When I began my career in real estate in 1992 I was still in college and not completely sure which direction I would go within the real estate.  Quite frankly, I wasn't fully engaged into getting into the real estate business for my career until 1993 when I switched majors from the PPA program (a professional accounting degree) to my eventual Real Estate/Finance major. 

In 1994, upon graduating from The University of Texas at Austin, I went to work at Keller Williams Commercial, Shopoff-Gurkin, for Doug Gurkin.  Doug was one of the two brokers who owned KWC and much of the business that he had done over the prior few years had to do with helping investors, many of whom hailed from California, buy investment properties, mostly duplexes and fourplexes, in the Austin area.  Most of them had purchased their investment properties between 1989 and 1992 so by the time 1994 rolled many of them had experienced significant gains on their property's valuation and were looking to exit the market, via a 1031 exchange, and reinvest somewhere else.

If you've very much of what I've blogged about you've probably noticed that I enjoy studying and discussing market trends.  Much of this interest was sparked during my time at Keller Williams Commercial and during my previous time at Brock Consulting Group.  Even with my dealings with my clients who are looking to sell and buy a home, I bring that extra ingredient of analysis to the equation and take pride in making sure my clients get a good deal for whichever side of the deal they are on.

This takes me really to one of my main goals in real estate - to help my clients achieve financial security through their real estate transactions. 

It starts with the first time homebuyer, who moves from renting to owning their first home.  The statistics show that the average net worth of a renter is less than $5,000 whereas the average net worth for a homeowner is over $170,000.  Its a fantastic feeling to help someone find that first home, at a good price in a solid neighborhood, and know that they've just taken a monumental leap toward increasing their net worth and financial security.

From there the next step many of my clients take is moving up.  In en effort to help my clients financial situation I typically offer a move-up program to my clients.  Many time moving up in price range can make the percentage increases in the market have a bigger effect on your bottom line net worth.

After that, most of my clients start to consider buying an investment property.  It really is a fantastic idea for someone who really is looking to increase their net worth and provide a future income.

Recently I went to an investment class and I will share more on buying an investment property, the art of getting in with no net first year cash cost as well as 100% financing in my next blog.

If you have any questions feel free to contact me off of the West Elm website or email me at Brink@WestElmProperties.com .

A recent article from the Los Angeles Times discusses a complaint that has been lodged against the recently launched Zillow.com website.  Zillow, which was 'turned on' 8 months ago, is being accused by a fair housing advocacy group of being purposely misleading.  The complaint apparently says that misinformation about values of homes is being used by many within the real estate industry, such as lenders and real estate agents, to take advantage of consumers.

I have actually been quite curious of the Zillow experiment.  Over the past few months I have noticed that they have made strides to provide information regarding local markets such as historical trends and county and state averages.  The trouble with Zillow, in a state such as Texas, is that our sales information is not public data.  With a system that is based on compiling sold information from public resources, Zillow will seemingly always be lacking in Texas. 

Just to see how Zillow is doing, I went ahead and ran my own home through their system.  I did the same six months ago.  Over the past 6 months it says the 'zestimate' is up $30k.  Is the market really up $30k - no, not at all.  Additionally, they have a heading at the top that says my "30 Day Change" is down $10,464, which is interesting given that the market in Austin has shown consistent growth.  Also kind of weird to me is the "1 year value change" graph which looks like every stock performance chart I've ever seen. 

That said, I do believe the value of this home is within what they give as their 'value range', a task which isn't too difficult given they are giving me a value range of $120,000.  Other magic involved in their value is the 3 comparables they provided me with.  My home is in the Spicewood/Balcones area.  One of the sales is in my neighborhood.  In fact, it's only 1/3 mile away.  The second comparable is in Canyon Creek.  Huh?  Canyon Creek of down Anderson Mill Road, out on 620 and then into Canyon Creek, Canyon Creek?  That's not comparables.  Hmmmmm.  Let's see about the 3rd comparable sale...in....Northwest Hills?  Seriously?  The home they gave me is just west and south of the intersection of 183 and Mopac, 4.17 miles away, according to their own estimates.  I don't know how far in actual driving terms. 

Okay, I'm trying to be fair.  Really!  I am.  However, there are just so many quirks in the system I can completely see where the fair housing advocacy group is coming from.  I truly hate the fact that anybody would use the site and take anything away from it other than entertainment.  A Zillow statement referenced in the article states that "zestimates are designed to be a starting point for consumers who want to learn about the value of homes".  The problem is, what if the starting point is wildly inaccurate.  And honestly, in my own case, what good is a starting point with a range of over 35% of the value of the home?  I would guess that your average consumer is familiar enough with a neighrborhood they are researching to understand the values within 35%.  In truth, a valuation system that doesn't come up with a value within 10% is useless.

This actually brings me to my next point, and that is the treatment of the property valuation like a stock or some similar commodity.  To me, the 1 year value chart makes me want to laugh and shake my head at the same time.  Privacy precludes me from sharing the actual chart with you, but if I did you would see a chart that goes up $10k, then down $15k, then up $30k, then down $5k, then up $15k, then down $20k, all within a 12 month period.  I am not saying that there will not be fluctuations in what you can get for a home over the period of a year as the market conditions change and the seasons change but I don't believe it looks anything like a line graph of specific plotted points.  A better representation might be a range.  Real estate values are not a fixed, exact amount.  Two people can look at the numbers and come up with a different value for the home and honestly that doesn't mean either value is incorrect.  Typically there is not an exact replica of the property to use as a comparable so adjustments will need to be made to the comparable.  Typically new construction is the closest you will get to a set, standard value point.  In the end though a home is worth what someone who likes it will pay for it.  I think technology has opened up many doors and provided us, as the consumer, with so many tools and the ability to access so much more information.  I continue to believe that technology will lead us to some amazing places and provide us with so many new and exciting opportunities.  However, right now in Texas, online property valuation is not something that is tenable.  If you want a property valuation you best bet is to hire an appraisal or I can complete a free Comparative Market Analysis or Broker's Price Opinion.  Just contact me: James Brinkman, West Elm Properties, 512-698-3525, Brink@WestElmProperties.com

As an aside, I just don't feel the whole zillow, zestimate, zindex things is cute at all.  It's seems like one of those things that someone thought, 'let's be clever and throw a 'z' on the front of some words!' (typically words beginning with vowels other than the zillow itself).  Well, to me it's kind of zannoying!

The time does go quickly.  I can't believe it has been over a week since I wrote anything so it looks like I have some catching up to do with you this week - so let's get started...

First, there are a few articles in the Statesman that I found of interest:

This article is about how the internet has changed the real estate business for buyers, sellers and Realtors.  This isn't exactly anything new or profound, but it bears discussion.  As I mention to every one of my sellers, 77% of homebuyers used the internet to search for a home in 2005, and this is a number that has been increasing every year.  I have noted a leveling off of sorts over the last couple of years as we reach some type of critical mass.  The more surprising facet is that nearly one-quarter of all buyers found their home through an internet search - a ten percent increase over the prior year.  This is one reason why I stress property presentation so much to my sellers.  If you look at my website, and in particular the exlcusive listings section, you will notice that I take a great deal of care and time on presenting each listing so that homebuyers can really grasp what a home is about.  Too often, in fact far too often, I see agents who have put no pictures or 1 photo or dark photos up on the internet or in the MLS.  I'm not sure what those agents are thinking when they do that.  It certainly is not going to make a buyer think that they want to see that home.  Time and time again buyers tell me that if there are no photos are bad photos of a property they skip right through the property and cross it off the list.  Additionally, I try to write a description of each property so that the home buyer can visualize what I can't really show in photos.  For the home seller, the goal needs to almost be 'not being eliminated' at this juncture in the real estate business.  With buyers controlling far more of what they see, which is a good thing, it is important to put on the best 'face' you can.  Many sellers need to ask themselves, is my agent really showing my home in the best possible light?  If the answer to that question is no, the seller probably needs to have a discussion with their listing agent or maybe even find another. 

Also of note though is that 81% of those buyers who used the internet to search for homes did use a Realtor.  Of course this brought out the whole "Realtors need to be prepared because we're no longer the gatekeepers of the information", which always makes me laugh.  Honestly, if all you, as a Realtor, could provide was which homes were on the market and the ability to show them, you really shouldn't be in real estate.  Of course, that is just my humble opinion.  A Realtor should be a resource for their client on the transaction, the market, the values and should make their client's lives less stressful and make the purchase as smooth as possible.  There are too many agents who actually interject themselves too much into the transaction and thus disrupt it or cause more drama than is necessary.  Maybe I'm just a little more prepared to embrace the changes in the industry, after all I did spend four years with eRealty or, as they were known in Austin at the time, the devil.  Of course that experience actually brought me to where I am today with my company.  Too often with these 'internet' real estate companies (you know who you are!) they lose sight of what is most important in a real estate transaction - trust!  Too much of the focus is placed on reduced commissions and, due to the reduced commissions, volume becomes the paramount issue because the profit margins are so slim.  In the end when you focus on volume the company starts to lose sight of the individual - the home buyer or seller - and, as my old broker who shall remain nameless used to say 'they just want you to treat them as johns'.  (Yeah, it sounds as horrible now as it did then.)  How disheartening that thought was.

My creation of West Elm Properties, Realtors was in direct response to my experience at eRealty.  I still wanted to be on the cutting edge of technology, to use it in any way that would benefit by clients, but I wanted to get back to the roots of the fact that the real estate transaction is a very human thing.  Buying or selling a home is one of the most stressful things to do and can stir up a whole lot of emotions.  Its important to not only use the best tools available for a buyer or seller but to also 'see' and understand the very specific, very unique needs of each client.  I really believe that having West Elm Properties helps me accomplish the marriage of the two facets new and old, better than any other company out there.

jb

When staging your home the idea is to make your home the star.  There really is no goal other than that.  Staging is not about being clean or even primping the home but rather about arranging the home so that there is a flow to the home.

For all my real estate listings I work with a professional design consultant who uses the principles of feng shui and energy when staging the home.  He only works with one other real estate company in Austin and I have found his work to be very effective.  Many of the home staging companies that exist arrange the furniture to look nice in the room but do not necessarily take into account the flow of the buyer's eyes through the room.  Good home staging not only takes into account how to maximize the best features of a room, it also helps 'point' the buyers the direction you want them to move.

With that in mind, here are a few ideas I've picked up when you are looking to stage your home:

> Consider sightlines.  When the buyers walk in your front door do they have any obstructions in their sightline?  Try to remove tall or large objects from this initial view and keep a clear 'pathway' so that the buyer feels drawn in.  Tall or large pieces in the way of this initial sightline can have the effect of 'pushing' the buyers back out.  Having this sightline clear can also lend an impression of more space.

> Straighten the kitchen - The kitchen is a major player in the home buyer's thought process.  You don't have to do a kitchen remodel in order to improve the appeal of this space for a buyer.  Once again the goal is space - specifically, open space.  Clear off the counter as much as possible to create better visual lines.  This includes most, if not all, of your appliances as well as towels, cooking utensil caddies and cookbooks.  A very select use of decorative items may be used, but the focus is on 'very select'.  You might try fresh fruit in a bowl if it fits well into the space.  Clean off the refrigerator and remove items from window sills.  Buyers will look in your cabinets so be sure to keep those clean as well with at least some sightline to the back of the cabinet.

> Pay attention to the 'earth' elements in your house - In Texas there is not a lot of opportunity to use a fireplace and yet a good percentage of homes in Austin have a fireplace.  It is also true that many people ignore the fireplace when arranging their furniture.  Rather humorously (and I was guilty of this myself), the furniture tends to be arranged toward the television and the television tends to be on whatever wall you find the cable outlet.  Arrange your furniture toward the fireplace.  Create a setting - a 'warm' place for gathering and, if need be, move the cable outlet.  However if you are staging your home for sale consider just going without.

> Throw rugs - Throw rugs - I mean literally, throw them!  Actually rolling them up and putting them away will be just fine.  In most situations throw rugs make a space seem smaller.  The first place to remove them is usually the bathroom which, typically, is one of the smallest rooms in the home already.  Pull them from your kitchen as well.  In fact the general rule seems to be if they are not there to specifically define a space they probably need to go.  An example of this is a living and dining room with no other separation designated in the wall or floor features.  Even then it seems it is risky to use a rug if the area is carpeted as the rugs show their best on wood floors.

> Closets and other spaces that go dark - Do not stuff these areas.  Rather, be sure that the floors of the closet are clean and remove whatever you don't absolutely need and start packing it.  This goes for most cabinets and other storage type rooms or areas.  Buyers will feel the space in question does not have enough storage room if the cannot see the back wall.

> Garage - It seems the garage has become the keep-all in today's society.  If you have nowhere else to go with these items put everything you can in boxes and stack them UP rather than out.  The best is to have your garage show as its intended purpose - to house the amount of cars its designed for as well as see the walls of the garage.  The 'good' is to clear enough space to fit the cars and stack and arrange everything vertically up the walls.

Additionally, don't be afraid to pick up recent magazine on home decorating and copy ideas from the pages.  Don't go overboard, but if you see a way to create a space in your home based on similar space in the magazine, don't be afraid to try to arrange your room that way.  Many people suggest that furniture and decorations should match.  I personally don't think that is as important as the items in the room 'going' together.  Matching isn't as important as style.  If the style is identifiable and cohesive then you are probably in good shape.  If it is more of a hodge-podge mix and match situation then you should probably look at taking the room one direction.

More

• No dim bulbs!  Make sure the light bulbs all lighting fixtures are working. 
• You might like your wallpaper but more and more home buyers view it as dated, regardless of when you installed it.
• Your pets are your friends, but that doesn't mean the home buyers will like them.  Keep them out of the way.  If possible, keep as much evidence that they even exist (food bowl, litter boxes, crates) out of sight.
• Use fresh!  Fresh flowers, fresh fruit.  Avoid plastic fruits and silk flowers.  The impression you leave with each is subtle but lasting.
• Keep it clean.  Not only the floors and counters, it's time to get detailed.  Fan blades, light fixures, air vents, window sills - whatever collects dust or dirt, keep it out.
• Leave a light on.  Keep your front porch light on.  It's an invitation to home buyers.

When you are all done walk out of your home, walk to the street and then walk back in and view the home - not as the seller of the home but rather as a buyer.  Try to see the home with buyer eyes rather than seller eyes.  Feel how the home moves you - what directions you feel you should walk.  How does the home look to you?  Don't make excuses or reasons for the faults, don't grant yourself, as the home seller, the benefit of the doubt - the buyer won't.  Remove all the possible negatives you can identify, starting at the beginning.  Remember, the buyer is there looking for a reason to rule out the home - don't give them a reason!

Six years ago, in the summer of 2000, I sat in my car outside a home in Jester Estates waiting to meet a client.  It was a Friday morning, about 8:50AM.  The instructions posted in the MLS said the home would not be shown until Friday at 9AM.  When I pulled up to the home I thought I might as well be going to a party because of the amount of cars sitting outside the home.  Outside my windshield I saw no less than 6 other Realtors and their clients waiting in a scattershot, makeshift line in front of the house.  The listing agent might as well have put a number dispenser at the front of the house and a little “Now Serving Number” digital board over the front door.  As I got out of my car I thought to myself, “Well, this is no good”.

Demand.  I saw a lot of the ‘Demand’ side of supply and demand that summer.  I’ve mentioned it before, but I had 7 different buyers that lost out on a home in best and final situations in July of 2000 alone.  Being in a market with multiple offers, many significantly over asking and actual market value, is not the boon to real estate (and for that matter, Realtors) that many people believe it to be.  Buyers are frequently are disappointed or frustrated and many end up overpaying for the home in that market scenario.  (I, personally, tried to be diligent and make sure the prices my clients paid were supported by comparable sales.) 

While many were caught in the euphoria of the thought of never ending price escalation, I was stuck with the feeling that the Austin boom was about to come to an end.  The words of Dr. Stephen Pyhrr’s article “ Austin ’s Persistent Real Estate Cycle” were resonating.  He wrote that Austin has historically experienced ‘up’ cycles of 8-10 years and ‘down’ periods of 3-5 years.  In 2000, the last ‘bottom’ of the cycle, the beginning of that cycle’s ‘up', had begun in 1991.  We were well into our 9^th year of the ‘up’ and it was becoming evident that cycle had run its course.  The real question was starting to look like, how bad would be the down cycle?

At that same time, in California the market was just beginning to really heat up.

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Six years later it’s hard not to see all the stories and articles about how the boom is over.  It has become one of the bigger business stories of the year and I would wager that most of the major media outlets have at least run one ‘Boom is Over’ in the past month or so.  Yesterday I ran across this article prominently featured on the MSN home page.  It is an article from Forbes magazine titled ‘How Low Will Real Estate Go?’ (Lacey Rose).  The first sentences in the article read, “Get used to it – the seller’s market is closing up shop.  The days of fat, fast home value increases are gone.  Pack away those flipping fantasies.  “The boom is definitely over, there’s no debate about that,” said Mark Zandi, chief economist of West Chester, PA – based research firm Moody’s Economy.com.  “Now the question is more how hard is it going to land, if it lands at all.” ”

So the boom is over, huh?  What boom?  Where have I been?  Last I check Austin went through its down cycle from the Fall 2000 to the Fall of 2004.  Here in Austin , we experienced zero growth, for the most part, between 2000 and 2004.  Since the Fall of 2004 we have seen steady growth, commensurate with that of a market in the beginning cycle of growth.  Growth, based on past history, that should continue through to 2012, maybe even 2014.

Even within the article there is a link title “How Low Real Estate Will Go In 15 Metro Areas” there are examples of markets that look like they will fair just fine during this ‘bust’.  The link graphs out the projected growth for the next 10 years in 15 different markets.  Seattle, Dallas and Houston all are projected to fair just fine during this terrible, terrible time (tongue firmly planted in cheek).  Boston, Los Angeles, Miami, New York, Phoenix and Washington are the only cities they show that appear to actually have a retreat in pricing at some point over the next 10 years.  For those keeping score, that’s 6 out of the 15 cities cited, and yet the article/link is “How Low Will Real Estate Go…”. 

I don’t think it is a big jump in logic to say that the stories we read and see, written for national consumption, are heavily influenced by the east and west coast in this country.  Is it too much to ask that broad brushes not be used when writing the stories though?  Of the 6 cities that actually appear to have price decreases on the way, only Phoenix does not fit the mold as a major east or west coast market.  It definitely appears that this is coloring the news and, in spite of evidence to the contrary in plenty of markets, is causing the writers and reporters of these stories to make such grand sweeping statements as “the seller’s market is closing up shop”. 

I’ve said it before and I’ll say it again: all real estate markets are local.  When a market is down in your town, I’ll find you a market that is up in another.  Point me to a seller’s market in one city and I’ll point you to a buyer’s market in another.  There is no ‘national’ real estate story when it comes to a national real estate market.  Yes, certain factors influence all markets.  A spike in interest rates will have some influence over all real estate markets, but the impact will be different depending on the local factors. 

In Austin we are influenced by technology and the state government, among many other factors.  When the tech options vaporized and the stock market fell in late 2000 and 2001, the Austin real estate market followed.  The record highs of the real estate market in Los Angeles and Miami over the next few years had absolutely no influence as to what was happening in Austin .  Of course it didn’t, why would it?  Yet we heard story after story about how the national real estate market was booming, just as now we are treated to the doom and gloom.  During the last few years, Austinites would ask, ‘What Boom?’ and now, just as easily, they can ask, ‘What Bust?’ 

So as you read and see these stories just remember some simple rules:

Real estate is local.  There are always some points of wisdom to be gleaned from the stories and they are a good way to know what’s going on in different parts of the country but, in the end, what happens with the real estate in New York City has little influence as to what is going on in Austin. 

Real estate cycles are just that – cycles.  They go up and they go down but over the long-term the growth trend line is up.  Nationally, the 50 year growth trend line is up 4.8% per year on average.  Over the past 30 years in Austin the growth trend line is up about 6.7% per year.  Real estate remains one of the best ways to leverage your money over the long term, regardless of the cycle at that moment.

 

Don’t buy into the hype and hyperbole that the reporters use in their stories and articles.  In the end, much of their job is to sell papers, magazines or whatever their medium might be.  The headline, ‘How Low Will Real Estate Go’ will certainly grab one’s attention a lot more than something more pedestrian.

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Six years ago, as I got out of my car outside a home in Jester Estates and got ‘in line’ with my clients I thought to myself what a wild scene it was and how it certainly could not be a good sign for where the market was headed.  My clients actually got the house that day.  There were multiple offers but we stayed within the comparables sales and, after an afternoon of ‘sweating it out’, we got the phone call that their offer had been accepted.  Just a few months later the word came out that Dell would be laying off employees and so began the past downturn in the Austin market. 

Six years later we are still here.  Jester actually did fairly well over the past few years and is a high demand area.  Austin made it through the down cycle and came back out and now we are at the beginning of our growth period.   And, at least for the next few years, the boom starts here.

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Here is an interesting report on the subject of market performance from First American if you would like to read more on real estate cycles of different market.

The other night I was at a sort of a house warming party for my very best friends.  The husband was relaying a story about a recent telephone conversation that he had with a customer service rep.  It seems, that store 'x' (who shall remain nameless, although it's hard to avoid them with the amount of catalogs i get in the mail from them) had overcharged my friends $11 on the shipping.  When they called to have it removed they were told that the original shipping amount they were told was just an estimate.  No where was that communicated, either verbally or written, at any prior time.  The simple solution would have been for giant-store to just say, '"We're sorry, we'll go ahead and take that off for you".  But noooooooo...my friend ends up in a protracted 20+ minute conversation with the customer service rep.  During the conversation he asked to speak to her manager no less than 4 times.  The final time she yelled at him, "Hold On!"  He waited for about 5 minutes on hold and then she finally came back and, all huffy-like, said "we credited the $11".  He said thank you and hung up.

A couple weeks passed and my friends noticed on their bill that the store had actually charged another $11 - they were down $22 now.  My friend called the store's customer service line again, explained the situation, and the credit of $22 was applied - all in about 2 minutes.  It's amazing to think of all the time that was wasted by the first customer 'service' rep when it was such a simple fix.

It seems like I've heard more and more of these stories in the past couple of years.  On one hand I'm hoping it's not just me and my friends getting older and grumpier but on the other hand that would be a whole lot easier to correct.  Unfortunately, I see it in even such simple things such as asking someone working at a store, 'how are you doing?' and getting what seems to be a fairly common refrain of 'i can't wait for this day to be over' or 'i'd be a lot better if i wasn't here'.  

(As an aside, if you'd really be a lot better if you weren't there, then don't be there.  Find something you would enjoy doing more!)

In the end this conversation takes me back to real estate and a recent transaction.  There was a situation where the buyer of my client's home did not close the home by the contractual date.  We were told it would just be another day or two so we decided to hang in there.  Typically your first offer is your best and any offers after that tend to keep going down.  Putting the house back on the market, given the client's situation and the stigma that's attached to homes that fall out of contract, was not in my client's best interest.  Well, a couple days turned into another couple of days which turned into another couple of days.  The buyer, an investor from out of state, and then lender seemed to not understand the importance of actually living up to the contract and expediting the loan so that the property could close.

One afternoon I was having a conversation with a title rep, checking in to find out the latest information.  I also conveyed that this situation was very stressful for my clients and that our patience was wearing thin.

Her response to me:

"Well, tell them that's real estate"

Ugh!

What kind of answer is that?  I'm supposed to go to my clients, people who I now call friends, and tell them to suck it up because 'that's real estate'.

I'm sure the title rep did not mean the statement as flippant as it sounds.  But honestly, it's that thinking that drives me batty because it's pervasive within the real estate industry.  The people that are supposed to be protected and shepherded the most in real estate - the consumer - seems to not be at the forefront of the thinking for so many people within this industry.  So much of the drama that occurs during a real estate transaction is completely unnecessary and could be avoided.  If every link in the chain of a real estate transaction just remembered who we are here to serve, and took care of their parts with that in mind (much like they would want someone taking care of their own purchase or sale), then I think consumer trust in the real estate industry would skyrocket.

It's not that hard.  A little kindness.  A little consideration.  A good faith effort.  It goes a long way. 

Here's to customer service coming back strong.