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!

Top Ten Interview Questions You Should Ask A Real Estate Agent

Why Interview a Real Estate Agent?

For a lot of people, buying or selling a home is the largest monetary transaction they will make in their lifetime. Beyond a home being just a place of shelter, it's the place where family and friends gather and where our children grow up. It is also a savings account. In a lot of ways a home, when sold, can represent a large portion of many people’s retirement funds.

With the home buying or selling process representing such an important piece of many people's financial future, it is important to do you research when choosing a professional to represent you on something so large and important.

The good news is that 1,000’s of homes sell all over the country everyday. If done correctly, this can be a very smooth, seamless and rewarding experience. On the other hand, if handled improperly, it can make the process of selling your house a miserable and overwhelming experience. 

To better help you make a more informed decision when choosing a Realtor to help sell your home, it is important to take the time to interview them. We created a basic list of questions and why you should be asking these specific questions. These questions will pro-actively help you avoid the above issues. We've also included all the questions as a PDF that you can download and take with you when you go to interview a potential real estate agent. 

10 Questions To Ask When Interviewing A Realtor!

1. Tell me about your experience? How long have you been an agent in Austin?

I know this is a relevantly straight forward question, but the truth of the matter is, so few people we meet with ever ask. Without asking this question, you put yourself at risk to hire someone who, quite frankly, may not be qualified to advise you on such matters.

Experience is important for 2 reasons:

1. You only truly learn by doing. Passing a real estate exam, does little to nothing to educate someone on how this business works. There are hundreds of moving parts for every transaction and if you don’t know how the process works, it can cost your clients thousands.

2. The barrier to entry for someone to get a real estate license is about on par with learning how to properly swing a golf club. Anyone can get the general idea of how it should work, very few can drive a golf ball 300 yards down the middle of a fairway.

What does this mean in real estate terms? Is your Realtor up on national and international markets--both real estate and otherwise and how they will affect your bottom line. Do they understand how the timing of getting your home on the market can make the difference between selling at $400k or $425k? Can they tell you about supply and demand and how to properly take this into consideration when you are trying to come up with a price to sell you home.

Yes, we are in a sellers market. Most people think that means that all you have to do is put a sign in the yard, put the listing in the MLS and hold your hand out. People are leaving thousands of dollars on the table everyday by not hiring a Realtor with experience in both up markets and down. Worse, they are going to trust this massive transaction someone who probably won’t be in the business in 2 or 3 years.

2. Have you been through the home buying/home selling process yourself personally?

This is really important for 2 reasons… the first is financial stability. I don’t know how many times I’ve heard a potential client tell me they plan to work with their sister, cousin or friend to buy or sell their home because they want to “help them”. I always ask, aren’t they supposed to be helping you instead of the other way around. I’ll tell you right now, you are helping no one when you putting one of the largest transactions in your lifetime in the hands of someone who can’t help themselves. If your Realtor is going to put their financial gain above yours, that is a huge red flag. When you aren’t stable enough to put your clients first, you give bad advice and make poor decisions.

The other part of this question is about understanding how large a decision buying or selling a home truly is if you haven’t bought or sold a home yourself. Growing up in the real estate world I had my first experience buying and selling when I was 17.  My Dad and I flipped a home together; he had a client that really just needed to get rid of a home. It had been his Mother’s and she had really let it go. We got the home at a great price, then my Dad and I put together a budget, estimated our profit on the sell, and we setup a bank account to pay for the updates and repairs. Every few days I met with the contractors, wrote checks and kept up with their progress. Let me tell you, the responsibility of something so big...especially at 17, has stuck with me to this day. It was one of the greatest lessons of my life. Selling a house takes time, dedication, hard work, and willingness to do anything and everything to get it done. 

3. What exactly will you do to find buyers for my house/property? Do you have a system and plan for your listings?

Most Realtors do what we call the 3 P’s. They PUT a sign in the yard, PUT the home in the MLS and then they PRAY it sells. And in this market, it can sell a home. But typically, this approach leaves thousands of dollars on the table.

Ask your Realtor what they do “Pro-actively” to get your home sold. Do they have a written plan that they can present to you? More importantly, do they have systems in place to achieve that plan and track the results?

On the buyer side, with so much competition out there for the few homes that come on the market, what will your agent do to find you the home you’re looking for? What will they do beyond setting a search in the MLS and showing you homes as they come on the market?

In addition, when your dream home comes on the market, what will they do to ensure that your offer is accepted? What process do they go through to writing the perfect offer and present it in a manner that gets the offer accepted? Ask them how often they win when there are multiple offers, you’ll find that most Realtors don’t have a real answer. It’s like a batting average; if you don’t know how many hits you get versus how many times you strike out, how will you ever improve?

4. Are you a full time or part time agent?

Did you know that the average Realtor does less than 5 transactions per year? At a median price of $292,000 (the median price in Austin as of this writing) the average Realtor makes about $43,800 in gross commissions annually. That doesn’t seem like enough to live on and should beg the question: do you really want to hire someone who does real estate part time, or has another job or, worse, whose business is failing? I recommend you find someone who does at least 15-20 transactions a year. If they work with a team (and that’s even better for reasons I’ll get into later) make sure their team is doing about 15 per agent. Less than that and I would start to wonder “why?” What’s wrong with the way they do their business that they can’t do at least a couple of deals every month? Clearly someone doing less than a deal every month is doing this as a hobby and not a profession.

5. Are you an individual agent or do you have a team?

Hiring someone on a team, or that runs a team is preferable. Why? Because the number one complaint I hear from people about their last agent was that they didn’t communicate enough or that they somehow felt that their agent didn’t have time for them. You already know I’m recommending you hire someone who’s busy. I think you should want to find someone doing a lot of business, and unless they have a team, you run the risk that they won’t have time for you. Ask them who they have on their team and what their roles are. This varies widely and there’s not just one way this is supposed to look. What you want to know is that they have both the office staff to handle the paperwork and logistics of the transaction as well as other trained agents who can communicate and work with you should your agent not be available. Find out if the person you are interviewing will be working with you personally every step or do they have specialists to handle various aspect of the transaction. There are advantages and disadvantages either way, and the important thing is you are comfortable with how they do it. Find out if they have hours or days they don’t work. Some people don’t work after 6:00 or Sundays. Is that OK with you? Some people like their employees to be available nights and weekends and some people are less demanding. You’ll need to make find out how your agent and their team operates and decide what works for you and your needs. And unless you get this clear you run the risk of hiring someone whose style won’t work for you.

6. What parts of town are you most familiar with? How many homes have you sold in my neighborhood in the past year or two?

This is important because every part of town, every neighborhood has a different supply and demand and different reasons why people do or do not want to live there. Wouldn’t it be good to know that a home was built on an old landfill and soil tends to shift and cause foundation problems? (This is an actual neighborhood in Austin). School districts as well as specific schools play a huge part in coming up with a home value. Its important to have an agent who knows the knows that areas that you want to live in, someone who can guide you accurately when looking for your dream home. 

7. Do you have a marketing/advertising plan? Can you tell me about it?

It is important to have an actual written marketing plan with systems and processes behind it. How else will you hold your Realtor accountable to the actions they are supposed to be taking to ensure that your home sells and sells for top dollar. When a Realtor doesn't have a firm plan of action in hand for your house there is an large chance they will be leaving money on the table or be unable and unprepared to command the highest prices from the market.

8. Who answers your calls and shows my home if you’re not available?

Your Realtor can’t be everywhere at all times. It is crucial that they have a team that supports them to ensure that every showing happens and every question is answered. Harvard Business Review did a study and found that if a call is answered and/or returned within 5 minutes, that potential business is customer is 75% more likely to make an appointment. If your Realtor doesn’t have a team, it is important that they have some sort of back-up if they aren’t available. And it is important that they communicate this with you upfront!

9. Can you provide me the names and phone numbers of past clients as references?

Beyond having some testimonials, it is important that you have references that will speak to your Realtors competence and character. For all intents and purposes, this is a job interview and should be treated accordingly. Not only that, but as we have repeatedly discussed, selling your home is a huge undertaking and you need to be absolutely sure that you can trust your real estate agent beyond the shadow of a doubt. Reaching out to past clients can provide you with the assurance that your Realtor is integral and trustworthy. 

10. Why should I hire you over the other 12,000 agents in Austin?

Your Realtor should have a unique selling proposition. Something that they do very well that sets them apart. What’s their marketing plan look like? What is their negotiating style? How do they help advise you to pick the right offer if you do receive multiple offers on your home? Can you trust them - do they have an established reputation? You need to know what your agent can do for you that no one else can. 

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.