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Monthly Archives: June 2016

Picking Your Battles

You know how folks often tell you to “pick your battles” when it comes to dealing with children, coworkers, or postal workers (just an example—many of them are great)?

You also have to do that when it comes to the many different types of people you work with in the real estate redevelopment biz. Sometimes even when you’re right, it’s best to let things go and hope logical consequences will follow and make your point for you. Today’s examples:

That Darned House

Once again, the sale of our Blue Ridge house didn’t make it to closing. This time it was at the very last minute. The potential buyer had asked for some additional repairs, which we indeed took care of. We even pushed back the closing for the buyer’s convenience. However, today, one day before scheduled closing, the buyer backed out, stating that that more repairs weren’t needed might be needed. Blue Ridge is more than 30 years old. Yeah, at some point additional repairs will be needed. We fixed everything we knew about, but….

Sigh. I’ve bought houses that old before, knowing there were issues, but figuring, hey, it’s 30 years old. Apparently some buyers today think that when you fix up a house to sell, you know every single issue and fix them all…but some hidden things you just don’t know! So, good luck to this buyer in finding a house with zero current or future issues (including a brand new house—builders are human and do make errors). Those homeowner warranties you can buy are a good idea, just for these reasons. In fact, we always include one with every house we sell, just in case.

But, well, we’ll just choose not to battle on this and let that one go. We like the house so much that one of our team plans to buy it and live in it.

As for the buyer, there will most definitely be consequences from treating sellers this way–we certainly won’t work with them professionally again (and there was a chance we would have).

Coloring St. John’s House

That's a nice contrast. Just not the requested color.

That’s a nice contrast. Just not the requested color.

St. John’s house is the one we are partnering with our friends with in San Antonio. We showed you what it looked like all scraped off a couple of weeks ago. It came time to paint the house. We sent the contractor a photo, numbers, and color name of the colors we wanted to use. The contractor came back with, “I have a lot of another color and I’d like to use that. Is it okay?” We said we would prefer the color we chose.

A few days later we got the message that our color was too light and showed all the flaws in the wood on the house. Also it was “brown” (actually it’s a brownish gray). That concerned us, since our choice was a pretty dark gray. We said it was fine to go with one of the even darker shades of that color, and to do that.

Crisp colors. Much better than before. But not what we asked for.

Crisp colors. Much better than before. But not what we asked for.

We got some pictures. They are the ones you see here. The house is indeed dark gray. A dark bluish gray. We’re pretty sure that was the leftover color the contractor wanted to use all along. The one we didn’t want to use because it was close to the color of another house on the street. Sure, it looks all right. It will do. We won’t argue and insist on the color we asked for in the first place. We need to finish the house and sell it.

Detail of the porch.

Detail of the porch.

If you are doing this kind of work, this is the kind of stuff that happens often. You just can’t sweat the small stuff and argue over every detail. But you can reward people who work with you, listen to you, and treat you with respect.

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The More It Changes…

Realtor.com referring to listing agents

Because of it must support the needs of real estate agents over buyers and sellers, Realtor.com may not become the self-service portal the market demands.

I read “The Death of the MLS” by Bob Haywood this morning. It sounds scary doesn’t it? “The Death of the MLS”? Currently 80% of homes are sold through the Multiple Listing Service (MLS), according to the National Association of Realtors® (NAR).

So how are we going to find and sell houses in a future without the MLS? Haywood suggests people will use self-service sites, specifically Zillow. While I agree with most of his prognostication, there are a couple of points I’d like to make:

  • Zillow gets most of its data from the various MLS sites around the country.
  • There are other sites that are as or more effective in helping buyers find properties (Trulia and Realtor.com, for example).

This trend to self-service brings investors both new opportunities and new risks, some of which are the same thing. I’d like to look at these, since Haywood speaks from the perspective of a Realtor.

Flying houses painted with percent signs.

A few percent pain in “real estate commissions can mean the difference between you making money and losing money on your house.” It seems like every city has self-help sites for sellers.

The biggest opportunity for investors is the ability to avoid at least the listing agent’s commission. That leaves 3% or more in the deal, which enables us to pay more for a property and still make money. It also gives us the opportunity to increase our profit margin, but no opportunity is without risk. This trend is already visible in the increasing number of unlisted sales through Zillow, Trulia, and Craigslist.

In this case, investors, flippers, and redevelopers are assuming some of the risks that Realtors have assumed for us. We will be held more accountable for the accuracy of information and the completeness of repairs as we deal more directly with the buying public. This last bit is important. We may be held accountable for repairs we did not do or did not even know needed doing. Further, courts have a long history of holding developers and other vendors accountable for any miscommunication with “unsophisticated” buyers.

And many buyers will continue to use buyer’s agents. A buyer’s agent is a licensed real estate agent who represents the buyer, even though they are paid by the seller. Their job is to use their real estate expertise to ensure the buyer’s interests are protected and even enhanced in the deal. They negotiate concessions the buyer might not otherwise think of, but buyer’s agents don’t necessarily assume any responsibility for accidental misrepresentations.

That said, I love buyer’s agents. Our goal at Hermit Haus Redevelopment is to offer a home the new owners can be proud of. It’s part of our win-win philosophy. We make mistakes—you’ll see us talk about some of them on this site—but our goal is to offer the best house in the neighborhood. If we do that, we make the buyer’s agent’s job easy.

In his article, Haywood discusses the (im)possibility of stopping the Uber-ization of the MLS. I really don’t want to, even if it makes my business a little riskier. I believe it’s in everybody’s best interest (except maybe a few agents) to make buying and selling houses easier. I believe the ethical redevelopers, like Hermit Haus, will thrive in this new environment. We’ve already got more experience in our leadership team than many others, and we will continue to adapt and thrive as the market changes.

As Al Stewart translated Nostradamus, “The more it changes, the more it stays the same.” Quality will prevail in the market over cut corners.

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Rising from the Ashes

IMG_8544

These shiny new and energy efficient windows will last for decades.

One more Ash House update! It’s like a phoenix emerging from its ash-covered past. We are happy to note that the new windows are in, so light can flood in at last. This house was once dark, dank, and surrounded by a huge amount of woods and bamboo.

It’s now light, happy, and surrounded by attractive, trimmed greenery. Here are some photos of the new windows. The first photo shows the front of the house (and our colleagues). They sure look clean and bright. The large windows used to go all the way to the ground, but that’s no longer up to code (and water gathering there had caused rot. So the new windows aren’t so long, but still quite big. And we fixed the grading, so no more rot in store!

The second photo is of the back windows, from the inside. The former ones were in bad shape, and all foggy. These will keep the family room bright and happy.

family room windows

These new windows are also up to code and much higher quality than the ones they replaced. And the one at right opens, which its predecessor was unable to do.

The final picture at the bottom of this post is also a happy moment. The extra-long bathtub is in, which means that bathroom can be finished out. And some lucky buyer will be able to stretch out and enjoy a comfy bath. Know any former basketball players who are looking for a home in a lovely Temple neighborhood in a golf course community?

We’re still waiting on the counters, which should be here early next week, and for the bathrooms to be finished. Plus, there is STILL more work to do on the landscaping. It’s going to be great, and available in July!

Look here or on our Facebook page. for an announcement of open houses! You ARE a fan of our  Facebook page, aren’t you? We have some fun videos and even more photos there. We’re also on LinkedIn!

a large white bathtub and a large white arm.

Big ole bathtub mid-installation. Can’t wait to see the tile behind it!

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You Don’t Always Get It Right the First Time

The Ash House, looking pretty

Time to share more photos of the Ash House remodel, which is moving right along–just waiting on the windows!

Once the contractor’s team got the lovely white shaker-style cabinets in, and installed the usual lighting he puts in houses, we took a hard look at the interior. Something just wasn’t as good as it could be. And that was the paint and lighting. We do want to have a standard look and feel to our houses, but at the same time, we want to bring out the best in each house we work on.

kitchen

The kitchen cabinets and walls contrast nicely.

The color we did most of the interior in is a very pale gray, almost white. With all that white cabinetry, the few accent walls we had put in didn’t seem like enough. It was a sea of white. Yes, white is very popular right now, but in this case it came across bland rather than “clean-lined and modern.” So, we bit the bullet and put in a change order to paint the kitchen walls a medium gray, and paint the very long wall of wood paneling the darker color as well. We know the house will lighten up once the windows are in (the old ones are covered in paint, so not much light comes through).

The kitchen cabinets (above) now really stand out against the darker color, and the counter tops (coming very soon) will balance the room out nicely.

family room

The long wood paneled wall painted darker. We’re going to replace those fixtures.

And look at that long wall, at right. It’s known that dark colors recede, and sure enough, that darker wall makes both the family room (shown) and the living room look bigger.

New lighting in the dining area and front office have a 60s vibe.

New lighting in the dining area and front office have a 60s vibe.

And wow, did slightly nicer lighting make the dining and front office area look better. The style fits in well with the 60s vibe of the house’s exterior and interior. We’re going to have matching fixtures in the other parts of the interior, as well.

Thanks to our partner, Larry, for sending us these nice photos! We’re glad we took another look and tweaked the house just a bit.

And like they always say, “it’s just paint!” If a buyer doesn’t like the colors, they can change them. It’s still a neutral canvas for people to imagine their furnishings and possessions in, which is the goal in a renovation. All the kitchen and bath surfaces are white or gray, and the floor is a really beautiful gray wood-look laminate. We did reluctantly veto our impulse to paint the long wooden wall a pumpkin color. See, I do have restraint.

By the way, are you tempted to sell?

Are you one of our readers who would love to see their house transformed like this? Perhaps you need to move, but don’t have the time or skill to remodel the house you’ve been in a long time, even though you realize it’s “dated.” Perhaps you just can’t keep up with your payments. Perhaps you own a house that’s not in great shape and you’d like to cash out and move on to some other project. Visit our website for folks who’d like to sell their house, hermitsbuyhouses.com, and we’ll send you some useful information about your options. And if you want to work with us, we’d be happy to talk to you, any time.

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Market Update – Austin Area

Wilco median price graph

The Austin area and Williamson County continue to experience growth in the real estate market.

It’s no secret that we are operating in a very competitive up market right now. That makes it challenging to buy houses right, but gives us a little margin for error on the selling side. As our friend Shenoah Grove puts it, “We’re currently eight years into our five-year cycle.” A “typical” real estate cycle is five years of increasing prices followed by two or three years of “market correction.” The Austin area is in its eighth year of increasing prices, and there’s no indication of a change anytime soon.

In May, the median cost of a home in Williamson County, where we do most of our work, was  about $288-thousand. In Travis County, it was $346-thousand, and in Austin proper it was $355-thousand. Although those numbers are averages and some neighborhoods experience more or less (or even negative) price growth, prices were up about 5% throughout the area.

Our current low inventories should keep prices rising for a while. Inventory is figured by taking the number of houses available for sale and dividing it by the number of houses sold in a month. Williamson County and the City of Austin have only 1.9 months of inventory. That means if there were no new listings, every house available would be sold in less than two months! A “stable” market normally has about six months of inventory. The worst area in the greater Austin region has only three months of inventory.

All this is great news if you’re a seller, not so much if you want to buy.

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