Buyer Questions

Here are some buyer questions I hear a lot:

  1. What is a typical timeline for making an offer?
  2. How many offers will I have to make on homes before I have one accepted?
  3. Why are the ‘for sale’ prices so different from what the county tax appraisal says?

love these questions! Question #2 especially indicates to me that the buyer is savvy about our particular market.

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1. What is the timeline for making an offer? After further questioning, I find that the buyer usually means ‘How much time is there between looking at houses and going under contract? How much time from having a signed contract until I own the house?’ 

A couple of generalizations about this set of questions: are we talking about Austin? Or, are we talking about one of the surrounding cities? What is the price point?

Austin is generally the fastest-moving market because there are so many more buyers than there are available properties (hint, hint, Potential Sellers!). If you are not ready RIGHT NOW to make an offer and show the seller your ability to pay down payment, closing costs, and get a loan, you could be a day too late in getting the house you want. Once you start shopping, you could be getting an offer accepted in the next couple of days.

If you are looking in an outlying area, you might have days or weeks before you find what you want and have an offer accepted, BUT some situations require you to act as fast as you would in Austin. If it is a fabulous property at an appealing price, be prepared to act that very day, or it could be gone!

The next generalization about this question is: what is your price point? In general, the lower price-points, say $600K and lower in Austin and the lake area, and $350K and lower in outlying areas are highly sought-after and you will have lots of competition for that house. The price points higher than that tend to last longer on the market, but it is still true that a fabulous property at an appealing price will go quickly, especially if the price is under a million dollars for a truly million-dollar property and/or location.

If you have a cash offer accepted, you can close quickly- you will be waiting on the results of your own inspection, the title company’s commitment to what the property being passed to you legally is, and possibly, the seller’s schedule of when they can vacate the premises. I have heard of closes in just 4-5 business days, but it is typically 10 days or 2 weeks, realistically.

If you have a loan that needs underwriting, your close won’t happen in less than three weeks after you have a contract, although about 4 weeks is more typical. If you have a lender who is not motivated to get you to the closing table, it can take longer.

2. How many offers will I have to make before I have one accepted? The answer to this is dependent on the price range in which you are looking and on how close to your personal upper limit are you looking. The lower prices, say $250K and below, are full of buyers looking and making offers. I know many ways to make the offer really great for the seller, besides the sales price. BUT, the sales price you are offering is still the most important part of what you ‘lay on the table’ for the seller.

Which leads us to the second part of the question- how close are you to your personal upper financial limit in the homes you choose to look at? If you are already close to the top, you won’t have room to offer more, sometimes much more, than the asking price. Some of these properties receive 10, 20, or 30 offers in a couple of days. Being able to offer a lot more than the asking price becomes important, or you just lose out to someone who can. People looking at close to their upper limit in price might lose 5 or 6 offers before they finally have a contract on a house.

3. Why are the ‘for sale’ prices so different from what the county tax appraisal says?

The way I have had this explained to me in my real estate classes is this: there are three prices on a house; the price the county puts on the property, the price an appraiser says the property is worth, and the price the open market says the property is worth.

a. County appraisers are not necessarily trained, licensed appraisers. They might be people hired to drive around to see if there is anything obvious that has changed about the property since the last drive-by, and then the next year’s value is slapped on the property based on what the last year’s assigned value was, plus whatever increase in revenue the county might need to keep paving the roads, paying the sheriff, etc.  Often, the county’s appraised value is lower than actual market value.

b. An appraiser has been trained to use algorithms plus experienced judgment to interpret the results in order to arrive at a value for the property. Your lender will hire an appraiser from the appraiser pool to calculate a value for the property before the loan is approved. You will pay for the appraisal at closing and not all lenders are careful to hire an appraiser who truly knows the peculiarities of the local market. I encourage you to use a lender whose policy is to “hire local” when it comes to appraisers.

c. The open market (available through exposure on the multiple listing service) will place a value on property for you. Given enough exposure, the current pool of buyers will select a price at which a property will be purchased. If the property you are looking at is listed by a competent agent who has been able to convince the seller of the reality of the market [both important caveats], the price you are looking at on the glossy brochure or pretty website is somewhat close to what a buyer will pay at this particular time. An exception would be if the seller, assisted by the listing agent, calculates that putting a lower price on a home will produce many more offers from which to choose. In this case, the listed price may be lower than you could expect to pay.

There is, of course, a lot more I could say about each of these questions, but this will get us started.

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Photo from 2006, when I was with a church group that worked on new post-Hurricane Katrina homes for the musicians of New Orleans. These were built to be appealing, safe, and affordable to build up the community again.

Negotiating

It could be that growing up an ‘only child’ gave me a foundation for intuiting a lot about negotiation. After all, I perceived the world as myself “against” two parents (who had my best interests at heart), but whose decisions I saw as overly-restrictive. I am sure I argued them out of their minds! But, over time, I did start becoming more sophisticated about ‘reading’ those parents of mine.

With age and experience, I have a completely different perspective on the goals of negotiation. I no longer want to win just for the sake of winning. I am interested in figuring out what the opposite party wants and needs and in seeing a way to align those interests with the wants and needs of my side. I must remain clear and communicative about the needs on my side, especially because perceived needs are usually more fluid than we like to think they are.

When I am on the buyers’ side of a negotiation, I have learned to ask lots of questions of the other agent in a transaction to find out as much as I can about the sellers’ situation. I also pick up clues from the listing, from the photos, from the house itself, from their expressed timelines. I pick up a lot of clues and often, I’m not even sure how I know what I know. That’s intuition.

A real estate buy/sell negotiation starts at the very first contact with my own client. That is when I start setting the tone for how I do business through negotiating with the client on the terms under which we will act in concert to achieve what they need to achieve.

On the buying side, each contact with a listing agent in setting up an appointment to view a property, in letting the agent or the occupant know when we leave the property, in letting the agent know positives and negatives of my buyer’s and my thoughts about the property sets a standard for a later negotiation, should the buyers decide to make an offer. Being unfailingly courteous and respectful toward the other agent and their clients helps them understand that we are not out to ‘get the best of them’, to fool them, or to be arbitrary in our approach. This relaxes everyone, which reduces fear and defensiveness in later discussions.

When I am in a position in which the opposite party tries to bully me or my client, I take this as a sign that his position is weak and the only tool he has left is to try to force his will onto me or my client. Or, that she is pathological! Bullying behavior sends me into my hyper-calm exterior, hyper-alert interior mode in which I see the possibilities and strategies for disarming the bully and forcing her to face the realities of the situation. Working with reality is more productive than dancing around imagined wrongs and slights with power-moves.

Working the seller’s side is interesting because they have had the time and inclination to build a fantasy world of how the market works before I even talk with them about real estate. My job is to give them the experience of market reality so that they can start moving away from notions and into the actual world. And my job is to walk away from the relationship, if it appears that the sellers are not going to face reality in price or in preparation for a sale.

Being in a position to calmly walk away from a negotiation is gold. Knowing the bottom line frees all parties to search earnestly for a way to work together, if both have a stake in the result, and both realize that the other party can and will end the negotiation if there is no positive movement.

On the selling side, it helps that I am familiar with a buyer’s perspective, and I can help the seller understand that perspective, too, in order to remove as many barriers and negotiating points as possible before the house even goes on the market. Imagine if there are only two or three points of contention in a contract, rather than ten! How much less time and annoyance we all expend when we have taken into account a buyer’s perspective ahead of the negotiation!

On the buying side, it helps that I am familiar with a seller’s perspective; all the time and preparation that has gone into getting a house ready for market, and sometimes, even legal issues that have had to be resolved in advance of listing the home, as well as the ongoing inconvenience or even financial stress that comes from having  a home on the market.

Our Texas residential contracts are set up to be very much to the advantage of the buyer, as if the seller is a business or corporation which might be trying to fool the unsuspecting buyer into acquiring a ‘dog’. Of course, there is an element of that in a sale, and I believe in being vigilant in observing potential problems when buying a house. But, unlike a business or corporation, most sellers are emotionally attached to their property and their dignity, and honoring that impulse really helps a buyer’s side in a negotiation about any part of the contract.

I really love negotiation. I love the feeling of being emotionally calm and mentally charged. I love the flow of intuiting the unspoken and using all clues to reach what the parties feel is a satisfying, or at least fair, outcome.

I love when my buyers pay less than their lender’s appraiser says the property is worth. I love when my buyers win with their offer, even when it is less money for the seller than other offers. I love when a seller gets above-asking price for their home, especially when the house has been priced in accordance with what houses in similar condition have been sold for in the neighborhood. And I love when even the people on the other side of the transaction feel satisfied and free to move into the next phase of their lives unencumbered.

There are two or three basic theories I’ve read about how negotiations should be conducted, but my experience shows me that my best approach is to use intuition coupled with adjustments in my side’s response based on the results of each step we take, learning the hidden parts of each parties’ needs and tolerance as we go, until we reach a satisfactory conclusion.

I’ll be happy to negotiate on your behalf, starting with our first contact.

Ruth Marie was about 14.

Esteemed teacher and young student.

There is a lot of unspoken AND spoken negotiation in playing music together. If one player has a strong idea about which way to take the mood, the tempo, even the pitch, it is well that others adjust, or persuade that outlier otherwise, all in real-time! 

What I’ve Been Thinking About Today

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Yes, kitchens do become dated, and most buyers in our market long for acres of luxurious countertops rather than a dog trot breezeway on which to churn their butter.

In advising people who have been in their homes for a long time and are thinking that they might be moving into a smaller place, or into an assisted-living apartment* in the next couple of years, I realize that folks get information on How To Sell A House from  a variety of sources. Those sources are often national in scope, and are helpful in a way, but never specific enough to a market or micro-market to be completely believable.

In planning home renovations with an eye to a home sale, there is no substitute for consulting with someone who has local market expertise and has walked the walk with a multitude of buyers, hearing their comments and feelings about homes they see. Just because you think you know that most buyers want certain features in a kitchen, or a bathroom, or a certain flooring choice, does not necessarily mean that you will do yourself a favor by spending a lot of money following through with that type of renovation.

When I do a thorough market analysis, I look at every home in your neighborhood, and sometimes, other similar neighborhoods, to see what has sold in the past few months, what those homes looked like inside and out, where they were situated in relation to through streets, scenic views, neighborhood amenities, noise sources, as well as the prices they brought to their sellers. In a neighborhood in which many of the “perfectly good” homes are being torn down to be replaced with a modern version of home, your beloved home might become a tear-down, or a major remodel project, too. If that seems likely based on what the market is telling us right now, it would not be prudent to spend a lot of money updating your home for a sale. It would be more prudent to adjust your expectations to accommodate what the buying public is telling us about price, and for you to put a sales price on the home that reflects what is actually happening in the market.

Please, please do not set off to modernize a badly-dated kitchen or bathroom without getting a pair of expert eyes in to advise you on the likelihood of payoff from such a project.

Much better to keep an eye on home trends all along and periodically make judicious upgrades to your home as you are able. You want to be able to enjoy the fruit of your labor while you are living in the home, right?!?!

*Some of these apartment centers I refer to as “party barges” because the residents live in a stimulating atmosphere of slumber party pranks, laughter over wine and parlor games, endless field trips and educational adventures, and the occasional nap thrown in.

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Happy birthday to this fabulous country of ours, home of beautiful mountains, vast skies, innovative thinkers, and generous hearts. What a great experiment our founders flung out into the world, and may we continue that experiment with creative and supple minds and bodies, that all who enter will sense an awakening to possibilities and promise for everyone and everything contained within these 50 states.

Undercover Detective

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Quick- what is this person doing?

If you said, “looking for where the main sewer pipe exits the house to go out to the street”, you’d be right! Ding, ding, ding…

Why do we care about a sewer pipe we can’t even see? Because old sewer pipes can rust from the inside out, develop cracks and leaks, and allow tree roots to invade and clog up the system.

How do you know this has happened? When your sewer line stops working and your toilets and sinks back up. Fun, huh?

The solution, of course, is to install a new main sewer line from the house to the street, digging up the yard.

What if the sewer line now travels through the roots of a large, desirable tree? Some companies are experienced in using a water-and-air shovel to delicately dig through the roots without harming them.

Costly, but necessary.

Ten Things I Look For When I’m Helping You Buy a Home*

  1. In Austin: Are there any open permits for previous additions, swimming pool, HVAC updates, electrical updates? Why this matters: In the past couple of years, the City of Austin has gotten very strict about not issuing new building permits (including plumbing, electrical, HVAC, etc) until the old permits have been inspected and approved. There is no such thing as permitting in arrears. Pool built five years ago with no permit? Sorry- it has to go before the home gets another permit for anything. (This actually happened to someone!)
  2. What is the foundation? Why this matters: If pier-and-beam, I want you to use an inspector who understands these systems in this environment.  Because pier and beam has not been common in our area since the 1950’s, there are fewer of these homes, and they are not as well-understood by the average inspector as are the more common slab homes. Some inspectors really make a study of the pier-and-beam situations. And, we have two very different soil types in our area, each of which has an effect on the foundation.
  3. How are the neighboring properties zoned, or who or what owns them? Why this matters: You don’t control what you don’t own. For example, you can buy a home that is backed up to what looks like a beautiful greenbelt, but guess what? If it isn’t public land, the use can change and you can have a whole new subdivision just beyond your back fence. If you bought your home for peaceful privacy, you might not appreciate all the neighbors.
  4. Does the home have a septic system, and does it use well water? Why this matters: It is imperative that you have these systems thoroughly inspected by a specialist. There are lots of ways to mistreat a septic system, and you want to know what you are getting into before you buy. Same for the well water. You will want to get a well specialist in to check the system and you will want to assess the water quality and what it is going to take to upgrade a current treatment system, if necessary. Inadequately treated well water can ruin your dishwasher, your clothes washer, your house plumbing, your tubs, your toilets, your clothes, your dishes and drinking glasses. You get the idea. You need to be prepared; that’s why you have me by your side.
  5. What do you see on the survey and what does the title insurance commitment except? Why this matters: I am not a lawyer. Let me repeat that: I am not a lawyer. But, I have looked at a title commitment or two and a survey or two, and if you don’t already have your own lawyer looking everything over related to your home purchase, I will happily point out some things I see that you might want to get further professional help in understanding. Sometimes the survey is obviously not accurate. Sometimes there are puzzling aspects to easements on the property.
  6. Is the property in some category of flood zone? Why this matters: Even though flood zone maps change around here regularly, not everyone has had experience with a flooded home. I would like to help you understand what flood recovery entails, if you are thinking about buying in a flood zone. Also, a previously-flooded house can be harder to sell in the future, so that is something I would want to explore with you.
  7. If the home is in a condominium association, especially, but, also, just a property owners association, we want to look carefully at those documents. Why this matters: In both cases, the health of your purchase is closely tied to the health of the entity that oversees most aspects of the dwelling and the neighborhood. If it is a new condominium association, there is no history to look at, and so you want to ask lots of questions. If it does have a history, you want to examine it carefully, see what lawsuits or special assessments it might be facing; figure out if you want to be tied to the situation. Yes, we will make a point of being out and about to meet potential neighbors and ask them about the association. I am not shy about doing stuff like that to keep you in the know.
  8. What is surrounding the neighborhood you are interested in? What zoning is there? What businesses might be moving in? Why this matters: For example, if you are buying a lower-end home in a neighborhood that is about to welcome the new location of a huge source of employment, you could be in for some good luck ahead when you want to sell, due to demand. Or, if your new neighborhood is one that is about to be bordered by a new toll road, your property could be harder to sell in the future because of noise. Location matters.
  9. What is the sales history of the home? Why this matters: by looking at the dates of sales, as well as the buyers and sellers, we can guess at whether or not this home has been purchased in poor condition and fixed up for resale. Some “flippers” do a wonderful job and you will be glad to live in your remodeled gem. Some “flippers” do a minimal job, putting lipstick on a pig, so to speak, and you could run into foundation problems, water incursion problems, or other expensive problems down the road, even though the amenities look shiny right now. We want to do some research!
  10. What is the local school like? Why this matters: Of course, I will link you with the Great Schools website, but I can make contact with local principals and neighbors with children so that you can hear about school from the people who know. Even if you have no children, a home in a district with a reputation of one kind or another can take on that reputation, too, making it easier or harder to sell in the future.

Because Keller Williams Realty is my brokerage, I have access to lots and lots of other people’s experiences in real estate transactions. I don’t just have to learn from my own experiences; there are about 900 other agents in my brokerage and I can find out what has happened in their experience, too. Not only do I see other agents at weekly meetings, classes, and coaching sessions, we have our own closed Facebook group from which I learn every single day. And, when I take continuing education classes, I don’t do it online. No; I go to the Austin Board of Realtors for my classes so that I am in a room and in discussions with 20-60 people from various brokerages, and I hear about their experiences. I have a buncha stuff filed away in this brain, and I have the purpose of helping to keep you safe in your transaction.

*Of course, there are more than ten, but this is a good start, and it illustrates some things a lot of people wouldn’t think to check.

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How buildings get built fascinates me. I can’t count the number of times I have participated in  building projects just over the border in Mexico. Here is the early stage of constructing a medical clinic.

(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!

Here’s Why You Care About the Municipal Wastewater Treatment System

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Mercer Street, Dripping Springs, Texas

The Dripping Springs Keller Williams business center was honored to host the town mayor, the city engineer, and the deputy city administrator one morning a couple of weeks ago at our weekly office meeting. We had invited them to tell us everything they knew about the wastewater situation, both current and future plans. Would you be surprised if I told you I enjoyed the presentation?

Until thirty years ago, Dripping Springs was an unincorporated ranching community that, with the exception of the gas stations along U.S. 290, pretty much aspired to be left alone. Funny what the growth of the nearby metropolitan area did for those aspirations. The mayor joked that, after he was elected, he was surprised to discover that being the mayor of a small town consisted of more than drinking coffee and showing up for parades! Evidently, he has now become an informal expert on municipal wastewater systems.

Dripping Springs’ growth is very dramatic: many thousands of houses are permitted to be built. The current downtown area of Dripping Springs is extremely charming with early 20th-Century buildings being re-purposed for businesses that fit the needs of 21st-Century residents. BUT. The businesses can’t get the building permits they need to expand. WHY? The wastewater treatment system can’t keep up.

The city has applied for a permit from the state to treat and discharge a whole lot more wastewater than it currently does. This city has invested in a system that cleans the water even cleaner than Onion Creek, into which it could discharge the water. Dripping Springs’ wastewater is much cleaner than Austin’s discharge. You would expect that Dripping Springs would be motivated to dump treated wastewater into Onion Creek, but there’s something even better. Developments and subdivisions are contracting to buy the treated effluent to store on their properties for use in landscape and sports field irrigation . The water is being reused in ponds for fishing, and in other surface storage schemes.

Eventually, because water is so precious in this semi-arid region, the city will be able to take this treated effluent and then run it though the water treatment plant for household and business taps in town. This sounds repugnant, until you realize that is exactly what happens to the effluent now, courtesy of natural waterways and ground percolation. City effluent discharged into rivers all over the region, as well as private septic systems spraying or trickling onto the surface, are re-captured by downstream municipalities which treat it for drinking water. What nature does in its own time and place can be duplicated in a more focused way by each municipality.

This attention to wastewater and to drinking water is what will allow the region to sustain the growth it is experiencing.

Now if we could just solve our transportation situation….