Monthly Archives: August 2014

Is the Internet Replacing Real Estate Brokers? By Jeff Stewart, CCIM

Leave a reply

ccim logo    It is often speculated that the Internet will eventually replace real estate agents, just as it has eliminated many other professions.  Ironically, the exact reverse has been true so far.  A National Association of Realtors (NAR) survey in 2001 revealed that 69% of the homebuyers nationwide purchased a residence with the assistance of a real estate agent. The remaining buyers were split evenly between buying directly from the previous owner (15%) and directly from a builder (15%). Fast-forward to 2013 and a similar survey discovered that 88% of all homebuyers had used real estate agents.  They also determined that only 5% of the buyers bought directly from a For-Sale-By-Owner.

 

Did the Internet play a role?  Most definitely . . . the Internet was where 37% of the buyers found their new home.  In fact, 30% looked online for properties before they ever even contacted an agent. Clearly the Internet is the first stop for most buyers.  Technology is aiding buyers like never before.  Buyers can search for properties anywhere in the country.  They can apply for loans, draw floor plans, check floodplains, and even digitally walk down the street to look at the neighbors’ homes.  What they cannot get is the reassurance of knowing that they are in the hands of an experienced agent who will help guide them along the way.  When making the largest buying decision of their lives, people need experts they can trust.

If you, or know someone you care about,  have real estate questions please give me a call.

Jeff Stewart, CCIM    Broker Associate

Stanberry & Associates, Realtors

jstewart@stanberry.com

 

Tax Considerations When Selling Property      By Jeff Stewart, CCIM

Leave a reply

TaxesPeople have many different motivations for selling their real properties.  While I always try to respect my clients’ privacy, over the years I have found that it is very important for me to understand what the goal is before I market a property.  Let me give a few examples.

A number of my Baby-Boomer friends are finding that they want to have less property to maintain.  A good example might be a lake house that is no longer used.  The lake house might have very well appreciated $400,000 over a twenty-five year period of ownership. A sale would create a large tax bill.  In order to best serve my client, I need to know the answers to a number of questions.  Does my client need a greater retirement cash flow or a lump sum for some purpose?  If the house has no mortgage, would the seller consider carrying the financing with a reasonable down payment?  An owner-carry note creates an income stream and spreads the capital gains tax over the life of the loan.

Another example might be if the seller wishes to sell a small apartment complex.  If the seller has owned the apartments for many years, the tax on the capital gain and the recaptured depreciation will likely be substantial.  If the seller does not need the cash or income stream, an IRS 1031 Exchange might be the best alternative.  A 1031 Exchange allows investors to “swap” real estate investment properties without creating a taxable event.  Of course the rules are very specific and this is not for everyone, but it is a very common procedure that is used every day in the commercial real estate world.  It is a perfect way to exchange into a more practical property that can be later willed to the seller’s heirs.

Finally, it sometimes happens that I find that the best advice I can give a seller is to not sell.  I remember the fellow who owned a building in Elgin, Texas.  He was tired of dealing with the tenant and the other usual landlord duties.  After doing my research, I determined that due to unusual circumstances he was earning much more rent than the little building would normally rent for.  In other words, the building was not worth much and the rental income was substantial.  I advised him to hire a property manager to relieve him from the stress and hang on to the building for the cash flow.

I have represented as many as three generations of some families.  Occasionally, I find that the decisions about the family real estate holdings really need to be considered in the larger context of what works well for the family as a whole.  This requires a gentle touch, good listening skills and a lot of experience in dealing with family dynamics.

Changes can come fast and sometimes we need someone from outside the family to help identify options.  That is what I have done for many families for over the years.  It is most rewarding to be able to utilize my years of experience in helping families in need.  Should your family or someone you care about need this type of assistance, please do not hesitate to call.  We can help.

Jeff Stewart, CCIM    Broker Associate

SpeakingOfAustinRealEstate.com        jstewart@stanberry.com

Stanberry & Associates, Realtors

Cell 512-923-1669

 

     Lack of Timely Response to Residential Offers     By Jeff Stewart, CCIM

Leave a reply

Jeff Jackson 2014

My nephew is a Texas Aggie and he has a saying  . . . anything done at least three times becomes a tradition at Texas A&M.  Of course he is joking, but they do love their traditions.  We Realtors are no different.  Much of how we conduct our real estate business in Texas, and certainly Austin, is based largely on tradition.  Clients from other states often ask why the seller usually pays for the title policy?   Tradition.  Why does the seller and the buyer split the title company escrow fee for closing?   Again, tradition. Actually it makes for a most unsatisfactory answer, but it is pretty much the truth.

By the same token, those of us who have been in the business for quite some time are often ill at ease with changes to tradition.  This is especially true when there is a hint of a legal reasoning.  We now have a perfect example of a change from the way we have traditionally presented offers.  It raises the question of why we have changed and is it for the better?

The license act requires agents to present all written offers to the seller.  The Realtor code of ethic requires the listing agent to submit all offers and counteroffers as quickly as possible.  I suspect many agents are slipping a bit on this point.

In an effort to manipulate multiple offers, many listing agents now wait until Friday to put residential listings in the MLS.  It is becoming the norm for the seller to then finally consider any and all offers  the following Sunday evening or even Monday.  One can imagine how pleased buyers are when they find out that they have made a full price offer (or MORE) on a home Friday evening and the agent insists on holding open house in the home all weekend long.  Welcome to the new Austin tradition. Buyers are often upset to learn that sellers do not have to even respond to an offer.  This unfortunately happens more than one might imagine – especially in multiple offer situations. To be sure, it is painful to be a buyer nowadays in our over-heated market.

But back to the idea of tradition . . . .  In the past, agents tried to present offers the same day if the hour was reasonable.  If the hour was late or the seller was out of touch, we always made an effort to present offers and counteroffers ASAP the next day.  So will this trend hold once the pendulum swings back in the buyers’ favor?  Probably not, but then again maybe it is the new tradition.

Jeff Stewart, CCIM     Broker/Associate

 

Stanberry & Associates, Realtors.

 

jstewart@stanberry.com    512-923-1669

 

Has HGTV Helped or Hurt the Housing Market? By Jeff Stewart, CCIM

Leave a reply

logo     logoThe advlogoent of reality TV, and especially HGTV (Home and Garden TV), has created some interesting trends in residential real estate.  Granted, one would be excused for suspecting that little redeeming value might come from reality shows, but I see evidence of both good and bad.  Perhaps the most visible result of all the reality shows has been the increase in people seeking to “flip” houses.  Ten years ago, this was a phenomenon that we associated mostly with California or Florida.  Indeed, the flipping crazy helped exacerbate the housing crash.

Now flipping is a major part of the Austin residential market.  It is not necessarily all bad.  I have often wondered what we would eventually do with all the thousands of poorly built tract homes from the 70s and 80s.  You know the ones, the Masonite Monsters.  Many, if not most, of these homes had three sides Masonite siding . . . as well as a similar product for interior doors.  As we now know, none of these products held up very well and almost all need replacement.

The good news is that more people than ever are entering the market with a desire to refurbish these aging homes.  Yes, most are looking to flip the houses in a quick sale; but as long as the work is done correctly and the homes are worth the sales price, do we care?  Having redone many, many homes myself, I am not surprised that many flippers discover that it is very easy to remodel a home . . . making a profit from all that work is another thing entirely. Yet, enough people have been successful at the remodel/flip game that it remains a large part of the market.

If there is a downside, I would have to say that it is that many of the homes I have seen have only been cosmetically improved.  The kitchens and bathrooms look like they jumped of the pages of a recent magazine, but a peek in the HVAC closet or electric panel might be very alarming.

For the past month, I have been working with a client looking for houses north of the Mueller neighborhood . . . some of the most expansive soil in the entire city.  Probably half of the remodeled homes had recent slab repairs.  This is both good and problematic.  A good contractor can almost completely hide all signs of earlier slab movement.  Without before and after photos, how is a buyer to know exactly how bad the movement really was?  I have been involved with the slab business for many years and I have never been convinced that a slab is fully stabilized over the black Taylor clay.  Yet, that is only one part of town. Overall I would say that HGTV has created interest and that is a good thing as long as people are making a good faith effort to fix up old homes correctly.

Jeff Stewart, CCIM  Broker Associate

Stanberry & Associates, REALTORS

jstewart@stanberry.comlogo