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The Crossland Team
Sylvia Crossland, Broker Steve Crossland, MPM (512) 301-5811 |
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How to Evaluate a Texas Real Estate Offer
September 29, 2008
I recently did a walk-through on a property that was closing with our buyer the next day. The contract stated in Special Provisions paragraph 11: “home and carpet to be professionally cleaned prior to closing date”. Upon viewing the property, the sellers had not completed the carpet cleaning. The seller was at the home removing some final items. When I asked “have you scheduled the carpet cleaner?”, the seller said matter of fact “no, we are not cleaning the carpet”. They did have a maid service there working though, which we later learned was not because they or their agent read the contract, but because they didn’t want to clean it themselves.
I said nothing further about it and left with my buyers. It would not be proper to start a discussion there with the sellers about their compliance with the contract terms. I called Sylvia as I drove away and she called the listing agent to inquire if the sellers knew that they’d agreed to clean the carpet, and to make sure it gets done.
Sylvia told me the listing agent got out the contract on her end, read paragraph 11, then stated “whoa..ho..ho. aren’t you the sneaky one!” Then the listing agent went on to lament what a great deal our buyers were getting, how the sellers were “giving the house away”, etc. To which Sylvia replied simply “The seller agreed in the contract to have the home and carpet professionally cleaned. I just need to make sure you know that. We expect it to be done as agreed”. The listing agent did finally say that it would be done, but was indignant and acted as if some sort of trick had been played upon her and her sellers.
It was done and the deal closed and the buyers are very happy with the purchase and the home. But the listing agent’s incompetence and attitude is unfortunately NOT a rare case. You wouldn’t believe how many buyers and sellers fail to carefully read what they sign, or don’t understand what they do read, and how many agents fail to properly guide their clients through a proper evaluation of an offer.
So what is the best way to make sure things are not missed or overlooked when evaluating a real estate sales contract?
If you’re one of our sellers, we run your offer through a checklist I created, which will sum up the offer’s bottom line and reveal all items of concern or question. Let’s take a look at the “offer checklist” Sylvia and I use and the more than 40 data points that have to be considered.
Texas Economist Dotzour’s Take On Proposed Bailout
September 28, 2008
Below is the Texas A and M Real Estate Center Mark Doutzour’s take on the financial bailout. As usualy, he puts everything into a nutshell quite well.
COLLEGE STATION (Real Estate Center) – As negotiations continue over the proposed $700 billion bailout of the nation’s financial system, Dr. Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University, offers his perspective:
“It’s a sad day in America when the federal government (the American taxpayer) has to bail out homeowners who purchased homes they couldn’t possibly afford. It’s sad because of the vast majority of Americans who live within their means and pay their mortgages on time are now being asked to pay for other people’s mistakes.“It’s a sad day in America when we have to spend billions to bail out financial institutions that made loans to those people, then sold those loans to pension funds and endowment associations that had no idea of the risk they were taking when they bought the ‘complex and sophisticated’ bonds. ‘Complex and sophisticated’ is just a euphemism for ‘I have no earthly idea what I’m buying.’
“Now for the pragmatism. If we don’t bail out the banks, the American economy grinds to a halt. Many U.S. businesses are financed with short-term notes that mature in 90 to 180 days. This is called commercial paper. What happens when your 90-day note matures, and nobody will refinance it? Just ask Fannie and Freddie, who had $225 billion in short-term notes mature and nobody would refinance them. Hasta la vista. The commercial paper market is virtually frozen, and many businesses are in the same boat as Frannie was.
View Austin Real Estate Listings from your iPhone
September 28, 2008
Realtor.com has a nice iPhone specific url that allows you to view real estate listings from your iPhone. I’m not sure what percentage of U.S. listings are fed into Realtor.com, but I would be suprised if it isn’t most of the major metro area MLS listings. And they are all at your finger tips with your iPhone.
Reality Check
OK, so what? Big deal. Who cares? What problem is solved by having access to nearly all of the Realtor listings in the U.S. through an iPhone? Why not just go home and log in from your web browser if you want to surf listings?
Well, I’m with you. I’m not impressed with “gee wiz” technology just for the sake of technology, but I can think of at least two ways in which this technology benefits me personally and professionally.
First, it’s not uncommon to be showing houses to buyers, and they ask about homes we drive by that are not on our list. This happens all the time.
Normally, if it’s not on our showing list, it’s because it didn’t fit the parameters of the search, or I eliminated it for some other reason. But I don’t always know or remember at the moment the question is asked. If there are flyers, we get one and find out the price and specs, but flyer boxes are usually empty, and sometimes the price isn’t printed on the flyer (because the agent wants you to call and ask, so they can convert you to a “buyer lead”.
I can also call the agent number on the sign, but what do you think the chances are that the call will be answered? Not good. Realtors hardly ever answer their phones.
So instead, now all I have to do is enter a quick search and pull the listing up, complete with pictures and basic details. The screen shot above is the home page you’ll see if you visit iphone.realtor.com with your iPhone.
Let’s walk through more screen shots and see if this is cool and useful, or not. Oh, and I’ll get to reason number two of why this isn’t a complete waste of time eventually, but for now, let’s just see what you can do with Realtor.com and an iPhone.
Austin Sales Market Update for August 2008
September 23, 2008
The average sales price for houses in Austin in August 2008 remained about level, decreasing slightly (-1.96%) to $259,500, down from $264,695 a year ago. Median sold price rose slightly (+2.05%) to $199,000. The number of failed sales efforts, or “Not Solds”, (expired or withdrawn) was 46% for August, up from 41% last month and up 33% from a year ago in August.
The “not solds” are a number I keep a close eye on, and I predict that we’ll see that number creep up over 50% by October or November. It’s almost guaranteed it will go above 50% in December, as many sellers pull homes off the market for holidays. The take-away for sellers with homes on the market this time of year is that you are competing for a limited number of buyers in an increasingly sluggish Austin market. That means proper pricing and condition are extremely important.
Days on market continues to climb also, to 63 days average on market and 43 median days on market, up from 60/39 last month and 54/34 a year ago. Those days on market number are not bad numbers though, especially if we want to compare Austin the to anywhere else in the country. But, the trend here in Austin is without a doubt that homes are taking longer to sell and fewer are actually selling. That doesn’t mean buyers are obtaining great deals, though we are seeing some of that, but, at present, that more sellers are giving up and pulling their listings from the market.
Here is a quick summary of the August stats.
• Number of homes sold is down 24% from 2,425 Aug 2007 to 1,837 Aug 2008.
• Average sold prices in Austin were down 1.96% over the same month last year to $259,500.
• Median sold price was up 2.05% over the same month last year to $199,000.
• Avg sold price per square foot is down 3% from Aug 2007 to $118 per sqft.
• Avg days on market is up 9 days (17%) from 54 last year to 63 this Aug.
• Median days on market is up 9 days (26%) from 34 days last year to 43 this year.
• Number of “Not Sold” (exp or withdrawn) is up 40% over the same month last year, to 46% of all removed listings.
Below is the chart with these stats, along with a YTD chart.
| Austin Real Estate Sales Market Update | ||||
| Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data | ||||
| July 2008 | Aug 2008 | Aug 2007 | Yr % Change | |
| # Sold | 1969 | 1837 | 2425 | -24.25% |
| Avg List | $270,569 | $269,807 | $272,527 | -1.00% |
| Med List | $203,385 | $204,409 | $199,900 | 2.26% |
| Avg Sold | $261,638 | $259,500 | $264,695 | -1.96% |
| Med Sold | $199,000 | $199,000 | $195,000 | 2.05% |
| Sold/List % | 96.70% | 96.18% | 97.13% | -0.97% |
| Avg SQFT | 2170 | 2187 | 2164 | 1.06% |
| Med SQFT | 1965 | 1986 | 1995 | -0.45% |
| Avg $ SQFT | $120.57 | $118.66 | $122.32 | -2.99% |
| Avg DOM | 60 | 63 | 54 | 16.67% |
| Median DOM | 39 | 43 | 34 | 26.47% |
| # Expired | 525 | 721 | 503 | 43.34% |
| # Withdrawn | 870 | 857 | 691 | 24.02% |
| Not Sold | 1395 | 1578 | 1194 | 32.16% |
| Not Sold % | 41.47% | 46.21% | 32.99% | 40.06% |
Below is the year to date numbers. Read more
What is Your Debt Share of $700B Bailout?
September 23, 2008
As the U.S. government debates a $700 Billion bailout for the financial industry, what does that mean for you and me, and our kids? One summary I saw broke it down like this:
About $2,300 per American
About $6,000 per U.S. household
The tally for all the various rescue measures launched by U.S. authorities this year runs to about $1.8 trillion. The $1.8 trillion is equal to:
About $6,000 per American
About $15,500 per U.S. household
Who will pay that back? Tax payers. But wait! We don’t all pay taxes.
As the chart above illustrates, in 2006, the percentage of U.S. tax payers who had a zero tax liability was 32%. That leaves 68% of us to pay back the 1.8 Trillion in debt, which changes the numbers.
But wait!
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Dotzour’s Take on Mortgage Solutions
September 18, 2008
My favorite economist, Mark Dotzour from the Texas A and M Real Estate Research Center in College Station has some thoughts on the mortgage mess.
DOTZOUR: STEP ONE, RECHARTER FRANNIE
COLLEGE STATION (Real Estate Center) – As long as the federal government continues to indicate they are willing to redraw the promises contained in mortgage loans, investors will be wary of buying more mortgage bonds. Hence the interest rates on mortgages will stay higher than normal. That’s how the Real Estate Center’s Chief Economist Dr. Mark Dotzour sees the recent government takeover of Fannie Mae and Freddie Mac.“Fannie and Freddie were doing a great job of providing low cost mortgages to a large majority of American families for three decades of the 20th Centrury. Somewhere in recent years, they lost track of their mission and morphed into the largest mortgage bond speculators on the planet,” said Dotzour. “They did this by veering away from their mission of ‘packaging mortgages’ into the risky waters of keeping mortgages and hoping they hold their value. That bet has completely failed, and now they become a part of the problem and not a part of the solution to the housing market.”
Dotzour outlines what he thinks should be done.
BACK TO ORIGINAL PURPOSE“First, they (Fannie and Freddie) should be re-chartered to their original purpose of serving as a conduit for mortgages. They shouldn’t be in the business of holding mortgages as investments.
Austin Continues to be Economic Top Performer Nationwide
September 17, 2008
The Austin Metro area ranks 4th among the country’s largest metropolitan areas on the Milken Institute and Greenstreet Real Estate Partners’ 2008 Best Performing Cities list. Texas as a whole did well, with Dallas, Houston, San Antonio, Killeen, and McAllen joining Austin in the top 25 of large metro areas. The top “small metro” area in the country was Midland TX.
Last year Austin ranked number 20 on the list. The list ranks cities according to metrics such as job creation and salary and technology growth.
Is there are corelation between the economic strength of a metro area and its real estate market? Of course there is. Absent the type of speculation that happened in cities like Merced California, a metro area must have solid job growth and positive net migration figures in order to generate the kind of market buyer demand that sustains or propels a real estate market.
Remember, Texas had a soft economy and no real estate price run up during the early/mid 2000’s, and Texas had a relatively low percentage of sub-prime loans, compared to the areas in the U.S. that saw crazy real estate appreciation during those same years. Those 4 years of zero appreciation in Austin from 2001 through most of 2005 are looking pretty good in retrospect. Bleeding out 30,000+ jobs in 2002/2003 was tough medicine back then, but makes for a healthier economy today.
Let’s take a look at some of the cities on the list compared to the real estate markets they are experiencing.
Read more
Mortgage Rates Drop Below 6%
September 12, 2008
Loan rates are back in the 5%s and may keep falling. I’m not sure if this will create any notable demand increases in Austin, but buyers and investors do at least perk up when rates drop below 6%. On the downside, the “number of loans” limit recently fell from 10 to 4, meaning if you already have 4 or more real estate loans, you cannot obtain another conforming real estate loan. This has stopped at least one sale I know of.
From a Realtor email newsletter I receive:
For the first time since early spring, mortgage rates have fallen below the 6-percent threshold.
Freddie Mac reports that 30-year fixed loans came in at an average of 5.93 percent this week, down from 6.35 percent a week ago and 6.31 percent at the same time last year.
A borrower taking out a $200,000 mortgage at 5.93 percent would pay $1,190 for monthly principal and interest payments, which is $54 less than the payments on last week’s rate.
Cheaper Austin Homes Staged Better than Higher Priced Homes
September 7, 2008
I’ve been previewing and showing homes in a variety of price ranges and areas of Austin lately. Would you believe currently that homes in the $150K price range in Cedar Park and Leander are staged better and show better than homes $300K-$400K Circle C and SW Austin? Well, that’s what I’m seeing the past couple of weeks.
For instance, I have looked at a lot of homes in the Cedar Park/Leander area in neighborhoods such as Block House Creek. My buyers are mostly looking at homes under $160k in that area. The homes we are seeing are, for the most part, well staged, clean and ready to sell. I see a lot of seller motivation in most of these homes, and as a buyer’s agent I appreciate that, as do our buyers.
On the other end of Austin, I have clients looking in the $300K to $400K range in Circle C, Villages of Western Oaks, Legend Oaks area, which is Southwest Austin. There is a lot of inventory in this price range currently, so I’ve been previewing homes to narrow down the ones to which I will take my buyers. I’ve seen an unusually high number of really messy homes in poor showing condition in this area and price range, which suprises me! These sellers and their agents are dropping the ball. With so many houses on the market, if your home is not clean, well staged, priced right and ready to show, you might as well not have it on the market…it will not sell!
One house I went into the other day had shoes strewn all around the entrance hall, the formal dining table was covered with junk and stuff, and the home stunk badly. I turned around and walked out without going any further. I’m not bringing my buyers into a home in that condition. Buyers rarely pick stinky homes that show poorly, and we have plenty of homes in better condition to see.
With this in mind, keep the following things in mind when selling your house:
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Repair Negotiations - What is Reasonable?
September 4, 2008
I continue to be amazed at the number of agents who cannot grasp a simple concept when it comes to repair negotiations and who respond to reasonable, normal requests as if the sky is falling. My concept of reasonable is, in a nutshell, what would an ordinary buyer and seller consider reasonable, and what is fair to both parties?
In Texas, buyers have two bites at the apple when negotiating the terms and conditions of a residential real estate purchase. The initial negotiation is focused mainly on price and closing date. But your home isn’t necessarily sold just becuase it goes under contract. It has to survive the inspection and “Option Period” before we consider it a “hard” contract. That involves, in most cases, a second negotiation resulting from inspection items.
The second, final negotiation is completed during the Option Period after the buyer has had an inspection of the home performed. The buyer may then seek remedy or compensation for latent defects or repairs that were unknown and/or undisclosed at the time the initial contract was finalized. The buyer, through a final proposed amendment, essential tells the seller “if you agree to these additional terms and conditions, which are a direct result of the inspection or other discovery, we will waive our Termination Option and proceed to closing”.
Sellers in Texas have no contractual obligation to make any repairs whatsoever, period. All homes are sold “as-is”. However, a seller can refuse to work with a buyer on repair issues at risk of the buyer terminating the deal and seeking another home in better condition, or with a better price/condition relationship.
Sellers and their agents often fail to consider the fact that, if they let the current buyer walk away, the next reasonable buyer will probably ask for the same or similar repair remedies. In other words, those tree damaged roof shingles, leaking A/C coil, rusted out A/C drain pan, plumbing leaks and other items are not going to disappear upon the next buyer’s inspection. Furthermore, the next buyer may be even tougher in their requests than the current buyer.
So unless the buyer is completely unreasonable, ridiculous and over the top in the requests being made (as can indeed often be the case), it’s almost always going to be in a seller’s best interest to work with the buyer and make the deal happen - but to a limit.
This would be a lot easier if all buyers, sellers and agents had a common viewpoint or opinion of what constitutes “reasonable” repair requests. I have my own concept of what reasonable is, and I advise buyers and sellers according to this approach. But we often run into agents and buyers or sellers who have different ideas about what constitutes “reasonable” requests. When that happens, the final repair negotiations can become difficult, normally because of emotions, and sometimes deals fall apart because our buyer walks away from the unreasonable seller, or our reasonable seller tells the unreasonable buyer to take a hike. This isn’t a good outcome for either side, but neither is an outcome that is not win/win, and which has one party succumbing to the unreasonable demands of the other.
So what do I consider reasonable? Let go over it and see if you agree.
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