Selling Over the Holiday Season

Historically, December is a better month to sell than the rest of the Fall or Winter, which is generally considered part of the "slower" season in real estate. There are a few reasons why this is the case and why it might be a good time to consider selling your house around the holidays. We also have a few tips and answer some often asked questions that you should need to know about if you are planning of selling during this time. And be sure to check out Patrick on Fox 7 below as he shares his tips for selling during the holidays.

Serious Buyers Only

This is one of the best parts about selling in the "slower" season - you're really only going to attract serious buyers. While this can seem like a bad thing it is far from it. This means that the buyers you get are extremely motivated to move on a house and they aren't as finicky and flaky as some spring buyers can be. Beyond this there are some specifics that make December a great time to sell if you are willing to play it right. 

December Buyers are usually some combination of this:

• People that are relocating for jobs. There are lots of people that are relocating around this time of year and have a strong need to buy. They are usually under a time constraint and are looking to buy fast. 
• People with a little extra cash to spend. This is the time of the holiday bonus; large cash bonuses get paid out when companies do well and this usually happens around the holidays. This means that there is a good chance that buyers have a little extra cash to use for that downpayment. 
• People with time off. In December you have 2 weeks of downtime that you just don’t get any other time of the year. That means people who are looking to buy have a larger window of time to look and want to visit and see more houses.

Low Supply 

December is historically one of the months with the lowest number of houses on the market. In December of 2015 there were just under 8,000 active listings on the market in Austin. For the months of May through September there was over 11,000 listings. That is 3000 less homes available to buyers in December than in the Spring. What this means is that there isn't a lot of competition from other sellers. Additionally as we detailed above the buyers are more motivated during this time of year, this can lead to low supply and high demand - which is always beneficial to the seller. 

The Election

Now these reasons are general to most Decembers, however its important to remember that some effects are specific to certain years. For this December we just went through a very contentious election that had a lot of people on either side concerned. And traditionally when people are concerned about jobs or the future they are less likely to spend money, especially when it comes to something like a house. Now that the election is over we can expect a bit of a bounce back and some people who were thinking about buying in November but didn't, start their search up again. 

Best practices for marketing/selling:

• Should I/should I not put up holiday decorations?

  • Yes, but keep it tasteful, don’t go overboard. It can create an emotional connection for the buyer as well. Still want to declutter/depersonalize.

•  What do I do if someone wants to see my house on Christmas?

  • Yes. Only a very motivated buyer wants to see homes on a National holiday.  

• Pictures of the home during winter should be done sooner than later before the leaves change and before decorations go up. 

Love It Or List It? A BIRDHOME Recap!

SHOULD I LOVE IT OR LIST IT?

We had the joy of participating in an amazing event last night with the incredible Amity Worrel & Co. that we just had to share with you! Over the past few month they have been putting on their Design 101 events to help share professional advice on interior design, architecture, and real estate amongst other things. We were ask to contribute to their Love It or List It event last night and it went so well that we decided we need to share some of the knowledge and advice from the event with you! So read our recap below and be sure to check out the three amazing ladies that we had the pleasure of speaking with last night: Amity Worrel, Dianne Kett, and Maureen Hodges. They are inspirations to us and we can't recommend them enough!

1. Make a list of what you love and what you don't love!

Even if you think you already know you want to renovate your house, its always good to go through and make a list of everything you love and don't love just to make sure you don't miss anything. And be sure to include things beyond just what is in the house itself, consider the neighborhood, neighbors, commute, and location as well! This will help you narrow down your list to the things you can change versus the things you can't and you can decide if you can just renovate or if you need to sell and something different.  

2. Talk to an interior designer and architect

Once you have your list of what you love and don't love you can talk to an interior designer and/or an architect to get their opinion on budget and feasibility. A good general rule is that if you are just changing the setup of a room its okay just to reach out to an interior designer, but once you start talking about moving walls, changes plumbing or electrical, or adding on the house you'll need the knowledge and expertise of an architect as well. And any good interior designer will help you find one that you can trust! So make sure to reach out to them early and often - they are always will to help and get you moving in the right direction.  

3. Decide - Love it or list it!

Now that you've talked to an interior designer and an architect its time to make that decision. Are you going to love it or are you going to list it.  Maybe the architect comes to you and tells you that you can't add a second story or there is a heritage oak preventing you from extending that porch. Or maybe the budget and time just doesn't work for you. Or perhaps everything lines up perfectly and you're ready to move forward with making your house into a dream home. Either way - you'll be confident that you've got all the information to make the right decision for you!

4. Run the numbers

Either way though, once you've decided on what you're going to do make sure to reach out to a trusted real estate professional. Because a good agent will help you run the numbers. As we tell people all the time, buying or selling your house is a business transaction so its important to treat it like one. We can provide a valuation of your house currently and then what it would be after you renovate. If you are going to sell, we can help you through the process to make sure you can get top market value for your house. So don't hesitate to reach out to us, we understand that while this can be a very emotional moment it is also a very important financial one as well. 

5. Think Like a Buyer

So once you've decided to sell and interviewed and hired your real estate agent its important that the goal of selling your house becomes the priority. And the best way to do this is to take it from being your home to becoming a house that someone else can turn into their home. We always recommend to our clients to run through our Seller's Checklist and start to think like a buyer. The easiest way to do this is to have a stager come in and make your house appeal to potential buyers, they can remove the emotion from the process of selling your house and make it so much easier for a buyer to imagine and dream of living there. This is such an important part of selling a house that we started our own staging company!

We hope this helped you as you consider remodeling or selling your house and if you have any questions please don't hesitate to reach out to us or the wonderful women that spoke (we'd be happy to connect you as well). And if you're interested in attending the next Design 101 class be sure to sign up to be on Amity's mailing list!

Is It Time To Sell Your Austin Investment Property?

6 Reasons Why It Might Be Time To Sell That Investment Property

Predicting the real estate market is like the predicting the weather… you have a lot of facts, historical data and experts giving advice, but sometimes it just rains without any warning. So take my perspective with a grain of salt.

I am voracious consumer of all information real estate. I love the facts, figures and data behind all of it. I like taking into consideration the most minor neighborhood intricacies--like why a house two blocks north sold for $50,000 more than the same house a few blocks south. I also like to look at world events, like #Brexit to understand how that can potentially affect housing values in Austin.

The Austin Housing Market

Austin’s housing market is stronger than ever, demand still consistently outpaces supply. However, if you were around in 2007, you know as well as I, that it can come to a screeching halt within a few days, and there are more factors that contribute to that than just the state of the national economy! 

For example, let's take a look at the property around Lake Travis. We were in a 5 year drought and there were experts predicting that the lake might run out of water completely. Activist groups sprung up, water was shipped in to some neighborhoods. The lake levels were the lowest in history and housing prices were bottoming out. Houses were selling for an average of 5% below asking price when the rest of Austin was averaging less than 1% below asking.  And then, just a few rainstorms later, the lake was 120% of capacity and we had the complete opposite problem. Coincidentally, homes sales are up 44% and median prices are up almost 25% year-over-year for Lake Travis waterfront homes.  

I am singling out real estate investors specifically with this information only because most people need to either buy or sell a home no matter what market we are in. If they get relocated for their job, get a promotion, need to downsize or finally have saved enough to purchase a home--most people just move and deal with the hand they are dealt.

Real estate investors, like myself, depending on their investment strategy, are taking in factors like rental rates, cashflow, ROI, taxes implications etc. And if you are a real estate investor who purchased in 2012 or before, it might be time to sell to get the highest return out of the property.

Why Sell Now?

1. Home prices are still on the rise, but they are not going up as fast as in the past.

• This is the lowest May (2015) over May (2016) growth in median home prices in 6 years, only going up 1.39%.
• The trend so far this year is showing that prices are only going up about 5% overall this year, when they went up double digits the previous 3 years. See chart below. 

• We will most likely continue to see modest gains in home prices over the next few years, but the huge upswing has happened already with our market going up 40% over the last 5 years.  

2. Housing inventory is still consistently low at 2.4 month’s supply of homes.

• There is literally nothing out there to buy. Multiple offers, record setting prices and favorable terms for the seller are still happening everyday. This is the “high”, when people utter the infamous phrase, “buy low, sell high”.
• The chart below details out how the housing inventory has shifted from a buyer’s market in 2010, to a seller’s market within a 12-14 month period. Seasonally, the housing supply tends to shrink into December and January. A 2 month supply in February this year represents the most extreme seller’s market we have experience in over 10 years.

Months of Inventory is the amount of time it would take to sell all current listings at the current sales pace if no new listings became available. It is generally determined that 0-4 months is a “Seller’s Market”, 5-7 months is a “Balanced Market”, and 8-12 or more is a “Buyer’s Market”

 

3. Interest rates are at a 5 year low--30 year is around 3.5%.

• Why are low interest rates great for investors? It means your average homebuyer can afford more home. Coincidentally, you can sell your property for more money. Once interest rates start creeping up again, it will start narrowing the potential buyer field. The rule of thumb we use is that for every point interest rates go up (i.e. from 3.5% to 4.5%), this reduces the buyer’s price range by $25,000.

4. First-time homebuyers, who represent 32% of the homebuying population, are getting squeezed out of the market.

• The average age of first time homebuyers is 41 years old. I could not find any specific data to back up my next opinion, but 41 sounds really old to being buying a first home. Maybe I’m the exception to the rule, but I bought my first home at 25. This says to me that younger people with lower incomes cannot afford to get into our market. They are delaying their entry into our market and thus, narrowing the potential buyer pool. If we continue this way and incomes don’t go up in alignment with inflation at the very least, we will lose ⅓ of the buyers in the market.

5. There are many national and world issues that can have a ripple effect on our housing market.

• There is a very tumultuous election coming up in 4 months. Most economists are predicting that no matter who wins, the housing market will experience some sort of a change.
• We still haven’t seen how Brexit will affect America long term. Right now, it has only been positive. However, the official exit of United Kingdom from the EU has not actually happened yet. And Scotland is now even discussing leaving the UK.
• China, who played a large part in bailing America out when the last housing bubble burst, is now having their own housing bubble.  
• Something not being discussed AT ALL is how college student loan debt will affect the housing market. The average college student graduates with close to $38k in debt. With $1.3 trillion in student loan debt spread across 43 million Americans, this could have a major long term effect. There are several interesting articles arguing both sides of the issue here, here, here, here and here.

6. Appraisal reviews

• This is the latest in the Dodd-Frank laws designed to protect consumers in the market. This is something that most Realtors are NOT aware is happening. The short of it is this, if the home loan is being sold on the secondary market and complying with Fannie Mae’s guidelines--which 90% of loans are--then they are subject to review if there is any irregularity in the appraiser’s report. This extra layer of bureaucracy and oversight is slowing down the market AND in the majority of cases I’ve dealt with this, the values are coming back lower after the review.
• This single-handedly might explain why prices aren’t going up nearly as fast they were 12-24 months ago. This can be seen two ways. (1) Good-- to stabilize and pace the growth in the market. (2) Bad-- because it artificially regulates the free market capitalism of the real estate market.  Since this is relatively new, the longterm effects will remain to be seen. For further reading on the topic, see the best articles here and here.

In summary, my argument is that we know what market we are in right now. The cyclical and seasonal nature of real estate means we will be experiencing a slow down in the next 3-5 years, possibly sooner. There is no way around it. This market we are in is a great bird in the hand that has produced stellar returns for a lot of homeowners--both owner-occupants and investors. It might possibly be time to cash in on the returns and sell your Austin investment property.  Reach out to us below or give us a call at (512) 991-4801 and we'll be happy to help you navigate the waters of the Austin market. 

Selling Your Home: Getting More Than An Offer

Everyone knows that Austin is a seller's market right now. You all have heard some variation of the following story….

“We put our home on the market, had 8 offers in 2 days and sold it for $12,000 over our asking price!”

That’s exciting, right? And honestly, in this market we experiencing right now, this isn’t hard for any Realtor in our market to accomplish. The market can do a lot of the work if your goal is ONLY to get an offer. If your goal is to get it SOLD, then keep reading!

HOMES NOT STAYING SOLD

A new common trend that a lot of people ARE NOT talking about is having their home come back on the market after receiving multiple offers and having a bidding war.

Let’s first look at the statistics and see how common this trend is…

According to the Austin Board of Realtors, in the last week 465 homes have gone under contract in Austin. During the same period, 93 homes have gone under contract and come back on the market. That is roughly 1 in 5 homes not staying sold after initially going under contract!

From my experience, once your seller has picked an offer, most of the other buyers go away. They move on to other properties, their initial enthusiasm has waned and/or they rethink their initial bid. Losing out on this initial “herd mentality” can really suck the wind out of a home sale/sail. See what I did there…

The top reasons buyer’s back out of contract (in no particular order):

1. - They are not financially qualified to purchase the home
2. - They are having regrets about paying so much for the home after bidding it up
3. - The buyer and seller cannot agree on repairs during negotiations.
4. - The home not appraising for the agreed upon price AND the buyer and seller not agreeing on how to proceed forward
5. - Miscellaneous reasons: lost their job, lost their minds, were crazy to begin with, divorce, natural disasters, etc...

The sad reality is that most, if not all of these issues could have been easily avoided. The worst part is that, if the buyer AND the seller would have hired a more qualified Realtor to represent them, reasons #1-4 could have been avoided. 

If you want it to stay sold AND sell for top dollar, there are a few things you need to be thinking about.

 

#1 - Qualify the Offer

This is the simplest and first step you should take when receiving offers.

• Make sure the terms are fair and reasonable for all parties.

• Make sure the contract is completly and properly filled out. (You can’t imagine how many contracts I see with major mistake that can cost buyers and/or sellers a lot of money)

• Run a Seller Net Sheet on each offer to help compare offers and see which one will bring you the highest net proceeds at the completion of the sale. (Sometimes it is not always the highest offer that nets you the most, there a lot of other factors to consider)

• If any of the terms aren’t clear, call the buyer or buyer’s agent for clarification to ensure you know what you are accepting, countering or rejecting.

#2 - Qualify the BUYER

Let’s start with the premise that all buyers are emotionally drained, crazed lunatics who’ve made ten offers on ten houses only to be rejected. They are beaten down, kicked around and will do just about anything to get a house. We will call this buyer "BOMB BUYER", ready to explode at any point.

What we are trying to ensure is that your buyer IS NOT a bomb buyer. That they have thought the purchase through and are in a good state of mind to buy. It really helps when a cover letter is attached to the offer telling us a little more about the buyer. It is also prudent for a listing agent to have a conversation with a buyer’s agent. It’s amazing how often this does not happen and how amazing having a five minute conversation can get everyone on the same page. Texting/emailing does NOT count as a conversation.

Questions to ask are:

• How many offers have they made?
• How long have they been looking?
• Have they walked away from any purchases after going under contract?
• Are they first time homebuyers?

This line of questioning should get a good conversation going and help you understand how likely they are to continue forward if you decide to accept their offer.

#3 Qualify the Buyer’s Lender

This is another easy phone call that a good Realtor will make on behalf of the seller. Having them have a quick conversation will help give you a better understanding of how strong of a borrow the buyer is. It is also prudent to find out if the lender qualified them based on a conversation or they actually collected pay stubs, ran credit, etc.

Some good tips for working with lenders are:

• Are they local? Can you physically go visit them?
• Do they have a direct phone number you can call to reach them?
• Do they have an in-house loan processor that they can access quickly and easily?
• What is their track record for closing on time?
• Have their appraisers been coming up short on appraised values? Are their appraisers vetted and scrutinized regularly.
• Do they do a lot of the type of loans they are qualifying the buyer for? I.e. FHA, VA, Jumbo loans, condos loans, 1st and 2nd mortgages, etc.

If I am raising more questions than answering them with the above line of questioning, feel free to reach out to me so we can dig into why these questions are important.

Buyer tip: In a competitive market, choosing a lender based on interest rates and closing costs is not always the best idea. You need the lender who will go the extra mile, ensure you will close on time and make you look good to a seller. It’s about winning in this market, not about getting the best deal.

#4 Qualify Your Buyer’s Realtor

This is another area where you need to know you can trust the other party to perform and see the purchase all the way to closing. Believe it or not, there are a lot of Realtors out there who seem to enjoy having contracts terminate. They create emotional drama instead of being the calm voice of reason in the transaction.

Thousands of real estate transactions close everyday. Everyone agrees to the terms, all parties are happy and it is a win-win for both sides. There is no reason that the sale of your home shouldn’t happen just like clockwork as long as everyone is doing their job. Remember, clear and consistent communication by all parties involved solves 99% of problems that arise.

Make sure the buyer is represented by an agent who has experience (or is being mentored by an agent with experience), make sure they understand the type of property their client is buying and how the process works for the specific property--i.e. condos, land, multi-family, ranches all have different things that need to happen.

 

In summary, make sure due diligence is done before accepting an offer. This market moves fast and emotions run high. Have a plan on how you are going to review and respond to offers and stick to it. When offers come in, don’t stray from the plan. And if I didn’t touch on it enough, make sure your agent is picking up the phone to have real conversations with prospective buyers and their agent. Communication ensures you will net the highest amount and reduce the likelihood of contracts falling apart. If you have any further questions about selling your house or want to know more about something specific I touched on please don't hesitate to reach out. I would be happy to help you out in any way I can.