How to Respond To A Hand-written Offer For The Sale of Your Home

I recently listed a home for sale in the Mueller Garden Court, and the seller received an offer under the doormat of her home. The prospective buyer had decided not to use a real estate agent to put together the offer, and the seller dutifully scanned it and sent it to me.

Most agents will use one of the Texas Real Estate Commission’s promulgated forms to submit an offer. In fact, our real estate license dictates that if there is a form that we can use, we should use it, unless either the buyer or the seller has asked to use their own format. This might happen if you are selling your home to a wholesale buyer (one who intends to assign it before closing, and thus wants certain safeguards in their that protect themselves as a buyer).

So the most common form for a resale home is the option-based residential purchase contract. It allows a buyer to lay out all of the purchase terms and then buy an option to buy the home. So it might be that the buyer pays $150 for the right to buy the home, and that $150 is no-refundable. The buyer can also opt out of the contract for any reason during that option period, and not default on the contract. The offer we received was not an option contract, nor was it on a promulgated form. It was hand-written.

I am not a lawyer, and so I’m not permitted to practice law. That’s why the Texas Real Estate Commission gives me forms to fill in. The elements of a legally binding contract are (as I understand them) as follows:

  • Acceptance in strict compliance with the terms of the offer – in practice, both parties must sign the same offer with no changes between signatures
  • Legal Purpose/Objective – i.e. it can’t be binding if it agrees on the performance of an illegal act
  • Mutuality of Obligation – also known as the “meeting of the minds”
  • Consideration (amount of money typically)
  • Competent Parties – no-one can be crazy, drunk or a minor. (or all three)

My advice to the seller is to respond using a promulgated form – one in which all of the elements above are laid out. If we proceed with the offer as written, my advice would be to seek legal counsel.

Garreth Wilcock sells homes in Austin. 512 215 4785

 

 

 

Why isn’t that home listed in the MLS?

The Austin multiple listing system (MLS) is the system of record for many but not all home sales. In most estimations it accounts for around 60-70% of the overall sales. So some homes sell without the MLS, and buyers often ask the question: “Why isn’t that home in the MLS?”.

There are several categories of homes that aren’t listed for sale:

  • For Sale By Owner – regular resale homes where the owner/seller doesn’t want to employ a listing agent
  • New construction – sometimes one or two of a builder’s homes may be listed in the MLS, but if the builder has an on-site sales agent, sometimes they don’t list all of their homes – the as yet unbuilt, the under construction and the completed inventory.
  • Pocket listings – where an agent is marketing a home for sale by themselves privately. This might be to extend greater privacy to the seller, who may not want attention drawing to themselves (Sandra Bullock – call me when you’re ready to sell), or may not want to have their home in a presentation ready state all the time.

There are also inaccurate data sources which list homes for sale when they’re not. For example, Zillow or Trulia allow people to add their homes for sale directly to the site (the For Sale By Owner crowd), and sometimes the data they import from the MLS is just wrong – homes that sold three years ago are sometimes listed as active.

Then there’s the homes that have a “coming soon” sign out, but haven’t been added to the MLS yet. In some ways, this is the time when a home is worth the most (in a flat market):

  1. As time on market increases, the “market stigma” increases – the “why hasn’t this house sold yet” question that buyers ask means their perception of a home’s value is less.
  2. Buyers often feel that they should scoop up this “exclusive opportunity” before the rest of the crowd come along
  3. However: there are less people looking at the home or made aware of it, so the number of buyers looking at the home is diminished. The people that are looking (for example the people stalking homes for sale in Mueller Austin)

No matter why a home isn’t in the MLS yet, it’s possible to get your trusty buyers agent to find out more details and represent you in any potential purchase. Get in touch if you would like to find out more about any home in Austin. 512 215 4785

University Hills Austin Homes – Market Update

University Hills AustinIn a housing market like Austin where one in three home listings (per the MLS) fails to sell despite local economic indicators looking good, is University Hills faring any better?
It’s certainly a different picture to the one six months ago where the number of foreclosed homes was bringing down list prices and perception of home values. The impact of the distressed homes made for a temporary dip in prices. While there are still a few foreclosed homes set to close soon, there are none currently on the market and we’re seeing mostly equity sales. Remodeled and renovated homes above $200,000 are starting to appear again with eight selling at the time of writing in 2011.
As predicted earlier this year, investors are flipping homes from the distressed market to the upper end of the resale market. This is what I wrote in my May 2011 University Hills newsletter:

Home sales in the area have been dominated by foreclosures as the low average sales price indicates.

In the last year, almost one in three sales in University Hills has been a foreclosed home. The good news is that only 4 out of 21 currently active listings are foreclosed, and the discount inventory has been clearing up. Expect some home flipping activity in the next quarter.

Remodeled home sales are faring well with several under contract including one which failed to sell last year and went off the market. We’re getting to a state now where inventory is low and sales are consistent – demand is steady and showings are up over last year.  This is a good indicator that the very local market is shifting back towards a sellers’ market. This is long awaited good news for sellers.

The market remains broad – sales prices in the last 12 months have spanned from $67,900 to $214,000, and only now are we seeing contracts on two of five homes at the upper end of the market (>$225,000)

Will 2012 be a good year to sell your home in this sleepy East Austin neighborhood? It’s early to say, though I always recommend getting your home on the market before the Spring / Summer rush when there is less competition for the available buyers. Call 512 215 4785 to find out what your home is worth, or check out the competing University Hills homes for sale.

What is the US National Foreclosure Rate?

The US foreclosure rate at the end of 2011 is still somewhat high in my opinion 1 in every 563 housing units received a foreclosure filing notice in October 2011. How is Texas doing? The same measure was just 1 in 988 housing units in the same period, which is encouraging for those of us living in Austin. We’re not as safe as North Dakotans, but we’re almost 4 times safer on average than a homeowner living in California.

Check out the latest foreclosure data from RealtyTrac below.

Austin Land Market

Lots over $1m in Austin are in good supply right now, which is great news for land buyers. Here are a few statistics I pulled from the Austin MLS for lots that were listed for sale since the start of 2010:

Under contract: 2 lots

For sale: 38 lots

Sold lots: 14 (within 23 months of listing)

Failed to sell: 43 lots (ones that have been taken off the market)

If we look at lots on the market since 2005 we see that the average time on market is 6 months.

So what does this mean for a seller of a valuable lot? If you look at the lots that are currently selling, one is a foreclosed multi-family lot, and another is a huge lot just South of Downtown. There are a fair number of choices currently available for large estate home building, so it’s a tough market, with perhaps 5+ years of inventory.

austinLotsForSale

If you look at sold listings, the bulk take 4+ months to sell. The sales prices have reflected seller optimism and perhaps some market fatigue.

This analysis doesn’t take into account all of the tear-down homes that an agent hasn’t listed as a lot in the MLS, though at this price point, one would hope that the listing agent would have the presence of mind to do that.

Check out all lots in Austin over $100k for sale, and all Austin lots over $1m to see what’s happening in the market right now.

Investing in University Hills

The housing market in University Hills was under my microscope this morning. Is this somewhere that investors and buyers should be looking right now?

The image below shows the currently active homes under $170,000. The red arrow means a price drop which has happened in 11 out of 17 active listings. The “Frclsr” column on the left indicates the home is foreclosed, and 5 of 17 current listings in this price point are, with a few more short sales on top of that.
University Hills Real Estate

What does this mean for prices in the neighborhood? Well, this is only one end of the spectrum, and there are remodeled homes in other parts of the subdivision that are faring well. Looking at the lower end of the market though, it seems that prices have dropped, and the number of distressed homes may mean that appraisals on the regular resale homes will come in low. I’ve had one resident get in touch to say he was shocked at his appraisal value on a recent refinance request – 19% below what he paid three years ago.

I don’t think that values in the neighborhood have fallen that far, though they are certainly lower than peak at this price point. Another interesting data point is that two of the last three offers I’ve received on my listings in the area have been from real estate agents or brokers.

What this implies to me is that if the professionals are swooping in to buy, then maybe it’s a good time for investors and homeowners to buy too. Investors would want to see that single family home leases in the last 12 months in the area have attracted a median lease price of $0.73/sqft.

If you take a couple of distressed single family home listings that are move-in ready and consider the rental opportunities at the above broad brush lease price:

2602 Dunbarton : 4 beds : 1910 sqft per TCAD : typical lease $1350, price $125,000 (listing courtesy of, well, me)
2110 Vanderbilt : 4 beds : 1692 sqft per TCAD : typical lease $1200, price $129,900 (listing courtesy of Prudential Texas Realty)

things actually look quite appealing. If you follow the “one percent rule” idea for residential rentals, then the home on Dunbarton could rent out for just $1250 and still beat the game.

My crystal ball is a little cloudy in terms of predicting the future value of real estate, or anything else for that matter. If I was Jim Cramer, I might be yelling “Buy!” and firing off an airhorn or two.

Garreth Wilcock helps buyers and sellers in East Austin. You can search for homes in University Hills at his website.

University Hills – Can Haz Pancakes? (something to flip)

If you look at the housing market in University Hills in East Austin, you’ll see that house prices span a wide range. There are foreclosed homes in the $120,000 range, and remodeled homes in the $250,000 and up range, with one home on Bradley Drive listed at $325,000.

Why is University Hills such a popular target for remodelers? There are a lot of homes that are ready to be transformed. A real estate broker who lives in the neighborhood is fond of telling me that the area used to be the prestigious area where UT Professors would buy large homes just a quick jaunt down the road to the campus. One thing I noticed when I lived there is that there are many original owners living in the 1960s homes. Some of these owners have modernized, some have left their homes in original condition, which makes a ripe target for someone remodeling a home.

After: One home on the market right now is an example of a high-end remodel. Starting at the ground up, the foundation was leveled and warrantied. Then back to the studs, with new plumbing, electrical and HVAC work. Hand-scraped wood floors and new kitchen and bathrooms, energy efficient windows complete the picture. This listing is marketed by Julie Nelson of the Nelson Project, Keller Williams, and I include a short tour video.

East Austin Home

Before: At the other end of the spectrum are some of the more original homes, which would make an interesting target for a remodel. The prevailing sense I hear in real estate circles right now is “buy and hold” rather than “buy and flip”, so if that’s the majority advice being put out to investors, I would do the opposite (with adequate research to back it up of course!)

I’m marketing a few of these homes right now in the $120,000 to $155,000 range. Click on the pictures below to see more info on each. Any of these homes would make a great project for either an investor or a first time home buyer wanting to build some sweat equity.

Garreth Wilcock is a Realtor who is an expert in University Hills Homes for sale. 512 215 4785.

Dunbarton

University Hills Home
eAST Austin Home

University Hills – One Thing Every Home Buyer Should Ask

East Austin – You wouldn’t build a home without first putting down a solid foundation would you? It’s a phrase people bandy about with reckless abandon to illustrate their points about putting the groundwork in first. And in East Austin Realtor circles, and those who know University Hills in particular, you’ll often here the question asked – has it had any foundation work done?

Three little piggiesJust as the three little piggies learned their lesson about building material choice through multiple iterations of house manufacture, so the builders of the latter part of the 20th Century learned about the best way to prepare and pour a slab foundation. In University Hills, the two major builders were Bill Milburn and Walter Carrington, and through the 1960s and 1970s, they built large ranch-style houses amid the hills of 78723.

The challenge homeowners in the area have is that the homes were often built on absorbent clay soils, which swell when wet and contract in the dry summers of Austin. As they do so, the slabs that rest upon them rise and fall, often at different levels in different parts of the house, leading to an unlevel foundation. Which means that foundation leveling companies like Centex and LevelBest earn a living shoring up the foundations, returning the floor to level, and hopefully preventing any future deviations.

So what do you need to know when considering buying a home in University Hills? Has the foundation been levelled? It’s a subject of debate as to whether a foundation that hasn’t moved in 50 years is better than one that has and has been repaired. I advocate that there’s only real value in a foundation repair from a reputable company which offers a lifetime warranty. If there has been repair there are follow up questions – where is the engineer’s report to validate the work?, and is there a transferable lifetime warranty? Digging down further, the engineer may have recommendations about drainage, grading and gutters, so you need to ask if these have been followed.

A buyer’s inspector should check for signs of foundation movement, and recommend inspection by a levelling company as further due dilligence if necessary. These companies typically measure vertical deflection at different points in the home and express a judgment if any deflection is out of typical acceptable tolerance. If you are buying with an FHA loan, then the FHA appraiser will have an acceptable tolerance, and may ask for further investigation from a structural engineer which might cost $400+ for a report.

So the upshot is: if you’re buying in the area, make sure you do your due dilligence. If you’re selling in the area, get this checked out before you get on the market.

Garreth Wilcock used to live in University Hills, where he learned the hard way about choosing a foundation repair company that will still be in business when it’s time to sell your house. He helps people buy and sell homes there. 512 215 4785.

Four Reasons Not To Move To Austin Texas

I can certainly wax as lyrically as the next TREC licensed real estate agent about the boons of a large university presence, the burgeoning ecomony and the major employers and the low costs of living here in Austin, TX. But it’s June and my lyrical wax is about to melt, and I thought I’d blow off some steam. Here are some reasons that some don’t move to Austin:

Austin is hot. Not just a little toasty. Resolve-breaking hot. If you look at average temperatures in Austin, the moderate sounding 84 degrees in July and August might not seem too bad. If you look at the average high for August though, it’s 96 degrees, and the sun is pretty fierce – we’re at the same latitude as Cairo. Really.

Good news for sun-lovers, solar-power lovers, and cold blooded animals who like complaining about the weather. Bad news for pale English people like me who scurry between air-conditioned spaces and large bodies of water. Luckily Austin is replete with lakes, pools, rivers and swimming holes, and large shade trees.

Property tax is relatively high. Of course the flip side of their being no state income tax in Texas is that the property tax is a little higher than in other states. For example, my property tax rate in 2009 was around 2.2% of appraised value.

The good thing about homes in Austin are that the prices are lower than in other large US cities. If the median house price in Greater Austin in 2009 was under $190,000 it was still only around $300,000 within the city limits (equating to around $6,600 in annual property taxes before exemptions)

Pollen Sometimes referred to as the self-proclaimed Live Music Capital of the World, there’s another long-winded phrase I sometimes use: The Fall Allergy Capital of the US. While I’m in whining and griping mode, I’ll spit out that I never suffered from allergies until I moved to Austin, and then after about three years I got snookered by them. All it took was a minor change in diet and a bit of education and I don’t even notice them any more.

Too many top ten lists. OK, I’m scraping the bottom of the top of the barrel here, but Austin does get a lot of “greenest city”, “best City to get a job”, “best city for meeting smart, attractive people who will gladly lend you ten dollars” and other accolades. If you don’t believe me, check out the Austin wikipedia page.

The glorious TedXAustin unveiled its 2011 theme last night – “Right Now”, with a mention of Austin’s crowning as City of the Next Decade. Which means that there’s going to be alot going on here, and alot of other people moving here too.

If you think you can handle the pollen, greatness, property tax and heat, then you could consider a move to Austin. Lots of people do – the population doubles every 20 years.

Garreth Wilcock is an ex-patriate Austin Realtor ®. You can search Austin homes for sale at his website, and get in touch to take the heat and pollen test to relocate here. Heck, if you’ve had enough of all the new people, heat and property tax, he can even sell your home so you can leave.

Austin Mortgage Rates: Weekend Update

Austin loan officer John Schutze runs us through his weekly mortgage rate round up.

Mortgage rates keep inching higher as we end the week!

The same factors that lead to the large increase last week are still keeping the pressure on rates:

  • Rising oil prices and gas prices
  • Optimistic predictions about the end of the recession
  • Concerns over the U.S. total debt load
  • Fears of inflation


Given the factors above, investors desire a higher rate of return on their investment which is driving rates higher.

The Fed has spent around $600 billion of the 1.2 trillion allocated to purchase mortgages. They bought $25 billion last week but it wasn’t enough to push 30 year rates back below 5.0%. So the trend remains higher for now…”

John works at Bank of America and writes a blog about Austin mortgages.Garreth Wilcock is a Realtor ® in Austin, Texas. You can search Austin homes for sale at his website.

Garreth Wilcock is a licensed REALTOR® in the State of Texas with Keller Williams Realty.
All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental