Van Henry Realtor | Renting vs. Buying Article

Rent vs Ownership

The average monthly lease on an apartment in Austin passed the $1200 per month rate. There are less expensive apartment in the Austin area, but they generally come with a cost. Convenience, mobil accessibility can present challenges to those seeking to enjoy working in Austin. One question that is often asked is should one rent, or purchase. While the ultimate decision has to be in your best interest, lets look at the cost of renting vs purchasing a home.

Both apartments and homes have similar costs. Utilities, internet, waste collection fees, etc. Apartments may “hide” some of the costs by including them in the rent, but you are paying them non the less. For comparison seek I am not going to inculde the price of phone service, or internet.

Monthly Rent  |  Mortgage (on a $330,000 average price in Austin)
$1,200  |  $1643 (assumes 5% down –$16,500 and a 4.79 interest rate
$1,200 (deposit)  |  $489 (insurance, property tax)
$250 (renter’s insurance)  |  $0

Total monthly cost
$1450  |  $2132

At first glance, it seems rent is much cheaper and initially it is, however over time several things happen.

Year one cost
$17,400  |  $42,084 ($25,584 plus $16,500 down payment)

Year one appreciation
0  |  3.5% (conservative estimate $11,550)

Year one return on investment
Negative $17,400  |  Negative $30,534

Year two appreciation (3.5 compounded)
0  |  $11954.25 (3.5 compounded)

Year two return on investment
Negative $34,800  |  Negative $18579,75

Year three appreciation
0  |  $35,876.89

Year three return on investment
Negative $52,200  |  Positive $17,297.14

Year four appreciation
0  |  $37868.58

Year four return on investment
Negative $69,600  |  Positive $55,165.72

 

Home buyers are generally picky. Very picky. They should be. The purchase of a home represents one of the largest and most secure means of building wealth and transferring wealth to one’s heirs. Unfortunately home sellers sometimes lose sight of their ultimate goal when selling their home. That means they often forget the details. We all probably know that major flaws in a home will detract from the marketability of the home. Worse yet, it will likely not sell for a price that makes the owner happy. But just as important is how well you as a seller have prepared the home. Details, details, details. Those dusty baseboards will send a negative message to your prospective buyer. That gunk in the corners in the bathrooms will send the same message. Details, details, details. Is your home bright and airy? Open the curtains, let the light in. Take down the dark curtains. A buyer can always figure out a way to make a room darker, but walking into a dark home generally is a turn off for a buyer. Details, details, details. Clean up the scuff and wear marks as best you can. Many buyers want a home that is close to move in ready. Details, details, details. Use scentseys or something similar to freshen the home. Hint, those sprays that are well advertised, really do not do the job for more than 5- 10 minutes. Forget about that, or this will last for days advertising. A scentsey like warmer can be placed discreetly in the home and not be terribly obvious. A scented candle, on the other hand is obvious. Freshly baked cookies and bread also will work, unless you burn them right before a showing. Finally, you might consider playing soft light music in the home. As much as I dislike easy listening music, played softly in home does tend to make the home feel more inviting. When you are ready to sell your home, reach out to me so I can help you maximize your profit on your home.

Everyone has heard how important location is regarding business location, or location for a residence.  Close in neighborhoods offer a degree of convenience that can be an asset.  However more important than location is price.  Just about any home in the Austin area can be sold if the price is right.  Unfortunately some sellers have unrealistically high expectations for how much their house will sell for.  Having a real estate professional help you price your home correctly will help you avoid over, or under pricing your home.
I recently started watching a property I had noticed on the market.  What caught my eye was the asking price.  I also noted the price the home was sold for a few years ago.  The home was listed for over $100,000 than the owner had purchased it for.  I noted the current owner had only bee in the home for two, or three years and no major improvements, or renovations had been made.  At best and according to the comps I noted in the area, this home should have been listed for perhaps 12% higher than owner asked for.  That 12% percent is assuming an appreciation of 4% per year, which for the area is probably a little high.
When a buyer lists their home at a price that far outstrips the norm for the area, that buyer faces two prospects.  One is having the house sit on the market for many months, or having to make significant reductions in price in order to sell.  In the case of this particular home, the price has been reduced six times in six months.  One, or two price reductions usually is not a problem.  However three or more price reductions sends negative messages to prospective home buyers.  The best thing to do before you have your home listed is to employ a trusted real estate agent and listen to his, or her advice on pricing.  That agent will be able to look at what the trends are in housing prices.  That agent will also tell you thathousing prices are generally dependent on what comparable homes have sold for in that specific area.  Home price averages can vary by neighborhood, or even by block, or street in some cases.  The well trained real estate professional can advise you on the best listing price for your property.
Austin Real Estate - Feral Hogs

Those damn hogs!

Well pardon the language, but what else can we say in Texas. And what do hogs have to do with anything anyway??? First, Texas, like a number of other states in the country, is being over run by feral hogs. The damage they do to private property and crops totals in the billions of dollars. So what do hogs have to do with real estate? Well if you live in the city limits, or a rural HOA in Texas, your local governmental laws may limited your ability to protect your property from hogs. Before you move into a community, make sure you have read the covenants and laws of that community. This is especially true if you are looking to move in to a HOA governed community. The commmunity I live in has a hog problem. When we first looked into allowing homeowners shoot hogs, we found that our community restrictions and local county restrictions prevented us from shooting hogs on our own property. The Texas legislature, several years ago thought it was a good idea to make changing HOA covenants much more difficult, but the real consequence is it is now far more difficult to implement some measures to control vermin. Alternatively, we have allowed for electric fencing and we have a hog trapping program that works. Unfortunately, the large number of hogs and their prolific reproduction rate means we are not making much headway on the problem. The bottom line is, make sure you obtain and read your covenants. Where most people run afoul of HOA’s is by not adhering to the printed rules of the community. Those damn hogs cannot read, but you can.

You just drove through the new subdivision being developed.  Attractive new homes and stunning model homes are available.  You enter the model home and are floored by the style, layout and amenities.   As you walk through the model home you meet the builder’s or developer’s representative.  They are friendly, outgoing and jovial.  They show you several homes under construction, go through the upgrades with you, then ask you if you would like to make a decision right now, or think about it overnight.  Do you notice something was missing.  Reread the third sentence again…………….the person you have met is the builder’s representative.  Notice you have no representation.

The job of the builder’s onsite representative is to get the most money for the builder as possible.  Even offering discounts, the best interest of the builder is always first and foremost.  When you engage your own real estate agent to assist you with the purchase of a new home, you have your own personal representative.  As your representative, also known as the buyer’s agent, my job is to represent you throughout the process.  I may make different suggestions on upgrades, or how to purchase certain upgrades than the builder offers.  I will also known the area and can help you find the best location for you.  Best of all my services are free to you.

Remember, always have a your own real estate agent with you when you are picking out a new home.

I cannot tell you how many times I have walked into a home on the market and remarked how attractive the home was.  Everything was neat and tidy.  The closets were well organized, the baseboards spotless—remember clean your baseboards before we put your home on the market.  But behind that beautiful home was a disclosure form that could make one nervous.

Disclosure forms are part of the real estate process and are required by law.  The first page, or two are standard check boxes of what is in the home.  Fire place, ceiling fans, garage door openers, etc.  Pretty basic stuff.  But later on the form are places where the seller must disclose any issues with the home.  It is very important to be honest and disclose any known issues a home has.  Just because a home has an issue does not mean a purchaser will not go through with the deal.  However, if you do not disclose a known issue, you and your real estate agent could be liable for damages, including actual and punitive damages.

The absolute best thing to do is disclose those issues and also include documentation of repairs already done.  Receipts, invoices, etc will all be helpful.

Unless you are doing a “cash” purchase, many sellers want to know if you can in fact afford the home they have on the market.  You as a buyer also will want to know how much home can you afford and if your purchase transaction will go smoothly, or as smoothly as possible.  The terms Pre Qualified and Pre Approved will often come up in a conversation.  While similar these two terms are functionally different.

Pre Qualified (pre qual) means you have had a very basic income and credit check done.  However, this does not mean you have obtained, or even qualified for a loan.  Pre Approved is different however.  When you have been Pre Approved, it means you have qualified for a loan and more importantly, you know how much loan you are eligible for.  When you are Pre Approved, you are ready to shop with confidence that the home you fall in love with will be within your means.

I always suggest to my clients to seek out a lender who will sit down with you and work on pre approving you for a loan.  A lender will sit with you and go through all the details, give your credit counseling, if necessary and if at all possible will give you a letter or pre approval that you can show a potential seller.

Most lenders will perform this for you free of charge.  After all they hope to work work with you on your home purchase.  One Loan Officer I have had outstanding experience with in providing Pre Approval services to my clients is James Schell at Infinity Mortgage Holdings, LLC3420 Executive Center Dr. Austin, Texas 78731. 512-469-9058.  I invite you to speak with James about Pre Approval and credit counseling.

Why Use an Austin Realtor - Van Henry Real Estate

Why Use a Realtor?

One of the first questions I encounter is “Why should I use a real estate agent?”.  In this day and age of do it yourself everything, which is a craze brought on by the many popular DIY shows on the airwaves, many think they can go it alone and produce outstanding results.  Reality, however, is usually very different.  The DIYers we see on TV, You Tube, etc are usually highly skilled and experienced people.  They are also supported by solid support staffs behind the scenes.  The real truth is, unless you have an extraordinary amount of time and skill, renovating, buying, or selling a home can quickly overwhelm the DIYer.

As a Realtor (r), my job is to be with you at every step of the buying, or selling process.  I research prices of comparable homes in your chosen area and I monitor those prices on  a daily basis.  This allows me to help you get the best bang for your dollar.  As your buying agent, I represent you throughout the transaction and work to help ensure that the home you are looking out is the absolute best home for you.  As your selling agent, I help you obtain the best price for your home while also marketing your home in many different markets.

Purchasing a new home from a developer, or one of the large scale home builders can be an exciting time, but the buyer must always be on guard when negotiating with the company. Many people go to builders without a realtor and run into well designed schemes to get you to spend more money then intended. Taking your realtor with you will afford you a degree of protection that you would not have otherwise, a critical eye watching over every part of the transaction and a voice that will show you where you can save money. Following is a tale from experience. I will not name the builder, but it is one everyone has heard of. My client and I visited the sales center of this company after finding the perfect House for the client. We entered negotiations and immediately found that the home that had been advertised at a $3,000 discount had that discount mysteriously vanish. The company instead offered a discount which my client felt was acceptable. In the meantime looking over the sales sheet, I found the builder had built an additional $5100 dollar profit into the price by over charging for appliances and flooring. The negotiations went several hours and a price was agreed upon. After we left, the client received a call that the office had made a mistake and the price was actually $1,500 higher than was quoted and agreed upon. To say the least this company has received a letter from me stating the facts and questioning the ethics of the company. While we are waiting to hear back from the company, I can only feel we have run into the proverbial “used car“ salesperson. The upside is the client was not cowed into accepting a deal that was not agreed upon. Remember, never, never, never, ever go to a builder, or developer without your own realtor. It can end badly for you and sadly it has ended badly for some who failed to heed the advice.

Fraud in Real Estate

With some much business being conducted online, it is no surprise that unethical people troll the internet for victims. While so many remember the Phrase “I have a bridge I want to sell you”, modern thieves have gotten far more sophisticated. The big scams we are seeing right now involve the wire transfer of funds. In some cases, hackers, have obtained the online credentials of some realtors and possibly some large realty specialty firms. These hackers will send out e mails requesting the wire transfer of funds in relation to the real estate transaction you have in progress. Often enough these requests are often marked with language indicating the funds must be wired immediately, or within a specified amount of time. Before you wire any money anywhere, pick up the phone and call your realtor. Immediately after that call the title company. Your realtor should be doing the same. Verify any requests for funds with your title company. Do not send money!! Do not send money!!! Do not send money!!!! If at all possible when you enter into a real estate transaction work with local title companies with offices you can visit. The local companies are built on personal interaction and they work hard to get you over the paperwork hump to help you get into your new home. So would you like to buy a bridge?