An introduction to the Austin Real Estate Market

Let me be honest with you, I know a lot about the Austin Real Estate Market, but I don’t know everything.  I find myself frequently turning to on-line tools to help me gather and present information to my clients.  There are a lot of tools I use on a daily basis to help others with the buying and selling of their homes.  One of my most powerful tools as a Realtor is using the Multiple Listing Service, the MLS, or Realtor Database to find houses for my clients.

 Click here to Search the Austin MLS (more…)

January 2014 Austin Real Estate Statistics

2014 is off to a great start!  The Austin Real Estate market is on fire, as the most recent batch of statistics confirms.  As usual, I’ve compiled the most relevent, up to date numbers into a handy real estate infographic that you can download, share, or tweet.  These data were gathered from the monthly reports generated by the Austin Board of Realtors, and while deemed reliable, you should check the numbers for yourself if you have any questions.

Click to Tweet this  – Austin Real Estate Statistics and Infographic for January 2014

Austin Real Estate Stats

According to the Austin Board of Realtors:

  • Home sales are up 7% year-to-date when compared with the January of 2013.
  • The median price of a house in the Austin area is also UP 7%.
  • Homes took an average of 63 days on the market to sell, a decrease of 9 days from last year, even in this usually slow beginning of the year period.
  • There are only 2.0 months of inventory, (a balanced market has a 6 month supply). this means there isn’t a huge selection of homes to view if you are looking.

Did you see that last stat?  There is only a 2 month supply of homes.  A normal, balanced market has a 6 month supply.  What that means is that if no new homes are listed for sale, it would take 6 months to exhaust all the inventory of houses for sale.  That gives buyers a lot of options, as well as time to look around.

But in this crazy seller’s market, buyers are at a disadvantage.  Properly priced homes are receiving multiple offers, generally above asking, and they are selling in days (and in some cases even hours).  I learned of a house in central Austin that got 24 offers in a single weekend!

Strategies for buying a house  in Austin

If you are thinking about moving to Austin and buying a house, you could have some competition, depending on your price point.  There are lots of great tools to help you find a house these days, including Zillow, Trulia, or Realtor.com.  But once you find the house of your dreams, you need a strategy to get it, and that’s where I come in.  I’ve got proven, winning, negotiation strategies that can help you get the house you want, for the best price, and with the least amount of hassle.

Getting your house in the newspaper

Sometimes the old ways are the best ways.

One great way to marketing a listing is to get your house in the newspaper.

Regular readers (folks who love real estate)  know that I got into Real Estate because I saw a gap in the way Realtors  use the web.  I think there is a better way, and that way is fully using technology.  But sometimes old school, traditional marketing, like newspapers, can be helpful to selling a house.  Especially when it comes to Open Houses. (more…)

The best way to sell a house is to go on vacation

Sometimes, we all need a bit of a break.  For me, a break takes many forms, and usually a short one is enough.  On days when I know I’m going to be especially busy, I usually have a hard time sleeping the night before, so I get up early and go for a quick run to clear my head.  Or, after an especially tough day a couple of fingers of higher-than-average-priced bourbon and a movie after everyone else goes to bed helps me to unwind.

But sometimes there is no better way to take a break than getting on an airplane and flying somewhere.  Especially if the destination is to see my brother, and his family in San Francisco.

This last weekend I did just that.  I hopped on a plane and went to the city by the bay.  I took my little guy (his first flight) and my Dad even flew in for the weekend from Tucson.  I love my job.  Selling luxury properties, and modern homes is a ton of fun (and work), and I wouldn’t change it for the world.  I’m always talking to people about their dream lifestyle, and for 4 days I got to spend some quality time with my original immediate family.

I don’t talk much about my family on this blog – I like to keep my private live just that.  Locked up.  Mine.  I try to not bring work home (as much as that is possible), and the reciprocal count’s too.  So enough of the personal stuff, and back on to the original topic:

The best way to sell a house is to go on vacation

I’ve heard it dozens of times before – When you are trying to take a break in real estate, the second you try to take some time for yourself, your phone is going to ring.  This time was no different.  As soon as I was packed, I got the call that every agent wants to hear – “check your email, I’m sending over an offer.”

World Cup Sailing in San Francisco Prada Boat
I grabbed this pic of the World Cup Cats under the Golden Gate bridge with my iPhone while on vacation in San Francisco

Over the next few days we did the usual negotiations – buyers come in low, we counter, and eventually a compromise is reached.  It’s a very exciting process, and a high that you want to feel over and over.  When I returned to Austin, we were just finalizing the contract, and  the deal was done.

Plus, And the best part?  Because of technology, the seller’s agent never knew I wasn’t even in the state.

I know I was technically working while on vacay, but this is the fun kind – the part of the job we all love.

 

Requesting a higher option fee

The other day, I advised my clients to reject a contract for an unexpected reason, the option fee submitted was too low.

When I get a receive an offer on a house there are a bunch of things that I immediately look at and use to evaluate if it is an offer that I will recommend by clients accepts or reject

  1. The sales price
  2. The Financing.  Is it a cash offer or will there be a mortgage?
  3. The Earnest money amount
  4. When is the closing date
  5. The Termination option (or the Option Fee, as it is commonly called)
  6. Who is paying for the title policy
  7. Who is paying for the survey
  8. If there is a residential service contract being asked for, and who is paying for it.

Each of these 8 things are totally negotiable, and cost money that comes out of someone’s pocket.  And as a seller of a house, you can reject any offer based on any reason.  So be sure to carefully evaluate everything and make sure it is to your liking, because once you are under contract it is hard or even impossible to change things.

The buyers have a few more options to get out of a contract than the sellers.  But as time goes on, they get more expensive.  There are two different points where a buyer can cancel a contract.  The first is at the end of the option period, and the second is after that, but involves loosing their earnest money (and possibly more).

As soon as a contract is executed, the clock starts ticking.  You are in escrow, and each side has a bunch of things to do, as outlined in the contract, to make sure everything happens by the closing date.  You can’t back out, unless…

Unless you use the option period.  The option period is a short amount of time at the very beginning of the contract that the buyer can purchase.  Option checks can be anywhere from $250 – $1000 or more, and generally last a week.  That’s 7 calendar days (not business days).  During this time, the buyer can back out of the contract for any reason, and all they loose is their option check.

Since this is a way out of the contract, I like to see a higher option fee, and the other day I advised my clients to reject an offer because the option check was only $50.

I didn’t want my listing to be tied up for a week while they decided to kick the tires of the house.  You see, if the house is under contract, you can take backup offers, but the first contract is the one that has to be done first.

Right now Austin is in a deep Seller’s market.  There are a lot of people looking to move to Austin, and not a lot of places for them to live.  If they are serious about buying a house, they need to back it up.

I’ve been burned before at the last minute by buyers cancelled out at the very last minute because they get cold feet.  It is a waste of time for everyone involved.  Of course it is their right, but it costs them money.  And I believe the higher the option fee, the more serious they are as buyers.

Absorption Rate in Real Estate

One of the most common questions I get from people interested in selling their home is:

“How long will it take for my house to sell?”

I like to use a simple formula called the Absorption Rate to give a realistic estimate to sellers.  Its a great tool that relates supply and demand in the housing market, and can be used for individual neighborhoods, specific price points, or even to evaluate a specific agent’s marketing efforts.

In order to calculate the Real Estate Absorption rate, only three paramaters are needed:

  1. The total number of active listings
  2. The number of homes that has sold
  3. The time period that the number of homes has sold over.

Here’s the formula:

First calculate the average number of sales per month:

Number of sales per month = (Number of Homes sold over specific) / (time period)

Then calculate the absorption rate

Absorption rate =  (Total number of active listings) / (Number of sales per month)

Here’s an example using made up numbers:

Number of Sold Homes = 33,163
Number of Active Homes = 14,156
10 months
So using  the above numbers and formula you get:
33,163/10 = 3316.3
14,156/3316.3=4.268

Absorption rate  = 4.27 months to sell all the houses currently in the inventory in this made up market.

Remember, the Absorbtion (incorrect spelling on purpose for SEO) rate does not account for new houses being listed on the market, nor does it take into account Withdrawn or Expired listings either.

 

Do you need to stage your house?

Have you ever noticed some houses sell really fast, while others, that look great sit on the market, even after several price reductions?  It happens all the time.

I always recommend to stage your home.  Home staging in Austin is important – we are seen as a fun and quirky city, and lots of people want to move here from all over the country.  Whenever somebody moves, they want to enhance their lifestyle, even if just a little, and their new house needs to look the part.

Most people think that staging only needs to happen to vacant homes, ones that have any furniture in them.  But that’s not true.  While adding furniture to an empty house helps homebuyers visualize where things will go, it is helpful to stage houses that are currently being occupied, too.

Of course, you can hire a home staging company, or you can do it yourself

One thing I’ve learned is staging a house, is beneficial, regardless of how it looks when you live there.

You could be Jeff Lewis, and your home might be perfectly decorated and featured in magazines, but home buyers.  But buyers are different than residents, and look for different things when previewing homes to buy.

I’ve walked into so many homes that look absolutely perfect when we begin the selling process.  The floors are great, the colors on the wall are just so, and the place is very well decorated.

However, as we live in a home, we personalize it, and make it our own.  We put up framed photos of our family on the walls, stacks of our favorite moves collect near the TV, and our bathroom counter is covered in personal products that we use everyday.

All these little items, and many more turn off buyers.

Let me put it a different way.

Home stagingI love staying in hotels.  Especially well decorated places like the W.  I’ll bet you do too.

Next time you stay at a hotel, either a fancy one, or something else, take a look around as soon as you enter the room.  Not only will you notice that there isn’t anything extra in the room, but you will also notice that there are places for you to “unload” all your stuff.  The table tops are free of any items, leaving you room to put down your suitcase.  The nightstand is empty, so you can put down your watch, and water bottle.  The bathroom has lots of space for you to use.

Your house, when you are selling it needs to be like a vacant hotel room.  Nothing valuable in it, and lots of space for people to imagine their things going.

This is Home Staging while you still live in the home.

Current conditions in Austin’s housing market

Right now, in Austin, we are in our 22nd month of declining inventory.  Yep, that’s right.   There aren’t enough houses to go around. (as of September 2013)

Usually, in a regular market there is about a six month supply of houses for sale.  That means at the average rate of selling a house, and if no new houses are added to the market, there are enough to last 6 and a half months or so.

A six month supply means there is probably the perfect house out there for you to choose from.  One in the neighborhood you want to live, in the style you want and of course the proper size for your lifestyle and family.

But this year, 2012, Austin is at half that – a 3 month supply of houses for sale, and it’s decreasing.

Why?  Because everybody wants to move here.  There are tons of great jobs, opportunities, and things to do.  Austin is all over the news, in the best possible way.

On a recent trip, a realtor friend of mine went to Vegas for a short vacation to get away from work, and wherever he went, once people from all over the country found out he was an agent in Austin, all they wanted to do was talk about houses.  So much for a relaxing vacation for him.

So, back to my original topic.  Why don’t you need to stage your house to sell it?

Should I stage my house?

Staging a roomBecause the Austin market is a sellers market right now.  There are more buyers than sellers.

Remember the basics of supply and demand?  Yep, it’s that simple.  Less houses on the market mean they will sell for more, and we’ve been seeing housing prices creep up and up.

But not because they are priced higher from the start.

Studies have shown that when a house is overpriced from the beginning it sits for much longer on the market.  MUCH longer.  It’s better to price it accurately and in line with the other homes in the area.

I’m really good at determining how much your house should sell for.  I know all the houses in your area that are for sale.  I’ve been in most of them.  I know which ones have hardwood floors, or updated kitchens, or views of the lake or downtown.  If you want to contact me, I can tell you more.

The same studies show that when a house is priced correctly from the beginning, and you are in a seller’s market, multiple offers are common and even bidding wars can happen.  Trust me, you want me on your side when this happens.  I’m a great negotiator, and I have connections with realtors all over town.

Instead of staging, I encourage you to talk with me about evaluating the price of your home, and pricing it to sell quickly.  I’ll work with you and provide you with realistic numbers that will get your house sold – FAST!  Give me a call, and let me tell you more.