Your Austin Sweet Austin Home

Time to say goodbye to the old real estate market in Austin, Texas

 

You know how a roller coaster is pretty much always going up or down? Well, it's the same with the real estate market. It's always either going up in favor of sellers or down in favor of buyers. For a brief moment, it is balanced between the two.

For the past year or so, Austin's sellers have enjoyed the hottest seller's market ever. There was so little inventory that, in some neighborhoods, they barely had to do more than clean the toilets and there would be a line of buyers outside their door. And the list price was just the starting bid. 

Buyers struggled to move fast enough or bid high enough to secure a home for themselves. Many just gave up. 

But they have reason to hope! It appears we have reached the highest point on this coaster and are headed back downhill.

The chart below, provided by Texas National Title, provides the proof...

1.Inventory is rising in all three counties in the Austin area.

2. Closings are up a little in Travis County but down in Williamson and Hays. These would be properties that went under contract in May, when interest rates were still pretty low, inventory started picking up, gas was affordable, etc. 

3. Pendings (contracts) went down last week in all counties, despite more listings. Buyers can get picky and take their time again. 

4. Price decreases ramped up in all three counties. The reality of the new market is hitting sellers and their agents. 

5. Expireds and withdrawns are picking up, especially in Travis County. These are most likely sellers who decided they could and would stay put if they couldn't get a huge profit for their property. Or they may have blamed their Realtor and fired them, hoping someone else could 'get the job done'. 

Unfortunately, neither sellers nor their agents really determine the price for a property. The market does. In this kind of market, a Realtor looks at the numbers/rates/trends for similar homes, especially the competition, and helps the seller come up with a price that doesn't 'sell' the other homes.

Buyers are savvy. If they can find what they need for less, why would they pay more? And with days on market increasing, they can look around a little more.

What can a seller do? Well, properties are still selling. There are still buyers. They just have to forget the past and accept that this is a new market. A sale will occur when the three points of the triangle - Price, Location, and Condition - are met. Since location is fixed, the other two have to adjust accordingly. 

The good news? They will have a better chance of buying the property of their new dreams. 

As always, contact me with any questions or if I can help you, or someone you know, with a real estate need. I appreciate your referrals!

 

 

Hot Market, Low Inventory in Austin, Texas

 

This cute 4 bedroom 2 bath Austin, Texas home in 78753 was originally built in the ’70′s. It recently received a full remodel – new windows, roof, flooring, cabinets, quartz counters… the whole shebang. Between the upgrades, the location, and (finally) at the right listing price, it drew multiple offers, with my clients winning the prize. 

The Austin market is hot and inventory in the prime locations is low. If you’ve thought about selling your home, this is a great time to do it! Call me for a free market evaluation. 

Home Seller Myth #1 - Price it a little high...

As you might suspect, I subscribe to a lot of blogs and websites that deal with real estate issues. One article today from the Texas Association of REALTORS blog caught my eye - "Don't Be Fooled By These 3 Selling Myths".

Myth: If I price my home higher than market value, I’m leaving room for negotiations.
Truth: Buyers have no idea this is your strategy and won’t understand why your price is too high. Many won’t even view your home if it’s priced too high, much less put in an offer. An improperly priced home is also more likely to sit on the market, making potential buyers think there’s something wrong with it. And when that happens, you’ll probably end up with lower offers than if you’d priced the property correctly from Day One.

In conversations with people, I realize they have the impression that in a hot market, the seller can name their price and buyers will be lining up at the door. That's true for a few properties, but only the ones who understand the importance of pricing their property right from the very beginning. 

 

 

Many sellers also believe that buyers are always going to offer less than the list price, so they are tempted to add some cushion. What they don't realize is they are creating the scenario themselves. By pricing it high, they are setting themselves up for lower offers.

On the other hand, if it's priced right it will attract more buyers, creating competition and sometimes even drawing offers above the list price. Pricing isn't just another form of marketing - it's 80% of your marketing. It's important to get it right from the beginning because the first 14 days your property is listed is the window of opportunity when buyers and their agents discover it and are most likely to visit and make offers. 

 

 

But how do you determine what the right price is? There are no crystal balls, unfortunately, and every house is unique in some way, but there are tools and data that REALTORS use to price a property.  We have the multiple listing service which provides data such as sold prices, days on market, etc., and there are classes geared specifically toward pricing, such as those required for the Pricing Strategy Expert designation, which I have earned.  

To be clear... a REALTOR doesn't decide how much your home is worth. The market does. It comes down to supply and demand, just like any other commodity. First there's location. Next condition, especially first impressions. And then you have to take into consideration the competition. REALTORS will look at comparable properties that have recently sold and those that are also on the market. Fair market value isn't determined by how much you originally paid for the property, how much you still owe on it, how much you need for a future home, or how much you spent on your new granite counters or wood floors or new hot water heater. If a buyer can get the same for less, or at least meet their needs for less, that's what they will do.

Buyers are reluctant to make offers on homes that are clearly overpriced. They fear insulting the seller, but also a high list price could indicate the sellers are going to be unrealistic through the whole transaction, making a potentially stressful experience even worse. 

Many buyers won't even view a house that's clearly overpriced. It's worth repeating: "..,An improperly priced home is also more likely to sit on the market, making potential buyers think there’s something wrong with it. And when that happens, you’ll probably end up with lower offers than if you’d priced the property correctly from Day One."

 

 

Not to mention more days of having to keep the home show-worthy, of paying property taxes and mortgages and property owner association dues... and more days away from whatever dream or need enticed you to sell your home in the first place. 

Isn't your time worth something?

I admit this is a hot topic for me. I've been suckered into pricing a property too high initially way too many times, on the condition that we'll lower the price after a week if we haven't received an offer. Unfortunately, you often remain a step behind and never catch up if you don't start out in front, at the right price, to begin with. It pains me to see my sellers so stressed and frustrated after too many days on the market... especially when they decide it must be my fault, despite my recommendations on pricing it lower. 

From now on, if a seller doesn't seem to be realistic about pricing, I'm determined to recommend they find another agent, because I have a business to run. I want to help my clients, but I'm in this to make money for my family. Taking on a listing that is obviously overpriced is like throwing money down a well. Plus it takes time away from clients who are ready to team up and help you help them.  

If you still haven't been convinced, here's an example I recently heard...

Picture someone going car-shopping. They are looking at Cadillacs, but there's also a Kia in the lot, priced the same as the Cadillacs. Out of curiosity, they investigate, but soon see the only thing it has in common with the Cadillacs is the price. It has none of the higher end qualities you would expect if you spent that much money. Sure, it's a beautiful color, but why buy the Kia when you can have a Cadillac with all the bells and whistles?