Archive Monthly Archives: September 2010

Realtor Success, Girl’s Volleyball, Eating Frogs and Pareto

vilfredo pareto

Five years ago when my oldest daughter started middle school volleyball, I declared to her after observing a few matches that I could coach a winning team by doing just one thing. I would, I told her, spend every practice having every girl practice serving. 100s of serves each, every practice. Not until every player could serve with 90% success 90% of the time would we even practice anything else. And by serving well and consistently, the team would win every game. Of that I was certain.

And now my youngest is playing girls middle school volleyball, and nothing has changed on these middle school teams. I watched two matches last night. If a coach, at that level, were to do nothing other than teach every kid how to serve the ball over the net with 90% success, that team would win every game even if they lacked the ability to do anything else.

How did I become an expert at girl’s volleyball? Simply by observing the mathematical fact that very few serves are successfully returned. Often, less than 10%. Get a serve over, you get a point, 9 out of 10 times. And most players can’t get a serve over. Thus, the games are reduced to a contest of missed serves and missed returns, with very few actual volleys back and forth.

At the level of play I was observing, the team who got the most serves over the net won, period. To confirm this, I even kept a scratch sheet one match, tracking the number of serves made and missed by each team. And the theory was proven. No team ever wins without getting the most serves over the net.

Having run out of magazines to read around the house this month, I perused my bookshelf of old books the other night and pulled down my old copy of Eat That Frog! and started rereading it. There on page 19 is the chapter about the 80/20 rule, or Pareto’s Principle. Vilfredo Pareto would have been a successful Realtor because he would have understood how to use his time and focus his efforts. The rule says, simply, that 20% of our efforts account for 80% of our results. Or, stated the other way around, 80% of what we do accounts for only 20% of the results. We should, therefore, figure out what activities or efforts produce the most solid results, and focus on doing a lot of those things and less of the other. This is actually the same observation about serving that one can make while watching middle school girl’s volleyball.

Were I to coach a 7th grade girls volleyball team and employ my serving theory, my team might not consist of the most well rounded players, but they’d know how to serve consistently and we’d win every game. We’d be champions by doing just one thing really well with consistency.

So what’s this have to do with real estate and whether Realtors are successful or not?

It has everything to do with it. When other agents or even regular people we know ask me and Sylvia “how’s the real estate business?”, and we say, “great, we’re staying really busy”, they often seem surprised. “I thought it was a terrible market in Austin and everybody is really slow, how do you guys stay busy?”, they ask. The question is answered in 5 simple words…

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Posted by Steve
6 years ago

Announcing – Property Management

Back in 2005 when Sylvia and I started and our Austin Real Estate Blog, we were in the process of taking a break from Property Management, having just sold our Property Management company the year before and taken a year off from real estate altogether. When we started back, we only brokered sales, mainly to investors at first, but eventually to mostly regular home buyers and sellers, which now make up the majority of our buyers and sellers.

Now, 5+ years later, we’ve built up a small portfolio of fee managed homes again, at present almost 50 managed homes. Sales remains our main focus, and we’re still very busy, averaging 3 or 4 closings most months, even in the down market. But the property management side of the business has slowly grown as well.

Why is that a problem?

The problem in trying to run two real estate brokerage specialties under one website is that each dilutes the other. It’s frustrating to me, when talking to a prospect, to hear “oh, you manage homes too?”, or, ironically, the opposite, “oh, you do sales also?”. Both have perused the same website here at but, depending on which pages they landed on and read, or which blog articles, come away with differing messages about what we do. Or, as one prospect told me incorrectly once, “you guys seem like you’re more of a management company than a sales company”. What? NOT TRUE, darn it. That’s the problem.

Additionally, in trying to remain findable by those who need to hire an Austin Realtor and/or Property Manager, it’s hard to focus the website keyword optimization efforts, as well as the site content, on two different types of businesses, no matter how closely related. This affects the choices for title tags and meta descriptions used on site pages and in blog articles.

So I’m announcing today the launch of our new sister site dedicated specifically to Property Management and Landlord-Tenant issues,
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Posted by Steve
6 years ago

Austin Rental Market Update – Aug 2010

The Austin rental market remains strong, and rent values continue to rise overall. Let’s start with a look at the historic rental value graph. Going back to 1999, the YTD 2010 average and median rental rates still remain below the peaks of 2000/2001.

Austin Rental Market graph 1999-2010 Aug

The big dip in rental rates in Austin following the peak in 2000/2001 was a result of the tech bubble (does anyone even remember that) followed by 9/11. Around the tail end of 2005 our real estate sales market started picking up after remaining flat for 4 years, and rental values started to rise as well. We’re almost back to where we were at the start of the decade.

Next, the chart below shows August year-over-year rental market stats for Austin.

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Posted by Steve
6 years ago

Austin Real Estate Market Update – Aug 2010 Stats

Real Estate Market Stats

The average year-to-date sold price for homes in Austin is $256K, which just broke through the (peak) year 2007 YTD of $255K.

Now, there is a lot of discussion and caveats that must be considered along with this milestone statistic, but nevertheless, look at the graph below for a visual representation of where average and median home prices in Austin stand right now relative to past years. Further down you’ll find additional monthly and YTD stats and an overview of what Sylvia and I are seeing in the real estate market in Austin as we continue to wheeze through the tax credit hangover and head into the fall/winter months .

Austin Real Estate Sales Graph 1999 thru Aug 2010
Looking at the above graph, one might assume that home prices are rising in Austin. Actually, what’s happening more specifically is that fewer lower priced homes are selling than before, as a percentage of all homes sold. This is dragging the average and medians upward. Nevertheless, the graph remains what it is and to the casual observer, newspaper reporter, or market cheerleaders, this will be fodder for the simple utterance that “prices are rising in Austin”. The real question is, is your particular home worth more today than is was at the peak in 2007?, and the answer is “probably not”, unless it’s a sub $200K home. The graph is really a reflection of segment and price range shifts.

Below is the chart for August sales, YTD sales, a Pending Sales analysis, and some other stuff that I hope you’ll find interesting and useful.

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Posted by Steve
6 years ago

Buyer Happiness was Higher in Austin Seller’s Market

worried home buyer in Austin

What makes Austin real estate buyers happy? The answer may surprise you. What apparently doesn’t make a buyer happy is a rock bottom price at a 4.37% interest rate. If that was the case, there’d be far less buyer angst and hand wringing than there is now in the Austin real estate market. We’d have far fewer buyers in Austin flaking out on home purchase transactions for no good reason.

No, buyers are happiest in a seller’s market, winning a multiple offer bid-up against 5 competing buyers, and paying 10% over market value at 6.25% interest, and happily covering the appraisal shortage with additional cash at closing. This is not a joke, I’m dead serious. The latter 6.25% buyer feels victorious and ebullient about the purchase. The former 4.37% buyer feels like, perhaps, a mistake was made.

Austin buyers were much happier in 2007, at the peak of the market, when they had a lot less to pick from and had to work a lot harder to find a home. Buyer remorse, buyer finickiness, buyer flakiness, and just plain old cold feet existed to a far lesser degree in the harsher buying environment of 2007 than in the buyer’s dream market of today. Don’t believe me? Go ask any production Realtor in Austin. By “production”, I mean, go talk to Realtors who are busy and closing deals every month, like me and Sylvia. Ask listing agents if it’s a lot harder to get deals across the finish line today than 3 years ago, notwithstanding loan impediments, just purely from a buyer emotion standpoint. They’ll tell you it is and they’ll have stories of buyers backing out for frivilous reasons, or, in some cases, no stated reason at all.

This doesn’t make sense, I know. So what’s going on here? Why all the buyer angst?

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Posted by Steve
6 years ago

Can You Still Make Money Investing in Austin Real Estate?

Investing in Austin Real EstateAs someone who’s bought and sold a bunch of rentals, and helped other investors buy, sell and manage investment property in Austin for a number of years, I’m about to ask a question that might seem counter to my professional mission of being in service to real estate investors.

Is rental property investing in Austin still a good way to build long term wealth?

My answer, for a lot of people, is “probably not”.

Let me rephrase the question.

Is rental property investing in Austin a good way to lose money and create financial stress in one’s life?

Absolutely. More so than ever.

So, am I saying you shouldn’t invest in real estate in Austin, or elsewhere? No, I think everyone should consider doing so. But I do think, after careful consideration, a much higher percentage of people should decide against it than would have been the case 15 years ago. The opportunity for mistakes, bad decisions and cash flow disruption for the real estate investor today is much greater than in past years.

In other words, your margin of error is very thin. You better know what you’re doing, or have a good adviser. Success is harder to achieve than if you started in the 1980s or 1990s simply because today’s ratios are thinner. The financial and psychological profile of a good candidate real estate investor today has a much higher bar to clear than in years past. Let’s take a look at why that is.
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Posted by Steve
6 years ago