Thursday, October 14, 2021 / by Russ Phillips
Why it's hard to find starter homes & the EVER IMPORTANT need to have an agent that pays attention
It used to be we'd consider a starter home as something below $200-225k. Now, if you see a listing in that price point, you'd better run to it, and be prepared for an auction. For example, earlier this year the Russ Phillips Team listed a home at $275k and we received 22 offers the first weekend, driving the price up to $350k.
In addition to very strong economic growth, the Austin area is being targeted by institutional money. The article states that only 15% of the market share is being eaten up by institutional money, but when you combine that with people moving from all over to enjoy our local job market, lifestyle, and business-friendly economics...it's a huge part of the equation.
Here's an excerpt from that article:
"It’s not exactly accurate that investors are “buying every single-family house they can find,” as some have suggested. If that were true, their market share in the United States wouldn’t be a piddling 15 percent. They’re really buying up the stock of relatively inexpensive single-family homes built since the 1970s in growing metro areas. They mostly ignore bigger and more expensive houses, especially ones that are move-in ready: Wealthy boomers and the nation’s finance and tech bros nab those properties. And they’re also ignoring cities with stable or shrinking populations, like Providence and Pittsburgh.
But investors are depleting the inventory of the precise houses that might otherwise be obtainable for younger, working- and middle-class households, in the cities where those workers can easily find good-paying jobs, like Atlanta (22 percent of home purchases according to Redfin data), Charlotte (22 percent), and Phoenix (20 percent). More importantly, they’re able to scour those markets scientifically and systematically to make cash offers on the most attractively priced properties. While normal people buy houses when they actually need to move somewhere, (savvy) investors buy houses several years before a bunch of people need to move to an area. Whether they’re tracking where major employers are building new offices or looking at public school enrollment data, being ahead of the market gives big firms a big leg up."
HOW DOES A BUYER SUCCEED IN BUYING A HOUSE IN THIS ENVIRONMENT?
First and foremost, home buyers in this price point need to make sure they have their best financial picture ready for sellers. This means things like Loan Pre-Approvals (so you can compete with cash), and as good a down payment as you can muster.
But something people often overlook is the "hustle" of the agent shopping with and for them. Also, the networking capabilities, reputation, and "know-how" of where to look are key factors in success.
A "dirty secret" in real estate is how many people FAIL. Measured by non-renewal of licenses, Texas has a 90+% failure rate in the first five years. They tell you that at real estate school before you take the exam.
Another dirty secret is how many agents are part-timers or "hobbyists." So many people work with agents they know socially without any knowledge of their analytical skills, negotiation strategies, and so on. Working in leadership roles in the industry, I've been in position to see the actual sales production of agents (in units and dollars) and what I've learned is that many are in it for the tax write-offs, something to do in retirement, or hobby income. (Shameless plug: All Russ Phillips Team agents are full time and fully engaged....and we have salaried staff to help us off load tasks that don't help us get you into your next home or out of your current one.)
Without giving away too many of our secrets, here's a real example of what we do.
I created a facebook page and got 400+ Realtors who have done business in Georgetown since 2018. It's called the "Georgetown Buyer Needs Exchange" and you cannot see it out there unless you're a member.
It's there to stir up conversations among agents. From there, we ask our colleagues for very specific things we are not finding in the MLS. "Who has this coming...?" Through the years, we've put together a lot of deals through conversations that began there...giving our buyers and extra edge on inventory that you don't see out there everywhere.
Here's the great part. I'm the administrator of the page and I get to control the discussion.
Isn't that better than just having some agent program a website to email you listings?
That's not all, but there's not enough space for me to go into all RPT strategy here. It involves relationships, lenders, the poker playing of negotiations and the list goes on.
Here's another nugget to chew on: Many agents like to say "I've got XX years of experience." Let me put that in context for you. According to NAR research, the median number of transactions per YEAR per agent is 10.
Now let's look at my own best year in units sold. I succesfully closed 72 units myself (with staff help) in one year. So....does that mean I got 7.2 years of experience in 1 year?
The point is this. Success requires engagement. It mandates resources and networking. If you're going to call yourself "experienced," is that based on time with a license or units sold?
As of this writing, the Austin MLS tells me I have closed 828 units in my near 20 years. Does this mean I have "82.8 years of experience?" Who cares?
The real thing about experience is how it helps you, the client. I just had a medical procedure done and it was VERY evident to me that the physician was able to find and address the pain points. I didn't ask him how many times he'd worked on shoulders, but I did notice how good he was at finding the specific spots where I had muscle tears. As a result, I'm feeling good that the treatment will achieve the results I'm hoping for without surgery. I'm very glad that he knows what he is doing, because there's a lot at stake there for me.
There's a lot at stake for you too as it pertains to your home. Whether it is truly getting the most money out of your home in a sale or finding a home you can afford, you can't afford a part time hobbyist.
It's a challenging time for buyers to be successful. Let us make it easier. Call the main office line at 512-888-9205 to reach an agent.
