So March 2007 – Crossland Team

Archive Monthly Archives: March 2007

How to NOT Rent your South Austin Home

Yesterday I was pulling up lease and sales listings for a client who wants to either buy or rent in Southwest Austin. I came across a lease listing in a great neighborhood in MLS area SWW that has been on the market for more than 130 days. Sylvia was sitting at her desk and I remembered that she had shown that house to a leasing client several months ago. “What’s up with that house on {Street name}?” I asked her. “It’s been on the market for 135 days!”

Sylvia said, “It’s in bad condition, the fence is rotted and falling down, the carpet is dirty and stained, it stinks inside, the yard isn’t taken care of, it’s outdated with ugly pink decor and bad wallpaper, it needs paint and it’s over priced”. OK, that explains it.
Are there really Property Owners and leasing agents who are so out of touch with reality that they allow this to happen? Absolutely. Cheapskate owners and incompetent Realtors seem to find each other on a regular basis in the Austin real estate market. The outcome is rarely good.

I showed the house yesterday anyway, partly because there were only a handful that fit my client’s search criteria, and I wanted to see it for myself and let the client rule it out herself instead of just not showing it. Upon viewing the property, it now has a new fence, and there are paint cans and supplies in the middle of the floor in the garage, but everything else Sylvia said is still as she described. Looks like the rental market may be slowly teaching the landlord a lesson, but it’s still pretty late in the game to be hearing the wake-up call, and the home needs much more than a new fence and some paint.
Read more …

Posted by Steve
11 years ago

The truth about flipping homes in Austin TX

Here is a good story from the Austin Statesman about flipping houses in Austin. We’ve tried to hunt down some flip deals for a few Buyers but have decided it’s not the best use of our time. We don’t have cable TV or watch much TV, but from what I’ve been told by others there are a lot of TV shows about selling, rehabbing and flipping houses that make it look easy. It’s not easy.

Back in the 1980’s and 1990’s, real estate investors were a small group of people. Now everyone with Cable TV training and free time on a weekend is a nascent fix and flip artist. We also have way more young couples (weekend warriors) willing to buy a fixer and live in it while they work on it for a couple of years (thanks to the IRS 2yr capital gains tax exemption) and they drive up the pricing of fixers beyond the amount that makes sense for the old school fixers like us.

The good news is, if you have a beat up old house in a desireable area, you have a much bigger pool of potential buyers than you would have (proportionally) 10 or 20 years ago. The bad news for investors who want to fix and flip homes, those homes are not just laying around like they were in Austin in the late 1980’s and into the mid to late 1990’s.

Here is the story below:

Take it from these Austin pros: It’s hard work, high risk and not a ticket to easy money.
By Charles Ealy
Sunday, March 18, 2007

If you’ve ever stayed up late and channel-surfed, you’ve probably seen a cheesy infomercial about how to get rich quick by flipping homes. You know the pitch: Buy a house cheap, fix it up and sell it fast for a big profit.

Don’t believe them, say Rick Villani and Clay Davis of Austin. You’ll do much better if you set your sights on “getting rich slow.”

It might not sound as appealing, but it’s much safer and more sensible, Villani and Davis contend in their new book, “Flip: How to Find, Fix, and Sell Houses for Profit” (McGraw-Hill, $21.95). In it, they offer detailed advice on what they say are the two big strategies in flipping.

“You have to find value or create value,” Davis says.

The men, who are co-owners of Austin-based HomeFixers Corp., say they have worked on more than 1,300 flips in recent years and have attracted the attention of TV’s “Flip That House.” And no, that’s not a cheesy, late-night show. It’s on The Learning Channel, and it’s similar to “Flip This House” on A&E.

They also have caught the eye of one of Austin’s biggest names in real estate: Gary Keller, co-founder of Keller Williams Realty Inc.

He’s the co-author of “The Millionaire Real Estate Agent ” and “The Millionaire Real Estate Investor,” and he chose the “Flip” book to be the third in the Keller investment series.

“You’d be hard-pressed to find anyone with greater real-world experience in the process of flipping houses,” he says in the book’s foreword.
Read more …

Posted by Steve
11 years ago

Austin Real Estate – Feb 2007 Sales Market Update

February real estate sales stats for Austin show a modest gain over the same month last year. Number of sales for single family homes is up 1.5% from Feb 2006. The Average Sales price is up 3.0% from $231,337 in Feb 2006 to $238,374 in Feb 2007. Median sales price is up 5% from $171,250 to $179,000. Average price per square foot is up 2.7% from $111 to $114.

These numbers seem flat compared to what Sylvia and I are actually experiencing in South Austin, so I checked the stats on the areas we work to see what was going on.

Area 10N: Avg Price up 21%, Median price up 6.01%
Area 10S: Avg Price up 15%, Median price up 13.33%
Area SWE: Avg Price up 12.7%, Median price up 13.62%
Area SWW: Avg Price up 5.09%, Median Price up 2.81%

Not sure what’s up in area SWW. It’s been hot for the homes we’ve sold. There are some pockets that do better than others, and we’re also dealing with small sample sizes.

Austin Sales Stats February 2007
Previous Month and Year Comparison
All MLS Areas - Houses Only

Jan 2007
Feb 2007
Feb 2006
Yr % Change
# Sold
Avg List Price
Median List Price
Avg Sold Price
Med Sold Price
Avg Size SQFT
Median SQFT
Avg $ per SQFT
Avg Days on Mkt
Median Days on Mkt

Read more …

Posted by Steve
11 years ago

A Case Study in Lousy Austin Realtor Representation

A few days ago I wrote up a deal for a Buyer. The house was priced about $15K above market value, but it was a nice home that fit my buyer’s needs, so we ignored the list price of $239K+ and wrote it up at market value of $225,000. Along with the offer, I wrote that the offer was based on what we believe to be a fair price for the home based on our market analysis and current market conditions in the area, and that I’d be happy to send over the analysis along with the comps if requested.

The agent faxed back a counter-offer with the following written in the cover letter (with price typo and grammatical errors left unchanged).

“Making a offer $15,000. low was a mistake. If you would have offered say $133,000. they might have taken it but here is there counteroffer,”

Read that quote again. It’s exactly as written by the listing agent. He’s a great negotiator isn’t he? NOT!

The counter-offer was for $235,000. I discussed the deal further with my Buyer, and we decided to move on to another home with a more reasonable Seller and an agent who isn’t an idiot.
Read more …

Posted by Steve
11 years ago

Keeping it Weird in Austin

I took my laptop to Mr. Notebook today because the “A” key was not working. They fixed it in 5 minutes (a crumb? was under the key) and sent me on my way with no charge. I really like dealing with those guys at Mr. Notebook. Actually, I should say I really like dealing with competent businesses who know how to take care of their customers. Mr. Notebook in Austin fits that description well.

Anyway, after leaving, I headed south on Guadalupe and as I approached 15th street, a woman came out in the street and flagged me down. I stopped and she asked if I could drive her and her friends “downtown”. I looked at her and her 4 friends, all wearing SxSW badges and looking exactly like the kind of people you’d see at SxSW, one with a Mohawk, and told her “you’re already downtown”.
Read more …

Posted by Steve
11 years ago

Study: Austin home size limits hurt economy

From todays Austin Business Journal email newsletter is the article below citing a study that says the Austin “McMansion Ordinace” is hurting the Austin Economy.

I haven’t read the study, but the Homebuilders Association of Greater Austin paid for the study. The Home Builder’s Association is against the ordinance and is lobbying the Texas Legislature to pass laws that will effectively void it. So I’m not sure if the study results should be trusted.

The only questions I have would be:
1) Have home and/or lot values in the areas covered by the ordinance declined in value?
2) If homes in these areas have not declined in value, have values appreciated in equal proportion to the rest of Austin and/or similar areas not affected by the ordinance? (has the ordinance stunted the potential appreciation of homes in the areas affected)

In other words, is that puny little teardown in Tarrytown, on a 50ft by 125ft lot, now worth less than it would be if a bigger home could be built than what the ordinance now allows? It wouldn’t surprise me if the ordinance has had at least some impact, but MLS Sales data doesn’t bear that out as the central areas saw some of the strongest real estate appreciation numbers in Austin from 2005 to 2006. See my 2006 Austin Sales Market Summary for detailed area by area stats.

See the article below. The math seems confusing to be. I’d rather see a study that simply answers the above questions.

Austin Business Journal – 2:41 PM CDT Tuesday, March 13, 2007
A new study suggests that a city of Austin ordinance restricting home sizes is having negative effects on homeowners and causing a reduction in economic activity within the city.

The study conducted by Austin-based economic research and analysis firm Impact DataSource concludes that the city’s “McMansion” ordinance has forced increases in the cost of new homes and remodel projects in the areas it covers, making it difficult to finance improvements while limiting the ability of homeowners to sell their property. The Homebuilders Association of Greater Austin paid for the study.

The ordinance that went into effect in September 2006 limits development plans for owners of lots in the zone between Northwest Hills and Montopolis in the north and south sectors, and between Barton Hills and University Hills in the west and east sectors. A bill recently filed in the Legislature by Rep. Edmund Kuempel, R-Seguin, would force Texas cities to regulate home sizes based on one set of criteria and not multiple criteria like the Austin ordinance does. The city is fighting that bill, saying it would effectively “gut the ordinance.”

The study evaluated four properties, demonstrating an average loss of $229,888 of real property improvements, along with a $5,806 annual loss to local taxing districts per property and reduction in possible construction to an average of $451,375 per property. In total, of a possible 110 similar infill redevelopment properties listed for sale on October 31, 2006, improvements not added to tax rolls could total $25.2 million. Homeowners would lose $12.8 million in their share of actual and projected market value resulting in a further loss of $638,614 in annual tax revenues from these properties.

“The new residential standards make urban projects more complicated and more expensive,” says Jerry Walker, principal of Impact DataSource. “Regulations could add as much as $75,500 to the cost of remodeling and constructing a new residence in the affected area, further pushing middle-income residents to areas outside Austin and contradicting the city’s stated urban density goals. Young homeowners trying to upgrade or move to larger houses to accommodate their growing families are getting squeezed the worst.”

Posted by Steve
11 years ago
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