Adjusting to a Crazy Austin Real Estate Market May 2012

by Steve Crossland, REALTOR in Austin TX on May 2, 2012 · 9 comments

I just did something for which I am, on one level, ashamed. I entered a sales listing into the Austin MLS that is not properly cleaned, prepared, staged or photographed. The yard isn’t groomed. The photos are crappy 4-year-old rental listing photos I took when I started managing the property for the owner. The tenants moved out Monday, and it’s now live in the Austin MLS in tenant “move-out dirty” condition.

Have I gone mad? Perhaps.

I called the owner today and simply said, “look, this may sound crazy, but I think we should go on the market right away, without delay, and not spend any of the $2,000-$3,000 budget I told you to be ready to spend on yard grooming, landscaping, repainting the interior, preventative maintenance, repairs, etc., because I have a feeling the house may just sell as-is really quickly without doing any of that”.

Then I confessed that this advice goes against every grain of professionalism I have. We always fully prepare our listings before placing on the market. I curse and ridicule listing agents who don’t. It’s an embarrassment to show an unprepared listing to buyers. Yet, I just entered one.

After clicking “submit”, a full 3 minutes elapsed before the first Realtor called to ask about it. 3 minutes.

The final outcome of this experiment will determine whether I’m smart or just overconfident. But let me put into context the events that led up to this decision.

  • I closed the sale of a listing Monday April 30 that never even made it into the MLS. Sold as-is, no repairs.
  • Sylvia put another South Austin listing under contract tonight, full price, sold from the “Coming Soon” sign before we could finish prepping it or enter it into the Austin MLS. Something is going on here.
  • My listing is a small 3 bedroom with a garage in 78704 listed for $225K. The next cheapest 3 bdrm w/garage in 78704 is $350K.
  • There is, at present, only one other listing cheaper than mine in 78704, period. And it’s a foreclosure with 2 bedrooms and no garage.
  • I talked to my friend and fellow Realtor, Carry Bills yesterday, who is a 78704 expert, and she said buyers simply can’t move fast enough.
  • Data analysis aside, I have a gut feeling about this. I trust my gut more than my brain, usually.

The Austin real estate market has shifted. That doesn’t mean every home sells fast and without proper preparation. We have some listings in Belterra and South Austin, and one in North Central, that don’t have buyers beating down the doors yet, even though they are well staged, professionally photographed, priced right and show great. This is a market of shifting pockets and neighborhoods rather than a monolithic market moving in unison. Austin agents in a shifting real estate market have to change our thinking a bit, when circumstances dictate.

What kept bothering me was the possible outcome of having a seller, based on my standard advice that I give every seller, spend money to prep a home that may sell just as fast for full price with no prep at all. That is a very real possibility. I think it’s my responsibility to explain that to an owner and suggest that we try it.

If you’re a buyer with a search portal set up by your agent or elsewhere, waiting for a 3 bedroom with a garage to come on the market in 78704 for less than $349K, you should have already received your email alert, just like the agent who called me after 3 minutes. There is now a total of 1 listing that matches that particular search. And it’s in a great location on a huge pie shaped culdesac lot for $225K.

Is $225K too low a price?
Why not prep it well and try $235K or more? No, this home comps out at $200K to $220K in this particular location. We add value for a rising market and price it just past the top end of the range. Even a hot market has its limits, as do appraisals. If the price is right in that sweet spot, buyers will react and compete for the listing. Too high and it might get a lot of quick showings, but no offer. It’s tricky hitting the right price, and easy to miss the mark if overexuberance plays a role, but I think we’re there.

If I’m wrong about this, we can always pull the listing after 10 days, mark it “T” for Temporarily Off Market, do the prep and go live again with the good photos and all. There is plenty of selling season in front of us and the Austin real estate market just keeps getting hotter.

{ 9 comments… read them below or add one }

1 Bill Austin May 3, 2012 at 6:55 am

Steve,
I think you will be right on this one. I’ll add that there are several factors unique to this home that will likely make your decision right in this case. Best wishes…
Bill

2 Steve Crossland, REALTOR in Austin TX May 3, 2012 at 6:58 am

Thanks Bill. We’ll know by the end of the weekend, if not sooner!
Steve

3 Michael @ The Stage Coach May 3, 2012 at 1:37 pm

Articles like this are bad for my business! :)
Seriously though: It is an interesting market this year. I have seen many properties receive offers right away. I am also seeing “unrealistic” pricing which leads to long listings, staged or not. Eager sellers and listing agents think they’re taking advantage of a “hot” market, but are just shooting themselves in the foot. I like your point about the sweet spot – finding the balance of price and condition… and timing…

4 Chris Adams May 11, 2012 at 10:20 am

It seems like you hit on a ‘magic’ number with the $200,000+ range. Pricing is a crapshoot, but, like anything else, when you’ve been doing it long enough to recognize trends and can tailor pricing to buying demand, it becomes easier. Good post.

5 Frank McCarthy June 3, 2012 at 1:32 pm

Soon to be a seller. How does your story end? Thanks

6 Steve Crossland, REALTOR in Austin TX June 3, 2012 at 1:56 pm

Hi Frank,

Thanks for asking. My plan worked. Had an offer over list price immediately.

Then the deal took a twist. The buyer had the sewer line inspected and it failed. I had my own plumber confirm, and he agreed. Interesting because I had tenants in the house for the previous years and never had a sewer backup or plumbing problem. But the old cast iron was indeed rusted through, as confirmed by camera, and stuff was just flowing through in spite.

So, new sewer line for $15K had to be built into the deal. You never know what you’ll run into with a 1960s house.

Steve

7 Sara June 9, 2012 at 7:33 am

15k? Please tell me 1.5k. I have never had a sewer line inspection done on a house even with large trees. Never thought it could cost so much to replace. My plumber says I should always do a pressure test because a leak under the slab would cost alot. I usually just pay $500 for an inspector to photo spots of rotted wood, test dishwashers I plan to replace, and refer me to “an expert” on the roof and slab. :)

8 Steve Crossland, REALTOR in Austin TX June 9, 2012 at 7:36 am

Hi Sara,

Yes, $15K. About half of that amount was for a foundation company to tunnel under the home to give plumbers access to the lines. The other half is the actual replacement of sewer lines, plus some of the above the foundation stuff like commode flanges, vent stacks, etc. City of Austin permits and inspections to pass everything are also required.

Steve

9 Colleen July 9, 2012 at 12:01 pm

Love this post!
We’ve seen our homes go quickly too. Although, we’re in Buda and in $120s, but still this market is a buyers market!

Leave a Comment

Previous post:

Next post: