Training

Thursdays around here are supposed to be “Thematic Thursday”, which loosely means, “The theme of this blog is real estate, so on this day, I will describe the work of a real estate professional.”

I have heard lots of misconceptions and confusion about what real estate professionals actually DO, so I will give you some helpful information from time to time about what the business of residential real estate is. I will also veer over into raw land and farm and ranch from time to time.

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Here’s what a real estate professional might look like after she exchanges her ‘appointment clothes’ for her blog-writing t-shirt and shorts.

In order to become licensed in the State of Texas, a person must complete:

180 classroom hours of the following qualifying real estate courses

Principles of Real Estate I (30 classroom hours)

Principles of Real Estate II (30 classroom hours)

Law of Agency (30 classroom hours)

Law of Contracts (30 classroom hours)

Promulgated Contracts Forms (30 classroom hours)

Real Estate Finance (30 classroom hours)

(This is directly from the Texas Real Estate Commission website.)

Then you take the licensing test and pass it. That will give you an inactive license. A salesperson’s license only becomes active when she works for a broker.

So, a broker has even more experience and courses to become a broker because a broker is responsible (and legally liable!) for everything her licensed salespersons do professionally. A licensed salesperson does not work for a client. A licensed salesperson works for a broker, and it is the broker who is working for the client, even if they never meet. This is spelled out for the public in a handy-dandy document that TREC requires me to give you at our first conversation about specific real estate: Information About Brokerage Services.

Now, back to ‘training’. The state legislature is the body that sets the licensing requirements, and in Texas, they have prohibited themselves from increasing classroom requirements by more than 3 hours per legislative session. So far, in recent legislative sessions (which happen every other year), our requirements have been increased. I am all in favor of this- real estate is a complicated business and a salesperson does well to choose a brokerage that gives plenty of additional training and mentoring!

Salespeople and brokers are required to renew their licenses every two years. I am coming up on two years and I have already renewed my license until August 2019. First-time renewals require 90 classroom hours on certain topics and an additional 8 classroom hours on legal issues. I chose to get my Graduate, REALTOR® Institute (GRI) designation with my 90 hours.

While it is possible to do all the ongoing training online, I choose the more challenging route of taking classroom hours. I find that being in a room of 20-60 people is stimulating and offers me countless insights from everyone else’s experiences. Discussions are great! How to take days and days of classroom time during a busy set of transactions in my professional life? It’s HARD and will probably require temporary sleep deprivation. My truly challenging moment was two full back-to-back days of classroom instruction while fielding 20+ offers on a property. We can’t work during the class hours, so it all has to come in breaks and after driving home at night.

If you look on the TREC website, you can find me (License #659436) and see that I have taken more than just the 98 hours of instruction time in order to renew my license- all my official classes are listed. There are unofficial classes, too, especially from lenders and from title companies. I love going to these and finding out, or reminding myself, of laws, practices, and procedures.

The next designation I plan to earn is Senior Real Estate Specialist® (SRES®), helping older people with finances, living arrangements, and modifications of real estate.

I took last week off and went to the Seattle area to help out with:

These two grand-persons, while their parents were teaching.

You know what? Even when I’m out of town, I still have my phone, I still check messages, and I still have real estate conversations.

Have a question for me? Call me at 512-970-9121, or email me at lynnbridge@kw.com. I’m here!

(Almost) Every House is Unique

Cat video. You’re welcome.

Recently, I have found myself consulting with a number of different people about future moves that are not necessarily imminent. I think this time spent together with potential clients is rewarding! Every situation is different and every house is unique in that it is situated in a particular place in the city, in a neighborhood, of a certain age, amount of updating, and is experiencing street changes, or street stability, according to what’s happening in the market.

After asking lots of questions about goals, future desired location, amount of support- family, and otherwise- financial strengths and weaknesses, and determining which emotions are most at play, I put together a suggested plan for tackling all the issues, including prepping the house, for that future move.

Before our meeting, I drive the neighborhood carefully, even if I already know the area well, looking for signs of change, looking for clues to what’s happening. If I see on the MLS that an older home that is mostly in original condition has recently sold, I’ll check from the curb to see what it looks like now. If it is in an area where older houses are being torn down to make way for new ones, I want to know if this particular older home has met that fate, or if it is still being used as a home. Toys and playthings in the front yard six months after the sale are a pretty good indication that this home isn’t being replaced this year.

In advance of my neighborhood drive, I study the MLS and all the properties that have sold in the past six months, or year, depending on the area, searching for sold prices, condition of homes, location in neighborhood, etc. I study the photos that the listing agents put up on the MLS to see the condition of the interiors. I look for homes that might be comparable to the home I am scheduled to visit. I make graphs and charts of market activity in that neighborhood or that feeder district to a particular high school, depending on which parameters I think are most relevant to that house in that location.

When I show up at the door, I already know a lot about the situation, and I bring my graphs, information on comparable homes, a Seller’s Disclosure that the owner will have to fill out sooner or later, and other useful papers. After we sit down and talk about the personal situation, I walk through the house, taking snapshots and noting things that need to be repaired and/or updated.

Depending on the house and the micro-market it inhabits, I use one or more sets of these eyes to examine the property: the flipper-investor eyes, the buy-and-hold investor eyes, the move-up buyer eyes, the downsize buyer eyes, the coming-from-a-different-state eyes, the moving-out-of-the-city eyes, the second-home eyes. The recommendations I make to prepare the house for sale are usually based on the least amount of stuff the homeowner can do to make the house desirable. Of course, price of the home and price of updating and repair is a big factor, too.

Some homes merit new faucets, new flooring, new paint, etc., because through these improvements the homeowner is likely to make a quicker sale, or sell at the higher end of a reasonable price range. Some homes will be purchased by a flipper and price is the only thing that will matter to those folks. Even within my written recommendations, I make two tiers- one is “must do” and the other is “would be nice to do, if possible”.

Here are three short samples from some write-ups I’ve done recently:

The two most important points at which we must capture a buyer’s imagination are from the street and then again just outside and just inside the front door. Those are our ‘hooks’. People have no clue when looking at your neighborhood from the street that there is an amazing view behind the privacy fences, so we have to pull them up and in until they arrive where we want them to be.

The goal of any effort put into your home between now and putting it on the market is to transform it from your ‘home’ into a ‘house’. In other words, it will become a commodity when it hits the market. Your best chance for getting the highest price the market will offer is to get as many buyers aware of its existence as possible (that’s my job) and to pull them from the curb and into the front door (your job and my job). What I am describing now is changes you can make to the real estate to help pull those people in. Staging, our last effort before taking pictures and putting it on the market, will come later.

Because you are looking at a limited time for owning and enjoying the house (5 years is your general estimate, but it could be much less), you will only make changes which, if not made, will result in more days on market to sell your house, or will make the price lower than it needs to be. The changes you elect to make to upgrade the house in the eyes of future buyers must be changes you would enjoy, too, for the length of time you own the house.

Now… why the cat video?  Today I met with a friend and fellow agent who has recently marketed and sold a house that was home to an elderly couple with dozens of rescued cats! What a feat! (It took a village.)  Our rescues in the video? There are only 11 and they are well-loved and cared for. But, I hope we don’t have to move anytime soon!

Stuff to Know About Buying a House

IMG_0097I love to insert into this blog photos I’ve made over the years!

You can get lots of information on the internet about buying a house, selling a house, maintaining a house, etc. Much of the information is even correct. In some state. Under some circumstances. At some point in time.

I start reading about ‘How to sell a house’, or ‘How to buy a house’ and I think, “Yes, but not in my state…. That’s not the way it’s done here.” We have personally bought and sold homes in three states, multiple times, over decades. Each state is very different, and things change within one state over time. Every two years, after the Texas Legislature meets, we have new laws to follow.

The first thing to know about buying a home in the Austin area in April 2017 is that, if you are going to need to borrow money to buy the house, you must tend to that first thing. REALTORS® keep lists of lenders they’ve worked with and whose clients have had a good experience. Interview some REALTORS®, pick one, and ask about lenders.

Lenders will pre-qualify you for a loan, which means that they ask in person, or online, for your numbers and information, crank it through an algorithm, and spit out a pre-qualification, if your numbers pass the test. Because it is based on self-reporting, and doesn’t go in-depth with your complete financial picture, a pre-qualification doesn’t carry much weight with the seller of a home, especially a nice home in a ‘hot’ neighborhood.  Your REALTOR® is not likely to show you very many homes until you have a more substantial loan work-up done than pre-qualification.

Special note: if you cannot get pre-qualified for a loan, there are companies that can guide you through your journey to financial stability; a good lender might very well partner with a company that can help you in this way; and some lenders offer this service. All is not lost if you don’t qualify right away.

The next level is a pre-approval by the lender. This means that the lender has checked your background information, such as your credit scores from the three major reporters; Experian, TransUnion, and Equifax, has seen copies of your pay stubs, etc. A pre-approval is as far as most lenders will take you before you have a signed contract to buy a house. For the purposes of most home sellers, a buyer with a pre-approval is good enough to sign a contract with.

A few lenders will actually take you through the underwriting process before you even sign a contract to buy a house. Underwriting means a specialist has rooted through your work life, your banking and financial life, your credit history, and your related personal life enough to agree to loan you up to a certain amount of money to buy a house, providing the house you choose passes muster. Going into contract negotiations with a home seller after you have been underwritten for a loan is a strong position, provided your offer is one that makes the seller happy.

Okay, next subject is paperwork. There is a lot. I have been told, and have seen evidence,  that appropriate paperwork provides some legal protection for the following parties: 1) YOU, the buyer, 2) the seller, 3) your real estate brokerage, 4) the agent or REALTOR® looking after your interests on behalf of that brokerage, 5) the agent and brokerage on the seller’s side, 6) the title company insuring clear title on your purchase, 7) the lender, 8) the property owner’s association, if there is one, 9) the builder, if it is a new home purchase, 10) any lien holders on the property in question, 11) the government entities under whose jurisdiction the property falls, 12) any inspectors you employ to assess the property for you, and 13) anyone else who is breathing and walking, rolling, or slithering  nearby your real estate transaction. There is gonna be a lot of paperwork, and it’s my job to make sure it all gets negotiated where possible, filled out properly, and signed.

Because there is a lot of paperwork that gets looked at and signed at various points along the way from agreeing to hire a particular brokerage to work for you to completing the buyer transaction and taking possession of your new home, you must plan to be available during the time-intensive periods

Also, in this still-hot market, you must plan to be available to look at homes and make decisions in short-order. In most cases, you won’t have time to mull over a situation during the buying process; the home you want will be under contract with someone else that day. The time for big, mulling-over decisions is before you go looking at homes. Your REALTOR® can help you think through your situation and decide on your must-haves, your bottom line, and your contingencies before going into battle.

While we’re talking about going into battle, let me touch on the subject of negotiations. I have found that negotiating on behalf of a client works so much better when we all treat each other with utmost respect. I aim to be unfailingly polite and respectful, no matter how the seller approaches things- not only does it make work more satisfying, but I am able to be more successful in getting you what you need as a buyer.

Some of you have heard the opening salvo in a negotiation- the selling price on an item- and then offered a low bid, followed by going back-and-forth with the seller until you eventually meet in the middle.  In home-buying, there is an element of that strategy. However, it pays to understand the psychology of what happens with a house offer. Sellers are usually quite invested in their price and their home, and they don’t respect a low-ball offer on their prized possession. Not to mention, in this market, a lot of times the offers start at the list price and go upward from there. No, it would not be unusual for a low-ball offer to have the effect of cutting off any possible negotiation. You could end your chances before you even get started.

There are other considerations besides price. The standard one-to-four family residential resale contract has 9 pages, not counting additional disclosures, addendums, and ammendments, so you can imagine how many other points there are for a buyer and seller to agree on besides just the selling price. Your REALTOR® can help you put together an offer package that is appealing to the seller. Maybe even appealing enough for the seller to sign a contract with you!

Now you have signed a contract to buy a pre-owned home. Congratulations! Except in unusual circumstances, you will want to pay the seller an amount of money for the privilege of keeping the home off the open market long enough for you to hire professionals to inspect the various systems of your home and give you a report. You need to be reasonably certain that you know what you are getting into. The money you pay the seller for this purpose is called the “option money” and it will be a direct payment. If during your option period that is specified in the contract you decide not to buy the home, the seller has no obligation to return the option money. After all, you paid her the money to let you sign a contract, yet still spend time re-examining your future purchase, and possibly deciding against it. That keeps her home off the market for days, and could be a real liability for her.

You will also pay an amount of money called “earnest money” to show that you are indeed serious about following through with the home purchase, provided there are no nasty surprises that weren’t evident in the home after first inspection by you. This earnest money does not go to the seller; it goes to the escrow officer, usually at the title company you and the seller have agreed to use. Or, it may go to a lawyer’s office and be held in escrow there. This money is recoverable, as long as you follow all the agreements in the executed contract. If you buy the property, the escrow money may be used toward your transaction at closing. Earnest money is typically about 1% of the agreed-upon selling price of the house, but this is one of the many negotiable points between you and the seller.

In most cases, one of your expenses as a buyer will be the appraiser’s work. In a loan situation, the lender will order an appraisal by a licensed individual to give that appraiser’s best assessment of what the value of the house is. In this market, sometimes the agreed-upon sales price is higher than what the appraiser says it is worth. One of the decisions you, as a buyer, will be making ahead of the home-search process, is whether or not you can afford to make up the difference between what you contract to pay for a house (higher amount) and what an appraiser says the home’s value is (lower amount). There are also acceptable ways to provide the appraiser with information about the neighborhood and local sales that she might not have access to through standard channels when she is doing her work.

There are many expenses that a buyer will have in closing a purchase transaction. Some of them the seller might agree to pay, but many more will be your responsibility. Someone will pay for title insurance. Someone will pay title company and county recording fees. Someone will pay loan origination fees. Someone might even pay for a new survey to be made of the property. These costs are something your REALTOR® will help you grasp before you start your transaction and, if you will be getting a loan, your lender will take them all into consideration when they are looking at whether or not you are a good credit risk for them. They will help you understand the costs of closing a transaction.

Part of the transaction cost that is ultimately shared within the selling price by both parties will be paying your real estate broker and the seller’s real estate broker their commissions to cover the work done on behalf of both you and the seller. This is another reason for you to hire carefully when you hire a REALTOR® to work for you- the commission cost is not insignificant, and you want to make sure that the brokerage you hire will serve your needs to the fullest, and then some.

I know I have given you just a bare outline of what goes on from the buying side. In other posts, especially those tagged ‘buyers’, you can see more specifics that might answer some more of your questions. I keep writing these posts as a service to the community, because I know the feeling from my own pre-licensing days of being completely confused and in the dark about what was happening during my own real estate transactions. I want to shed as much light as possible on a complex and important topic.  I always welcome suggestions left in the comment section of this post, or other posts on this blog.

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A Few Things I Wish Sellers Knew

Thematic Thursday is the day when I post about buying and selling and leasing transactions, which are mysterious if you don’t do them at least every couple of years.

  1. The market does not care what price you need or want to get for your house. The market price is not set by you or by me. It is set by what buyers will pay for it at this time and in this place.
  2. Your house will sell faster, and likely for a higher price, if you make it look its best. This might mean replacing worn floor covering and putting on a tidy coat of paint, in addition to making repairs and making every corner sparkle for the nose, eyes, and ears of potential buyers.
  3. If your house is not going to sparkle, is not going to be repaired, is going to be worn and dated, don’t worry. You can still get lots of eyeballs and potential buyers by presenting a discounted price. Some buyers are looking specifically for a bargain!
  4. As soon as you decide to, or are forced to, sell your home, it becomes a house; a commodity. It is no longer your home. Get therapy, if needed, to get through the grieving process, then do yourself a favor and help me do my job of getting your house sold for the best possible price in the least amount of time. Please take my advice to heart, because I work in this business all the time and I see what is effective for selling and what isn’t.
  5. You will be leaving your house for scheduled showings, and you will be taking the pets with you. Especially the snake. It might be kinder for you and the pets if you can find a  loving and gentle home-away-from-home for the animals during the selling process, so they are uprooted once, instead of daily.
  6. If your house or property has unusual or challenging features, they will reduce the number of buyers from the buying pool for whom the house will be a good match. This often translates into a longer  time on the market before a sale. You might have to go through several rounds of fresh buyers before a match is found. In case you were wondering, this is a LOT like dating- the quirkier or more difficult we are, the more potential mates we have to meet before finding one that sticks. The alternative is to quit being quirky and/or difficult, but this isn’t always an option.
  7. When you pay my brokerage to sell your house and for me to get you through the process as gracefully as possible, you are paying for my experience, my work ethic, and my character, as well as the depth of knowledge and integrity in my brokerage. I draw on all these qualities when working on your project. By way of analogy, in buying art, you are paying the artist for focus, observational skill, imagination, practice, and creativity, all of which are worth far more than these particular molecules of ink on this particular piece of paper.

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    Horse from Leonardo da Vinci’s notebook

Second-string

In the Austin market, there are pockets where a home at the right price will be under contract in a day, or two, or three. Happens all the time- far more buyers than sellers= higher prices and fewer houses to buy.

If you, as a buyer, can’t be the winning offer that gets the signed, executed contract, then you can try for second-best. Here’s what you do: you tell your REALTOR® that you want to submit a back up offer, just in case the accepted offer falls through. Your REALTOR® will call the listing agent to make sure the seller is/ still is accepting back up offers. If so, then everything is done exactly like a first offer, except there is an ‘Addendum for “Back-up” Contract’ attached.

The gist of the addendum is that the signed, agreed-upon back-up contract is not in force, unless the first-place contract ‘falls through’ for some reason. At that point, the second-string goes out onto the field to play ball, becoming the first-string in the process. That would be you.

Once the back-up offer is accepted and signed, you still shouldn’t hold your breath, waiting, because your transaction is probably not gonna happen. However…. every once in awhile…. it does (!), and you feel like everything’s coming up roses.

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Thematic Thursday- What I Wish Buyers Knew

Thursdays are devoted to the theme- the heart of this blog- real estate transactions and all things REALTOR®. BTW, a REALTOR® is a licensed individual who belongs to the National Association of REALTORS® and subscribes to a higher code of ethical behavior than the state licensing boards require.

Whether this is your first home purchase, or the last in a long string, you can be sure that this transaction is at least a little bit different from any other you have experienced. In fact, I have fellow agents who have been in the business for decades tell me that they are still surprised by the unexpected in purchases and sales. Sometimes the curve balls come from changes in law, but more often they come from changes in practice. People are always thinking up new (sometimes unethical) ways of doing things, and the area of real estate changing hands is no exception. I am thrilled to say that I work with a brokerage that provides deep expertise from generous fellow agents and brokers who are willing to share their discoveries and knowledge with me, so if something ‘smells funny’ in a transaction, I have plenty of people from whom I can get second, third, and fourth opinions.

If yours is one of the approximately 30% of central Texas transactions that is to be a cash purchase, you have a huge chunk of work behind you already. In paying cash, you do not circumvent the range of emotions that you will feel during the course of a purchase, but you will not also be playing the waiting game to see if you AND your chosen property will qualify for a loan. Whew!

For the other 2/3rds of you who will be acquiring a shiny new loan along with your dream home, the very first action you will take is to find a great lender. A great lender is a detail-oriented individual who stays up-to-date on all sorts of loan possibilities, including even local grants (!) that some borrowers are eligible for. A great lender works for a home loan institution that is motivated to get its background work done in a timely manner, and get you to the closing table on time with the least amount of drama. A great lender is a masterful communicator who will calmly talk you through all the details of what will be required of you, and who has an eye on the clock and on the calendar to keep the process flowing.

YOU, my friend, must pay attention to this great lender and pedal as fast as you can to come up with the information, documents, proof, identification, numbers, whatever, that the lender needs in order to get your business done for you. You will have your financial life examined like you can’t believe, but a lending institution, like a doctor, has seen so many bank account records/naked bodies that yours is no surprise. Now is not a good time for you to clam up and feel all embarrassed. A good REALTOR® has a few great lenders they have worked with, and can suggest that you meet with more than one of them to make your own decision. If you are thinking about using an online lender, please check with your real estate agent to see what her experience has been with other clients borrowing through the same online lender. They are not all created equal.

Now why would I be talking about a lender before you have even looked at properties? Isn’t the house the most important part?!?!? Here’s why: in current conditions and practice in our area, a smart seller would not entertain an offer from someone who doesn’t even officially know how much she can afford to pay, and would definitely not appreciate a REALTOR® taking you into his home and possibly wasting his time. You are not a ‘real’ buyer in anyone’s mind until you have been at least pre-approved for a loan, and better still, underwritten for an amount that equals or exceeds the price of the home you are making an offer on. In many areas around central Texas, there is still a high probability that you will be competing with other buyers when you make an offer on a home. You lose if you are not prepared to move quickly in offering and in executing a contract.

If you are in the 1/3rd group who will be paying cash, your financial institution needs a heads-up to prepare a statement to give to a seller that proves you can pay for the home you are making an offer on. Some sellers might be fine with making a phone call to your institution to hear it from the horse’s mouth, but other sellers might only consider you ‘real’ if you have it in writing.

Okay, now that you have been pre-approved, or underwritten, or you have your proof of funds letter, how are we going to work together to find you the home you have dreamed of? Let’s sit down together, if we haven’t already, and sign the paperwork that puts me to work for you. Did you know that, if I am showing you houses and helping you to buy one, I am legally working for the seller, unless we’ve signed a buyer’s representation agreement? Do you really want me working for the seller? No, I didn’t think so.

Most buyers have already spent untold hours looking at houses online and driving through neighborhoods. This is fine for starters, but let me share some secrets: those beautiful and alluring websites you are probably looking at aren’t up-to-date with the latest information. Very often, a house you love has already been sold. And, please don’t, that is, DO NOT believe the automated value that some algorithm somewhere has assigned to a property. Sellers, I am talking to you, too, here! Those values can be far, far off from the actual market for that particular property.

We will set you up on a search according to the criteria I elicit from you in directed conversation and written “homework”. We will suit your needs and wants as closely as we can match them in the market. I can change the search, if you decide you want to be in a different area, or if you realize you need something a little different from what you started out wanting. The story in your head about how you live your life comes into clearer focus through the buying process, and the plot might change a bit as we go along. Perfectly normal.

Back to looking at homes- have you ever read or heard about studies on choice and satisfaction? It seems as if the more homes we find to look at, the freer we feel to make the best choice, right? Apparently, uh-uh.  Seems it doesn’t work that way. Too many choices just confuse and discourage us, even to the point where we procrastinate and don’t make a choice at all. Knowing this about the brain, we will look in the multiple listing service (updated every few minutes) at all the homes that fit your criteria: neighborhood, price, size, features, etc., and we will pick the 5 or 6 that you like best. I will make appointments to see them, one right after the other, if we can, and let you compare and contrast without brain overload.

You might decide on one that very day, and we’ll discuss the offer you want to make, and we’ll fill in the contract for you to sign and me to send over to the listing agent to present to the seller. On the other hand, after that first day of house-hunting, you might have a different perspective on what you want/need, and we’ll discuss this in a direct manner before we go on the prowl again. Occasionally, your will “lose” a house, or several houses, to other buyers who had offers more attractive to the sellers than yours was. There are ways other than more money to make an offer more attractive to some sellers, and if this is what you need to do to get your dream home, then that’s what we’ll do.

The last thing I’ll mention here is the emotional side of buying a home. Even the most facts-and-numbers-driven person has feelings that need to be recognized and handled in order to go from one stage of home-buying to the next. Real estate agents joke among themselves that one hat we wear is the therapist hat. Of course, for most of us, that isn’t literally true, but part of our job is to get you from the state we meet you in- a person without a new home- to the point at which you have closed on your home, moved in, and beyond, easing you through the myriad decisions and feelings that will come up. This is rewarding work!

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Welcome home!