   52 homes
78723   131 homes
78724   42 homes

South Austin
78744   62 homes
78745   174 homes

West Austin
78746   41 homes

Outside of Austin
78610   38 homes
78660   84 homes
78664   152 homes
78666   62 homes

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