Austin Property Talk

Warren Buffet - Timeless Advice

I did a Google search on Warren Buffet for something else I was doing and I came across this excerpt of a Q&A that he did with some graduate students a couple of years ago.  While I'm sure his answers to the investing questions were wise, (admittedly I care less about that) his insight into life in general is what drew me in.  Here is an answer to a particular question that I found captivating. 

Question: How do you define happiness and what about your life makes you most happy? When you make good on an investment, do you allow yourself to enjoy that success by getting excited - and on the flip-side, when an investment turns down, do you find yourself equally disappointed - or do you try to remove emotion from your work, as much as  possible?

Answer:  “I enjoy what I do, I tap dance to work every day. I work with people I love, doing what I love. I spend my time thinking about the future, not the past. The future is exciting. As Bertrand Russell says, “Success is getting what you want, happiness is wanting what you get.” I won the ovarian lottery the day I was born and so did all of you. We’re all successful, intelligent, and educated. To focus on what you don’t have is a terrible mistake. With the gifts all of us have, if you are unhappy, it’s your own fault. 

Read the rest of his response

You can never be too careful

I received a disappointing call this morning from one of my best clients.  She called to inform me of multiple unpleasant experiences that she has had with a home warranty company that I've referred a lot of business to over the past couple of years. 

If you aren't familiar with what a home warranty company does, they basically provide coverage to the home buyer for the first year of the home purchase to make sure that if anything goes wrong the buyer is insured against major repairs.  The more technical name is a residential services contract. 

As a buyer, if you never have to contact the home warranty service, you are in luck because that means that nothing substantial occurred with the house.  But, like all other warranties and insurance, the residential services contract is in place in case something happens. 

To make a long story short, this client of mine has had two negative experiences with the service that was provided during two claims she has had to make recently.  It turns out that companies (one plumber, one A/C) that were contracted to do the work through the home warranty company both turned out to be less than professional and very unhelpful to say the least.  To the point where my client recommended that I never refer future clients to this home warranty company.   That's a strong statement. 

Knowing this home warranty company well and the way that they do business, I made sure to give my account representative a call immediately to discuss the issues.   I gave him the names of the two companies that did (or did not really) do the work.  As I expected, he was very apologetic and promised to call my client directly to apologize and do what he could to make it up to her.  He said that he will make sure to take both companies off of their list so that nothing like this happens again.  While, I feel this was an isolated incident, it doesn't make me feel any less frustrated for my client. 

The main lesson to be learned through this experience is that your reputation is only as good as the people you associate with, or in this case the service providers that your company uses.   You have to be extra careful who you affiliate yourself with because not only is their reputation on the line, but yours is as well.  

Lovely Cedar Park Home for Sale

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$369,900 Single Family Home For Sale Main Features 4 Bedrooms 2 Bathrooms 1 Partial Bathroom Interior: 3680 sqft Lot: 0.18 acre(s) Location 515 Fallen Oaks Drive Cedar park, TX 78613 To get updates on open home dates and other property events, please click the "Like" button below:

Fraudulent Tax-Credit Claims Hit $134 Million

RISMEDIA -- A government audit has found that thousands of taxpayers have fraudulently claimed the first-time home buyers' credit, and the Internal Revenue Service apparently missed them all.

The fraudulent claims — some from prison inmates serving life sentences — totaled about $134 million, according to the Treasury Inspector General for Tax Administration.

Some of the "questionable claims" for refunds were made by 87 IRS employees nationwide, according to Michael R. Phillips, the deputy inspector general for audit.

There were three sets of tax credits. The first, approved in July 2008, was an interest-free loan that offered $7,500 to qualified first-time buyers that would be then repaid to the Treasury in $500 increments over 15 years.  The second, a maximum of $8,000 for first-timers, didn't need to be repaid, was approved in February 2009 and expired Nov. 30, 2009.

On Nov. 5, the tax credit was extended, and a maximum $6,500 added for qualified buyers who had not purchased a primary residence in five years or more.

All told, the "working estimate" of new and existing sales qualifying for all the credits is 4.4 million, National Association of Realtors spokesman Walt Molony said.

Fraudulent claims filed by 1,295 prison inmates added up to about $9.1 million on 2008 returns. Florida prisons generated the highest number of claims — 61 percent of prisoners serving life sentences who received the credit were incarcerated there.

Among filers loose on the streets, 256 used the same five addresses for their claims. In fact, 18,832 filers used just 7,695 addresses to claim a total of $134 million in refunds.

Of the 18,832 filings, 5,331 were filed by 1,941 paid preparers, the audit found.  About 2,500 taxpayers erroneously received a total $17.6 million in credits for houses they bought before the tax credit took effect, the audit found.

Is a Housing Shortgage Coming?

As the nation struggles to shrug off the worst housing crash since the Great Depression, it may be hard to believe a housing shortage could be on its way.  The nation is simply not building enough homes to keep up with potential demand. Just 672,000 new homes were started in April, an annualized rate and less than half the long-term run rate needed to meet the nation's natural population growth.  Read the article: Is a housing shortage coming?

The growth of the Austin economy will continue to outpace the rest of the nation over the next year, according to a forecast from one Texas economist.  Mark Dotzour, chief economist at Texas A&M University's Real Estate Center, predicts that the U.S. economy will slow in coming months--in part the result of forces such as increased global construction costs and the rising price of oil. But Austin is likely to add 20,800 new jobs over the next 12 months, a 2.9 percent increase in employment that will significantly outpace national job growth, he says.  Read the article: Austin will add 20,800 jobs in the next 12 months.

Real estate seller Trulia, Inc. reported 24 percent of its Austin listings reduced prices in June, which is down from 30 percent the same month in 2009. Austin was among metros with the best improvement in price depreciation, with 20 percent fewer homesellers cutting their listing price. The report compiled data from about 9,280 listings. Sellers reduced prices an average 7 percent, shaving off a total $73.2 million.  Read the article: 24% Austin home listings lowered price in June.

30-year fixed-rate still below 5%

Inman News -  For borrowers with good credit and cash for a downpayment, mortgage rates remained at or near record lows this week, according to Freddie Mac's latest weekly rate survey.

The survey found rates on 30-year fixed-rate mortgages averaged 4.75 percent for the week ending June 17, with an average of 0.7 point. That's up slightly from last week, when 30-year fixed-rate loans averaged 4.72 percent, but down from 5.38 percent a year ago.

The all-time record low for 30-year fixed-rate loans in records dating back to 1971 was set during the week of Dec. 3, when the rates averaged 4.71 percent.

Rates surveyed by Freddie Mac are for prime borrowers taking out loans with 20 percent downpayments. Borrowers taking out loans too large or risky for purchase or guarantee by Freddie Mac can expect to pay more.

Recent turmoil in financial markets has made the mortgage-backed securities that are the ultimate source of funding for most home loans popular with investors, helping keep rates charged to borrowers low.

** But the Mortgage Bankers Association is forecasting that rates on 30-year fixed-rate mortgages will gradually rise to 5.4 percent during the fourth quarter of this year, reach 6 percent in the last three months of 2011, and average 6.6 percent in the fourth quarter of 2012.

Simple Home Energy Audit

RISMEDIA, June 16, 2010--(MCT)--For many homeowners, electricity use is highest during the summer — that means steeper energy bills are just around the corner.

But a lot of the energy you're paying for is squandered through air leaks around doors and windows, or through cable boxes and appliances that sap energy when no one is around. Before you shell out the cash for a professional home-energy audit, however, here are some do-it-yourself ways to measure — and then curb — your energy use. 

MEASURE IT
The average household will spend about $2,140 on residential energy consumption in 2010, according to the Washington-based Alliance to Save Energy. What's running up that bill? A home power monitor is one way to find out, said Tom Simchak, a research associate at the Alliance to Save Energy.

CURB IT — AND SAVE
Whether or not you decide to shell out for energy measurement devices, you can save money on your utility bill with some simple steps to reduce your home's energy use.

A smart strip, for instance, eliminates vampire energy — the energy devices consume when they're switched off. Smart strips, which retail for about $30, plug into the wall and also work as surge protectors. The strip's sensor cuts the power to devices plugged into it when they're switched off.

LITTLE THINGS HELP
Some other low-cost or free energy-saving moves:

• Put thicker curtains around windows in summer (including in an unfinished attic) to keep out the sun.
• Regularly dust off the coils under your refrigerator so it doesn't have to work as hard to stay cool.
• Install low-flow faucets (with an aerator so the water doesn't just trickle out).
• Replace incandescent light bulbs with more-efficient fluorescent or LED ones.
• Consider checking out Microsoft-Hohm.com. The website details the average energy use of homes nationwide.

Simchak said these energy-saving steps don't require technical know-how. "I haven't done anything a normal person can't do," he said. "It takes a little time and effort. But with all these products available, regular folks can do them just fine."

Read the Entire Article:  Simple Tools to Do a Home Energy Audit and Save.

Loan Credit Standards Tightened Further

Their making a list and checking it twice . . . .

We thought the worst was over but it seems like every month there is some new federal guideline tied to final mortgage approval; an extra hoop to jump through.  First it was full disclosure on the good faith estimate, then it was raising FHA fees and now its extensive credit checks.  Its probably going to get worse before it gets better. 

The most recent change to Fannie Mae's guidelines called the "Loan Quality Initiative" calls for credit checks on the buyer(s) up to the day of closing.  Who can blame them.  Recent history indicates that everyone involved in a real estate transaction needs to go the extra mile to assure that there is no funny business going on. 

This is not necessarily a new practice.  Most lenders have been following this practice for some time now.  That is why it is imperative for a buyer not to do anything between the preliminary loan approval stage and the final "clear to close" stage that would negatively effect debt to income ratios. 

This means waiting to buy a new car, not putting new furniture purchases for the new house on credit and not even using existing credit on credit cards that have high limits.  Anything that alters the balance of the amount of debt that you carry compared to the income you generate can be a red flag for the lender, delay closing.  

Smart Money (Wall Street Journal) published a very good article that explains the entire procedure. 

One thing I found interesting in this article is the part that states that lenders are going to be extra diligent to confirm the occupancy plans for the property.  That is not something that we have seen in the past and I haven't seen it yet at a recent closing but it does have the opportunity to effect a number of closings.  Sometimes plans change during the escrow process and it looks like that could be a recipe for added chaos. 

A word for the wise: just keep everything status quo until the loan funds and the transaction closes. 

Summer Lawn Care Tips

When Kristin and I moved into our new house over two years ago, we had to work fervently to bring the lawn up to speed.  Lots of bags of dirt, mulch etc. . . . If the high temperatures weren't enough, we were dealing with hap-haphazardly laid sod by the builder's landscaper.  I have since found everything from large pieces of brick to huge metal rods in the dirt our yard was built upon (another story, different day).  However, after two springs and summers and a lot of sweat equity, we were able to turn the yard into a very nice looking spread. We take pride in the appearance of our landscaping.

This Spring due to crazy temperature fluctuations including actual snow accumulation, a portion of our grass decided to call it quits.  About a fourth of our backyard (the area that has struggled since day one) did not come back this year.  

Having faith that it would eventually turn around, I gave it a few months to make some progress until finally giving into the realization that it wasn't happening.  I recently removed all of the dead grass and spread new dirt in preparation for laying some new sod (whenever I get around to it).  It looks better and some of the areas have responded and started to grow again.  But, I'm having to deal with something that I haven't had to worry about in the past - persistent weeds.  When the grass isn't healthy they seem to take over and can be unrelenting.   

I recently came across a great website with all kinds of articles about lawn care and maintenance.  From How to Have a Weed Free Lawn to the cause of Brown Spots to Summer Lawn Care tips, it is full of good information. 

Post Tax Credit Hangover?

As an aside to my recent post below about the effects that the recently expired tax credits will have in the months to come, mortgage applications have slipped dramatically in the past month.  I rarely watch the evening news but I did catch a segment on this topic last night.  While it is a little bit troubling from my stand point as a Realtor, I want to just say, DUH!  Of course this is going to happen. 

As I stated below, anyone who was in a position to purchase a home from January-June of this year would have been foolish to wait until now to do so.  There were thousands of reasons to be under contract by April 30th and close by the end of June.  I've posted an article below but I think we have to take this data with a grain of salt.  If we are going to compare this month to the past 3 months when numbers were sky high because of the incentives then of course the difference is going to be significant. True indicators are going to be late Summer-Early Fall.  

MSNBC - The number of customers applying for a mortgage to purchase a property fell to the lowest level in 13 years last week, a sign the housing market is struggling without government incentives.

Purchase volume declined 5.7 percent and is at its lowest point since February 1997, the Mortgage Bankers Association said Wednesday.  Overall mortgage application volume, which includes loans for purchases and refinancings, dropped by 12.2 percent during the week ending June 4, compared with the previous week.  Read the rest of the article.

Austin Real Estate Wrap-Up

Im reading a book by Robert Cialdini about the "weapons of influence."  One of the major weapons of influence is scarcity and/or artificially imposed deadlines. 

In the real estate market, we've recently gone through one of the biggest time periods of scarcity in recent memory, in dealing with the impending expiration of the first time and repeat home buyer tax credits.  By imposing a final deadline (scarcity) for receiving the $6500-$8000 the government did a great job of giving the industry an artificial boost.  

I personally helped a handful of people who moved quickly to make sure that they were under contract before they lost the chance to take advantage of the opportunity.  These are people who had been considering buying and/or selling at some point in the next 12-18 months but decided to do so prior to April 30th to cash in on the incentive.  You can see this phenomenon reflected below in the Austin real estate market data through May 2010.  

Through April, the number of pending contracts and closed sales increased dramatically while the days on market required to sell a house decreased monthly.  Some of that change can be attributed to the natural (seasonal) sales cycles of the real estate market, but much of it is a direct result of the artificially infused buyer/seller motivation.  

You can also see that things slowed down a little bit in May which is typically one of the strongest months of the year.  It is going to be very interesting to keep an eye on how the data varies year over year in the months of July, August and September.  Since a buyer looking to take advantage of the tax credit must close before June 30th to maintain eligibility, the numbers will continued to be slightly skewed through June.  After June, the numbers will be more representative of the health of the real estate market in general. 

Over the past three weeks, I have seen a significant drop in buyer activity on my listings and in speaking with other Realtors in other areas, the experience has been the same across the board.  Most anyone who was going to buy a house and close prior to June 30th, did so before the end of April in order to take advantage of the extra incentive offered. 

We are all crossing our fingers and hoping to see an infusion of late summer buyers hit the market in the next few weeks now that school is out and people are aiming to be moved by the beginning of the next school year.  Only time will tell.

Endless Education

As you probably know by now from reading my newsletters and keeping up with the goings on in my world, I put a high value on personal growth and continuing education. 

I know some Realtors who have been in the business for years and years who do the bare minimum necessary to renew their license every couple of years.  That doesn't necessarily make them bad people, nor does it make them bad Realtors.  There are a lot of things that cannot be learned in a classroom or by reading a book. 

Still, I feel both a personal and professional obligation to my clients and colleagues to be on top of my game.  For me that means days and weeks in the classroom learning new techniques, approaches and keeping my finger on the pulse of the real estate industry.  In that way, I can provide the best service and the most updated knowledge possible to those whom I work with on an ongoing basis. 

I've blogged before about spending weeks at a time holed up in a classroom at the Austin Board of Realtors earning various designations (accredited education).  I have also served on the Professional Education and Development committee at the board for the past couple of years.  I feel strongly about education and renewal.  Maybe its my school teacher mother finally rubbing off on me.

My most recent undertaking is a nine week "spaced" training called the Leader's Choice program.  The Leader's Choice program is aptly taught by renowned real estate trainer and speaker Mark Leader. 

Each Friday for the past six weeks I have learned something new about business development, networking, client communication, and good ol' fashioned face to face sales technique.  This is the type of training that I have never experienced before, mainly because it is a major challenge to one's comfort zone and has forced me to do things (usually involving the telephone) that I don't typically enjoy doing.  But what do they say, whatever doesn't kill you makes you stronger.  I exaggerate, its not that bad but it does require you to expand your horizons and challenge routines which is a good thing.   

Many of the techniques and approaches that I have learned have already been put into place in various parts of my business helping me to stay in control.  I look forward to continue to expand upon my new awareness in becoming the best Realtor and the best version of myself that I can be.  

Zip Line Adventures

I'm a little bit tardy in actually posting this, but over the Memorial Day weekend my family went zip lining to celebrate my Dad's Birthday which is actually today.  Kind of confusing, I know.  The last couple of years, instead of doing the traditional dinner and gifts we have had an experience to celebrate his birthday.  Last year we went on a wine tasting tour in the hill country - this year it was zip lining in Wimberley, TX.   My parents had previously zip lined through the Jamaican forest on a trip with my dad's company.  My Dad told us not to expect that it would be exhilarating but that we would enjoy ourselves nonetheless. 

We reserved an the earliest time in order to beat the heat.  They started us off on what they call the "bunny" run which is similar to the tamest slopes when snow skiing.  We gradually worked our way up to the longest and fastest lines culminating in the "Big Kahuna" which spans 900 feet and provides for speeds up to 30-40 mph they say. 

Before you start, they give you the whole spiel about how the lines will support weight up to 5000 lbs and that all of the gear is rigorously tested for safety.  I never once even half considered that I was in any danger. Looking back on it though, when you are soaring hundreds of feet above the canyon supported by a couple of straps, a pulley and a one inch line, I probably should have given it a bit more caution  Ignorance is bliss, I suppose.  

It was a lot of fun.  There were a couple of back to back runs where I got going pretty darn fast.  Since you are out in the open and flying through the sky with very little to use as reference for how fast you are going, you really dont realize it until you go to stop.  The last couple of lines on our way down went through the trees and using the foliage and the ground as a reference, you understand you are going much faster than you thought. 

I put together a brief video of our experience.  The last part of the video I asked one of the guides to hold the camera for me while he went down.  They wouldn't let us do that ourselves but he said they do it for people all the time.  I think it turned out pretty good.  If you want more information just google zip lining and Wimberley for the website.