Real Estate Tips

I think back to my pre-licensing days and realize how much I've learned in the past four and a half years. Like many other professions, Real Estate is quite dynamic. As development patterns change so does the business and I've created this tab in an effort to help educate the public about how agents/Realtors work. Hopefully, this will aid in choosing the right Austin Realtor for you.

Common mistakes made by home buyers or sellers

Choose the wrong agent

Take advice from too many people

Make decisions based on past experience or outside markets

Inability to distinguish between salesmen and consultant-analysts

Don’t realize the difference between re-active and pro-active agents

Hire an agent unwilling to show property if the buyer’s agent fee is less than three percent

Don’t ask enough questions before hiring an agent

Place too much faith in 'get rich quick' classes

NOT making a Real Estate purchase. Remember, today's retail price is tomorrow's wholesale price. Waiting can cause you to be 'priced-out' of your desired place to live, especially in 'close-in' reasonably priced areas.

Here are some great questions to ask an interviewing agent.

“Do you preview property for clients?”
I preview an average of forty-five properties for clients before they purchase.

“How many homes have you personally visited or previewed last week and month?”
I have personally visited over two-thousand properties in my Real Estate career.

“What was their price range and why were they chosen.”
A good agent previews homes to understand and stay updated on market conditions. This is a huge difference between pro-active and re-active agents.

“When you produce a CMA or Market Analysis, have you actually been inside of your comps?”
It is difficult to see inside every house chosen for a CMA because generally the homes have closed up to six months ago. Personally, I see inside many homes that close in Austin while previewing for clients. What an agent should do is visit all comparable homes pending within a mile radius of the subject property. It also helps to call the listing agent of closed property to answer questions about the comp.

“How long have you been licensed, NOT how long have you been in the business.”
Many agents start as assistants and consider this “being in the business.”

“How long have you been in Austin?”
(And don’t accept, “I don’t know but it seems like forever” as an appropriate answer).

“Do you practice investment Real Estate?"
Investment minded agents pay great attention to detail which helps ensure a smooth transaction. Always ask agents if they have investor clients and how well they did. An agent should be willing to put you in touch with past clients or have testimonials on hand. The agent should be able to review a few basic formulas or provide an analysis worksheet.

Always ask to meet an agent’s broker and how many agents the broker sponsors. Hugh answers his phone between 10-6p, M-F even while eating lunch. I am one of two agents in the office and we have two administrators in the office from 9-5:30, M-F.

Know the difference between a salesman and a consultant-analyst.

Salesmen say things like, “If an agent’s willing to reduce their commission, they lack negotiation skills. How can someone negotiate the best deal for you if they can’t negotiate their own salary?” The truth is, we’re taught to say this in our “Keep Your Commissions Class.” In my opinion, what the class neglects to teach agents is a commission isn't earned until the deal closes. Real Estate is a business and of course it’s always about the quality of representation, money and the house. Money in all forms is a concern of all parties but most importantly to agent’s clients. (In my opinion, agents have the obligation to situate their clients well in the market suitable to the client. When clients do well, they develop lasting friendships with their agents.) Agents willing to reduce their salary for listings understand the leverage of listings vs. buyer clients. In my opinion, it’s easier to manage 10 listings than 10 buyer clients. I add value to my business not by reducing commissions, but by practicing business efficiency. For Example: I helped put a deal together in May one year. I was the buyer’s agent and we were $600 dollars apart on repairs for a deal. Neither buyer nor seller would budge and we were on the last day of the option period. I called the listing agent and offered to put up $300 of the repair amount from my buyer's agent commission and asked the listing agent if he would put up $300 from his listing agent commission. I never heard back from the listing agent and the deal fell through. The listing agent was finally able to sell the house in August but for $2000 less. The listing agent, unknowingly at the time, lost $2,000 for his client and kept a transaction open three more months for an extra $240.00 in commission.

The core of my business’ value, however, is my expertise. That’s why I partnered with Hugh Parrish. I provide lots of value to my clients by incorporating statistical analysis with my intimate knowledge of Austin. I fell in love with my statistics course in college and it was refreshing to meet a broker practicing statistical analysis. Furthermore, Hugh’s been around Austin since ’76, the year I was born, so I felt comfortable with his knowledge of Austin. As a native Austinite, I wanted to hire a broker who has been in Austin as long as I have.

Lately, I’ve noticed many agents consider themselves consultants rather than sales people. A consultant is willing to listen to clients and help them decide if their services are adequate or appropriate. For example, if a homeowner has the time, energy and expertise to sell their own house, I say go for it!! Not many agents are willing to tell you this. Most make a slippery slope comparison like, “You wouldn’t build your own house by yourself so why would you try to sell it alone?” Why not say, “You wouldn’t build a rocket ship…or the Eiffel Tower…or part the Red Sea. Honestly, a contractor would build their own home; it just depends on the person and circumstances. Sometimes I prefer the experience of a nice French restaurant with impeccable service and food. On other occasions I prefer to prepare a meal of grand scale at home. I will say this though. All of my clients have done very well for themselves and made excellent buying decisions. I’ve helped them maximize investment return (appreciation) while aligning preferred criteria. None of my clients have ever gone into foreclosure or found themselves upside down in a home a year or two later.

Many people get in this business to make easy money, or because they weren’t making enough at what they were doing before. Some may have left school unfinished or realized they chose the wrong profession upon graduation. Many agents doing well actually left other sales jobs like auto or computer sales. Some find themselves in this profession by reaction rather than choice. Real Estate has always intrigued me and my college experience is demonstrative. I’ve considered myself an analyst since my first statistics course. Would you rather hire an analyst or salesmen claiming to be the cliché consultant?

So, why did I choose this business?

A few reasons come to mind. First, I really believe Real Estate to be the largest investment 99% of people will ever make. Wise real estate decisions help people acquire early wealth which will lead to a much more comfortable retirement in a much nicer home in later years. The appreciation of a home allows people to make a more substantial down payment on a nicer home they may otherwise not afford. A lack of appreciation may trap people in a home for many years since principle reduction doesn’t really take shape for fifteen or more years. My REIA (Real Estate Investment Analysis) spreadsheet easily demonstrates mortgage reduction from 1-5 years. I take pride in knowing I have helped people acquire wealth and later enjoy a more comfortable retirement.

Second, I have the opportunity to help people stop paying rent and have a place to truly call home. Growing up, my great grandmother, Fina, lived on Bouldin Avenue just South of Town Lake and downtown. She was only a block away from Barton Springs Rd. and I can remember listening to music during Aquafest and visiting the traveling carnivals across the street. She raised almost four generations in the house on Bouldin Avenue over twenty six years. Her landlord decided to sell during the real estate boom of the late nineties. My grandma Fina’s home for over twenty six years was finally sold. She decided to purchase her next home about half a mile South. I wish it was me that helped her purchase but it was before I was licensed, although, I do my best to make up for it.

Finally, my family owned their first home for ten years and walked away with only 100 dollars of profit at closing when they sold it. My family purchased a new home in 1979, during a healthy market, just before the real estate (savings and loan) bust of the eighties and sold in 1991 just after the trough. The home was located in what we call area 11. Area 11 is just South of Ben White and East of I-35 (In Austin of coarse). We moved the year I entered High School which happened to occur towards the end of the bust in the 1980’s. My family would have been better off renting the home and living with a relative a couple of months till the next purchase (most of my family is in Austin). Unfortunately my parent’s agent at the time didn’t explain the concepts of market timing and fluctuation. The house has since quadrupled in value. The relationships between my parents and their agents have given me motivation to fill a void left by poor agency representation. Unfortunately there are many agents around who seem ignorant of our code of ethics and fiduciary responsibilities to our clients. My greatest desire is to change this about the industry and to improve the public's perception of Real Estate agents.