The Early Bird

Austin ranked 11th for foreign real estate investment according to a survey released this week by the Association of Foreign Investors in Real Estate.  Multifamily was the most popular sector, followed by office.  Read more at the ABJ here

If you’re considering buying a home or re-financing, it may be a good time to speak with your mortgage lender.  For the first time in history, Freddie Mac’s weekly mortgage survey posted a 30 year fixed rate under 5.0%.  The national average fell to 4.96% with .7% of a point, the lowest rate on record since it began recording rates in 1971.

Call us today if you need a referral to a great lender.

Rollingwood is getting a new organic grocer this spring.  Sprouts Farmers Market will open a 27,000 SF store in the Mira Vista shopping center at Bee Caves and Edgewood, just west of Mopac.  The shopping center contains other retailers such as Amy’s Ice Cream, Freebird’s and Panera Bread Co.  Learn more at www.Sprouts.com

In some parts of Austin, sales are down 70% and sellers are vying for a very small number of qualified buyers.  In a few cases, we are seeing sales prices as much as 20% below the original list price.   Yes, you heard me right, 20%.

I bring this up because recently we’ve had several people tell us that they didn’t use a Realtor because they:

A.) purchased new construction, and used the “builder’s agent”

B.) wanted to save the 3% the seller would have had to pay a Realtor if they had used one, and instead got 3% off the price of the house

C.) found the house themselves and used the “seller’s agent.”

As our country sits at the boughs of an economic recession, it pays to be as educated as possible when purchasing what will likely be the largest investment of your lifetime.  Hence, I’ve taken a moment to outline common mistakes buyers make when selecting representation.

Using the “builder’s Realtor” – The builder’s Realtor works and represents the builder and their best interests.  This also goes the same for using the “developer’s Realtor.”  It is easy to be lured into a sales center and tell the sales person all of your hopes, dreams, and financial situation.  This is what sales centers are designed for, and the “builder’s Realtor” is trained to make you feel as though the transaction will be so simple, you will have no need for your own representation.  She is also trained to ask in-depth questions about your finances, the other houses you’ve seen, and your need to close quickly.  She is doing this because she is paid to sell you the house, and represent the builder.  Notice that she doesn’t offer up what other people have paid for their homes, what problems they’ve had, or how desperate the builder is to sell you this home.  Again, this is because she works for the builder.  She may be nice, but she does not work for you.  The bottom line: while the listing agent is required to treat parties fairly and honestly by law, they are paid to sell the property for the most money in the shortest possible time.  Period.

Not using a Realtor and getting 3% off the price of the home – With everyone wanting a deal in this market, this is an easy trap to fall into.  You’ve looked on the internet, you think you know what houses in the area are selling for, and you found the house yourself.  Why would you bother to have the seller pay a Realtor when you could get a whole 3% off the sales price for doing the legwork on your own?

1.)    Realtors have access to data that is not available on the internet, such as how much the seller originally paid for their home, how much the seller has invested in the home, how long it’s been on the market,  and what comparable homes actually sold for in the area.   

2.)    If you use a Realtor who is working in your best interest, it is likely that you can easily negotiate more than 3% off the sales price of the home.  Remember what I said about some houses going for 20% off their original list price?  Imagine if that person had not used a Realtor and left 17% equity sitting on the table. 

Using the “seller’s Realtor” – Many times, you see a sign in the yard, call the agent, meet her for a showing and realize that this is the perfect house for you.  The “seller’s Realtor” seems personable and trustworthy.  Why not just use their Realtor?  Her first and only allegiance is to her seller, who she signed a contract with long before she met you.  Legally, she must only represent their best interests, to get the highest possible price with the best terms possible, for the seller.

                Now, this brings up the possibility of the Realtor working as an intermediary.  You like the agent, she seems trustworthy – why not have them represent both parties to oversee the negotiation and closing?  In this case, now both the seller and the buyer are paying 3% to the same person – and under the terms of intermediary, she is not able to represent either party wholeheartedly.  In this case, you are paying a full commission, without the benefits of full representation.  You are essentially on your own to know which questions to ask, and what information to trust.  Not a good deal.

                And, now we can make it even more complicated by bringing in another agent from the same office to represent you on the seller’s house, to not have the obvious complications of the situation of “intermediary.”  This seems like the perfect plan, to have full representation, and the convenience of keeping everything at the same office.  Allow me to explain the pitfalls of this plan:

1.)    The listing agent of the house you love has one goal: selling the house they are listing at the best price possible for the seller. 

2.)    The office where this person works has one goal:  selling the house, making a commission, and helping their overall office revenue.

3.)    The agent that you’ve just hired from this office has two goals: Represent you, sell the house their office is listing, and sell it to you, since you are the one who wants to buy it.  In this case, your representation is severely compromised, as everyone involved has ulterior motives.

Well, shoot you say, what’s a person to do?  You just want to buy a house you like at a fair price, and come out on the other end feeling like you’ve been fairly represented, and can build equity in your home at a fair and even pace over the next few years.  No one wants to move into their home and realize their home is worth less than they originally paid, and start building equity in the hole – a hole that in today’s world can take years to dig out of.

The answer to avoid these pitfalls is to have a Realtor working for you at all times that you know and trust.  Building a relationship with someone who is knowledgeable about the market (both nationally, regionally and locally), someone who you KNOW is only going to represent and fight for your best interest is crucial at a time when the details of a transaction can make or break your financial situation for many years to come.

What else can your buyer’s agent inform you of?

·         A change in zoning near your home

·         A possible Wal Mart (etc) being built behind your home that may affect your value in years to come

·         A new road being built near your home

·         Reserve fund of a condo home-owners association (ie – If they are about to do large assessments, you’ll want to know this).

·         Long-term investment potential of certain neighborhoods, builders, and areas.

·         What other projects are planned near your home – will your view be compromised?

Given our current volatile market, we urge you to work with us to build a relationship with you, so when the time does come to make a real estate decision, you are armed with the very best advice available, and can make a decision that will only reap rewards in the years to come.

At Taylor Real Estate you can trust that we take our profession extremely seriously.  Every day, we study the market, study neighborhoods, and analyze the data, so we are prepared when you ask us for advice.  We are committed to staying on top of trends, and constantly take classes to be able to provide you with more efficient and effective service, fresh marketing ideas, and are committed to being the most knowledgeable resource you’ll find. 

Austin’s overall office vacancy rose to 19 percent in 2008, compared with a 14 percent overall vacancy rate in 2007, according to a report released today by Oxford Commercial. Vacancy among Austin’s Class A office properties in 2008 totaled 20 percent, up from 13 percent in 2007.

An increase in inventory–Austin now has a total of more than 42 million square feet of office space as of the end of 2008, 3.6 million of that delivered in the past 12 months–contributed to the increase in vacancy rates, said Vic Russo, a senior vice president in the Austin brokerage firm’s office division. Russo said Oxford is projecting delivery of another 638,811 square feet of new product before the end of the second quarter this year.

“This isn’t product that’s coming on line that’s been pre-leased, these are new buildings coming on that aren’t leased,” Russo said. Much of that new space has been delivered in suburban markets, he said.

Total direct absorption for office space in 2008 was 368,709 square feet, down slightly from 382,631 square feet in 2007.

“We’ve got a rough ride ahead of us in 2009, although we’re better than the national office market,” Russo said. “But it will remain fairly flat through the first quarter of 2010.”

Russo predicted that much of the vacant office space in Central Texas will be taken by new relocations to the area and not from expansions of existing companies. To fill empty office space, Austin will need almost 17,000 new employees, he estimates.

Rental rates averaged $26.50 in 2008, compared with an average of $25.98 in 2007. For Class A office space, average rental rates decreased slightly from $29.77 in 2007 to $29.28.

The rental rate figures bode well for Austin, and show this market is bucking the national trend, Russo said. Landlords will likely increase concessions to attract and retain tenants in 2009, but Russo said he doesn’t expect to see significant drops in rental rates.