The State of Professionalism Among Austin Realtors is Poor

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One of the things I struggle with as a real estate blogger is finding the balance between positive, upbeat stories and dreary negative truths about the real estate industry and the people in it.

My sweet wife/Broker Sylvia has reprimanded me in the past for being too negative. So did my former “big name” Broker, multiple times, for crossing the line of polite decorum and calling out what I see as gross incompetence, not only with other Realtors, but the lenders, inspectors and various others who are part of every real estate transaction. I’ve mellowed somewhat, but things have become worse, not better.

This is going to be another of those “negative” writings because, frankly, I’ve had it. I’m sick and tired. I’m wondering if I even want to remain a part of an industry so plagued with completely useless idiots masquerading as real estate “professionals”.

I think it’s important, as a consumer, for you to know how truly terrible so many Realtors are, and how truly stupid you are for hiring them. You research your purchase of a car for months online before making a decision. You scour the internet travel sites looking for even the smallest of savings on your airline flight. You wander in and out of Best Buy, Fries Electronics, Office Depot, etc, plus review websites, investing hours of research, before purchasing that next laptop or refrigerator. I could go on.

But, when hiring your Realtor, according to NAR consumer surveys, 70% of you hire the first one to return your call. Stop that. It’s dumb. You, the consumer, are part of the problem, if not the problem.

Let’s look at some real life examples of the consequences of having lousy agents out in the field, who would vanish were it not for the “first return call” hiring practices of the real estate consumer.

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Are you an Austin Buyer or a Contestant?

Frustrated Austin Home Buyer

If you’ve tried to buy a house in Austin lately, in an area of high demand and low inventory, such as Southwest Austin, you may have run into some competition. In fact, you most likely have. As of this writing, there are 43 Active listings and 84 Pending listings in SW Austin. I won’t go into a breakdown of what that means statistically, but let’s just call it a Mega-Seller’s-Market and leave it at that.

Other buyers want the same house you want, often the first day it hits the market. A new listing in South Austin 78745 that I showed a buyer a few days ago had a parade of buyers waiting in line when I got there, and more when we left. An offer I wrote today for a SW Austin home that came on the market 3 days ago has multiple offers and we’ll see how ours did tonight or tomorrow. It’s really, really crazy out there.

This type of market changes the way you have to approach your home buying effort in Austin. You are no longer “shopping” for a home, you are competing for a home. You are not a home buyer, you are a contestant. You are not trying to negotiate an acceptable offer with a seller, you are trying to beat your opponent(s), the other buyers, by making a better offer. Suit up, game on. And you’re not able to know what it will take to make your offer “better”, you can mostly only guess, then decide how high you want to jump.

This is disconcerting and frustrating for those unaccustomed to the stress. It can tie you in knots emotionally. It’s too much for some buyers, and they simply bow out of multiple offer situations, not wanting to compete at all. Others get it right away, put on a game face, and bring their A Game to the first offer, crushing the competition and “winning” a home on the first try. Still others, go through several failed offer attempts before they can muster up the fortitude and grit to throw down a wining offer. If you’re one who keeps losing, read How to Win Multiple Offers in Austin for some tips that will help you and your agent increase your chances of coming out on top.

Are we in a Bubble?
I’m not ready to call this a “bubble”, but this marks about 12 months now of very strong demand and shrinking inventory in many areas of Austin.

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How Important is Showing Feedback and How Do You Get It?

Showing Feedback

I have found showing feedback to be essential and extremely helpful in the sale of my listings. Feedback provides insight into issues or factors that I might have overlooked or not considered important enough to affect pricing. Obtaining good feedback from showing agents takes some preparation and follow through though. Here’s what I do.

First, every listing has a “supra” lockbox. This lockbox electronically records every showing, and sends me an email when it is opened by an agent. The email has the day, time of showing and the contact information for the showing agent.

I then go into my MLS login where I have a standard letter that I send to the agent with a link to the listing. I greet the agent by name and thank them for showing the listing at “specified neighborhood” on “specified address”. I ask if there is anything about the price or condition that they can give me feedback on for this specific home. I think the personalized email is vastly more effective than the robotic auto-requests that so many agents set up. Some agents, including Steve, won’t take the time to complete a multi-question online feedback form sent by a robot, but they will respond to a personal email or phone call from the listing agent.

I ask, “did the buyer’s like it?”, “are they considering making an offer?” I also explain that the seller’s disclosure and survey is online attached to the MLS listing for their convenience. Also, to refresh their memory, I provide a link to the listing. After this I thank the agent for his or her hard work.

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What’s the deal with the We Buy Houses signs in Austin

We Buy Houses Austin sign

Ever wonder what the “We Buy Houses” signs really mean? You see them all over Austin, usually in middle to lower priced neighborhoods, and older transitional areas with a lot of fixers. Often the signs seems homemade and haphazardly placed. The words “fast” and “cash” are on most. If you were to call this sign, would you really receive an offer to close fast, for cash?

Maybe, but probably not.

The signs, called “bandit signs”, are actually a lead generation tool used by real estate wholesalers and flippers. Some of these guys are actually legitimate real estate investors looking for motivated sellers with dumpy homes who want or need to sell fast. Most of the sign placers are “bird dogs”, who find the motivated sellers then turn the deal over to the investor for a finder’s fee.

Either way, the main goal is to make you an offer and get the home under contract at a price that will produce a profit on either a wholesale resell (selling the contract) or a rehab/flip.

What sort of offer will these guys (or gals) make you?
The formula is fairly universal and straight forward. 70% of market value minus repair costs. Market Value, also known in the business as “After Repair Value” (ARV), is the value of the home if it were in retail sales condition and able to sell to a buyer using a conventional mortgage.

So, let’s say you inherited an old junker in South Austin that would sell for $225,000 in good condition, but it has a bad slab, bad roof, major plumbing problems, severe neglect and multiple trailer loads of junk to haul out of the rat infested back yard. And let’s say it would cost $100K to bring the home up to par, including the investor’s holding time costs, interest, insurance, utilities, risk factors, etc.

That home would be worth (0.70*225,000) – $100,000 = $57,500.

I’m over-simplifying the formula, and there are a lot of other components that go into the “repair costs” part, but this is an accurate “quick and dirty” computation. Also, the terms of the deal will often not be “all cash”, but instead some sort of creative financing. And, these deals are very, very hard to find.

Will this investor make money if he can buy such a house at this price, owner financed? Maybe, maybe not. Many don’t.

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Austin Xeriscaping – Someday Mandatory like El Paso?

Austin Xeriscaping

Steve and I took a GRI class last week in pursuit of more knowledge about current real estate trends and practices. I always find these educational courses to be informative and helpful.

My biggest “take away” from this class was when one of my fellow classmates, who drove over 900 miles from El Paso for the 4-day class, shared with us the current landscaping requirements in El Paso. ALL new homes there are now being required to use xeriscape landscaping in the front yards because of the water shortage.

I wonder how long before the same requirement comes to Austin?

So Saturday as I was taking my buyer clients around looking at different houses, I was pointing out features that I may have overlooked in the past. One home had full gutters and a rain barrel capture system in place which I highlighted as a plus. Also, in the very small fenced in front yard where there was mostly Bermuda grass,  I suggested, “You can take this grass out and put in xeriscape with native Texas landscaping”.

This whole idea of “no grass” front yards has really got me thinking.

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