When I began my career in real estate in 1992 I was still in college and not completely sure which direction I would go within the real estate.  Quite frankly, I wasn't fully engaged into getting into the real estate business for my career until 1993 when I switched majors from the PPA program (a professional accounting degree) to my eventual Real Estate/Finance major. 

In 1994, upon graduating from The University of Texas at Austin, I went to work at Keller Williams Commercial, Shopoff-Gurkin, for Doug Gurkin.  Doug was one of the two brokers who owned KWC and much of the business that he had done over the prior few years had to do with helping investors, many of whom hailed from California, buy investment properties, mostly duplexes and fourplexes, in the Austin area.  Most of them had purchased their investment properties between 1989 and 1992 so by the time 1994 rolled many of them had experienced significant gains on their property's valuation and were looking to exit the market, via a 1031 exchange, and reinvest somewhere else.

If you've very much of what I've blogged about you've probably noticed that I enjoy studying and discussing market trends.  Much of this interest was sparked during my time at Keller Williams Commercial and during my previous time at Brock Consulting Group.  Even with my dealings with my clients who are looking to sell and buy a home, I bring that extra ingredient of analysis to the equation and take pride in making sure my clients get a good deal for whichever side of the deal they are on.

This takes me really to one of my main goals in real estate - to help my clients achieve financial security through their real estate transactions. 

It starts with the first time homebuyer, who moves from renting to owning their first home.  The statistics show that the average net worth of a renter is less than $5,000 whereas the average net worth for a homeowner is over $170,000.  Its a fantastic feeling to help someone find that first home, at a good price in a solid neighborhood, and know that they've just taken a monumental leap toward increasing their net worth and financial security.

From there the next step many of my clients take is moving up.  In en effort to help my clients financial situation I typically offer a move-up program to my clients.  Many time moving up in price range can make the percentage increases in the market have a bigger effect on your bottom line net worth.

After that, most of my clients start to consider buying an investment property.  It really is a fantastic idea for someone who really is looking to increase their net worth and provide a future income.

Recently I went to an investment class and I will share more on buying an investment property, the art of getting in with no net first year cash cost as well as 100% financing in my next blog.

If you have any questions feel free to contact me off of the West Elm website or email me at Brink@WestElmProperties.com .

The smell of new paint. 

The feel of new carpet under your toes.

The smile that comes across your face as you look out at the new home you got to build and help design.

It's filled with your upgrades, your taste and your style and it's a very tempting draw for many buyers.  In fact, many buyers wouldn't do it any other way.

It's the new home.  Truly yours.

But do you know everything you need to know to protect yourself on this purchase?

Surprisingly, many buyers of new homes go it alone when they buy a new home.  The common scenario goes like this - You know you want to buy a home.  One evening or weekend you are out driving around looking at new home communities.  Maybe you've seen a subdivision or area that grabbed your interest.  Maybe you looked through the paper and tore out or circled the new home subdivisions that looked like they would fit your needs the best.  However you found it, there you are, walking into the new home model.  A friendly person greets you and you mention you are just looking around.  This person is sometimes called the sales counselor, sales consultant, on-site rep or builder's rep - I'll call them sales counsultant for now.  The sales consultant asks you to fill out a registration sheet just for their records and many times asks you if you are working with a Realtor and you tell the sales consultant that you are just looking around and not working with anyone at the moment.  You finish filling out their short information sheet and go peek in the model.

Oh wow!  Amazing.  It's beautiful. 

This is the home you want.

You walk back in through the sales office and the sales counselor asks, "So what did you think?" ...and before you know it you are signing an offer for the home and writing out an earnest money/security deposit check.

Hey, I understand.  Every time I go with my wife to a new home community for a builder event she will turn to me at some point and say, "let's move here!" 

Let me ask you this though - how many times have you went to buy a new car and not done some research as to the dealer's price or, as I did, signed on for Consumer Reports comparison service which helps guide you in determining a reasonable price?  Another question might be, how many times have you bought a home?

Many people go into a new home builder without a Realtor on purpose believing it will help them negotiate a better price for the home since the builder will not be paying a commission to the Realtor.  On the surface it sounds logical.  In reality it usually doesn't come to pass. 

For most homebuilders, if they do not pay a Realtor commission they take the money that would have been paid and put it back into the marketing budget.  The commissions are already factored in by the builder in their marketing budget and, if not used to pay a Realtor who will assist the buyer through the transaction, the money goes toward other marketing avenues - billboards, signs, commercials and the like. 

In other words, typically, the price to the buyer is the same, regardless of whether a Realtor is involved or not.

The sales consultant works for the builder and is an employee of the builder.  Don't get me wrong, most that I've met and worked with over the years are wonderful and friendly people and will deal fairly with you but make no mistake about it, they work for the builder.  They would love to put a contract together for you and they may be up front with you what they can offer in incentives and discounts but, in the end, their obligation is to their employer, the builder, not to you.

A Realtor, however, is there to represent you and your interest only.

So, now that you know it usually costs you nothing to have a Realtor work for you, let's explore a few of the reasons why it's not only cost efficient but also advantageous.

 1. A Realtor does the everyday - A home purchase isn't something to be taken lightly and it's something most of us do only a few times in our life.  As a Realtor, I do this everyday.  I understand the workings and details of the process from contract to closing, from the foundation pour to the handing off of the keys. 

2. A Realtor will have a better understanding of fair pricing for the area - Are you overpaying for the home?  Are you getting a good deal?  Has the builder sold other homes of similar size and quality for less or more?  I'll use this example - a fefw years ago I was working with a client in a neighborhood off of Bee Caves Road.  My clients found a home they wanted to make an offer on and the builder had several comparable sales in the MLS system.  The builder's list was $619,000.  The buyers and I looked through the comparables, looked to where we wanted to end up and submitted our offer - $480,000.  That's quite a bit different and the sales consultant/builder rep let me know so.  Our "final" offer was $520,000 and the sales consultant/builder's rep said there was no way they could sell the home for that price.  A week later we had the home under contract for $520,000 with some additional upgrades, nearly $100,000 below asking.  The majority of the comparables were above us and I know for a fact that another couple who went into the builder unrepresented paid tens of thousands more for their comparable home, but I was able to leverage the comparables and the market at the time into a great deal for my clients.  Will every home transaction be like this?  No, the market's changed, some communities have limited comparables, if any, and sometimes when the builder says it is their bottom line it is their bottom line.  But whether the pricing is fair or not is going to be something a Realtor will be more familiar with than the average home buyer.

3. A Realtor can meet with the homebuilder to make sure deadlines are met and the home is being built according to the buyers needs.  Sometimes it is difficult for the buyer to make it out to the home site during the day, due to scheduling or work for example.  I can be your advocate to help you out in certain situations.

4. A Realtor knows of special incentives and offerings from builders - Almost every day I get an email from one of the builders in the Austin area letting me know of special discounts and incentives as well as homes ready to deal for quick close out. 

5. Most Importantly - Having a Realtor means you have someone working on your side.  Not only can I help you with potential comparable sales information or at least determining whether the pricing is fair, plus the knowledge of what incentives are being offered, I can also negotiate from a non-emotional position since I don't have an emotional investment in the home.  Some buyers are uncomfortable with being too aggressive fearing it will strain their relationship with the builder's salesperson, a relationship that has to exist sometimes for 9 months.

Additionally in certain situations I can offer my own incentives and rebates to new home buyers.  For instance, I have a move-up program for people who are planning to sell their home and buy a new one.  This can result in my client paying very little out of their own pocket for my services.  Sometimes I offer other incentives so check with me before you even go looking for a new home.

You can check out an inventory of many of the new home builders in the Austin area right on the West Elm Properties website - Click Here to see the inventories as well as streaming video.

A recent article from the Los Angeles Times discusses a complaint that has been lodged against the recently launched Zillow.com website.  Zillow, which was 'turned on' 8 months ago, is being accused by a fair housing advocacy group of being purposely misleading.  The complaint apparently says that misinformation about values of homes is being used by many within the real estate industry, such as lenders and real estate agents, to take advantage of consumers.

I have actually been quite curious of the Zillow experiment.  Over the past few months I have noticed that they have made strides to provide information regarding local markets such as historical trends and county and state averages.  The trouble with Zillow, in a state such as Texas, is that our sales information is not public data.  With a system that is based on compiling sold information from public resources, Zillow will seemingly always be lacking in Texas. 

Just to see how Zillow is doing, I went ahead and ran my own home through their system.  I did the same six months ago.  Over the past 6 months it says the 'zestimate' is up $30k.  Is the market really up $30k - no, not at all.  Additionally, they have a heading at the top that says my "30 Day Change" is down $10,464, which is interesting given that the market in Austin has shown consistent growth.  Also kind of weird to me is the "1 year value change" graph which looks like every stock performance chart I've ever seen. 

That said, I do believe the value of this home is within what they give as their 'value range', a task which isn't too difficult given they are giving me a value range of $120,000.  Other magic involved in their value is the 3 comparables they provided me with.  My home is in the Spicewood/Balcones area.  One of the sales is in my neighborhood.  In fact, it's only 1/3 mile away.  The second comparable is in Canyon Creek.  Huh?  Canyon Creek of down Anderson Mill Road, out on 620 and then into Canyon Creek, Canyon Creek?  That's not comparables.  Hmmmmm.  Let's see about the 3rd comparable sale...in....Northwest Hills?  Seriously?  The home they gave me is just west and south of the intersection of 183 and Mopac, 4.17 miles away, according to their own estimates.  I don't know how far in actual driving terms. 

Okay, I'm trying to be fair.  Really!  I am.  However, there are just so many quirks in the system I can completely see where the fair housing advocacy group is coming from.  I truly hate the fact that anybody would use the site and take anything away from it other than entertainment.  A Zillow statement referenced in the article states that "zestimates are designed to be a starting point for consumers who want to learn about the value of homes".  The problem is, what if the starting point is wildly inaccurate.  And honestly, in my own case, what good is a starting point with a range of over 35% of the value of the home?  I would guess that your average consumer is familiar enough with a neighrborhood they are researching to understand the values within 35%.  In truth, a valuation system that doesn't come up with a value within 10% is useless.

This actually brings me to my next point, and that is the treatment of the property valuation like a stock or some similar commodity.  To me, the 1 year value chart makes me want to laugh and shake my head at the same time.  Privacy precludes me from sharing the actual chart with you, but if I did you would see a chart that goes up $10k, then down $15k, then up $30k, then down $5k, then up $15k, then down $20k, all within a 12 month period.  I am not saying that there will not be fluctuations in what you can get for a home over the period of a year as the market conditions change and the seasons change but I don't believe it looks anything like a line graph of specific plotted points.  A better representation might be a range.  Real estate values are not a fixed, exact amount.  Two people can look at the numbers and come up with a different value for the home and honestly that doesn't mean either value is incorrect.  Typically there is not an exact replica of the property to use as a comparable so adjustments will need to be made to the comparable.  Typically new construction is the closest you will get to a set, standard value point.  In the end though a home is worth what someone who likes it will pay for it.  I think technology has opened up many doors and provided us, as the consumer, with so many tools and the ability to access so much more information.  I continue to believe that technology will lead us to some amazing places and provide us with so many new and exciting opportunities.  However, right now in Texas, online property valuation is not something that is tenable.  If you want a property valuation you best bet is to hire an appraisal or I can complete a free Comparative Market Analysis or Broker's Price Opinion.  Just contact me: James Brinkman, West Elm Properties, 512-698-3525, Brink@WestElmProperties.com

As an aside, I just don't feel the whole zillow, zestimate, zindex things is cute at all.  It's seems like one of those things that someone thought, 'let's be clever and throw a 'z' on the front of some words!' (typically words beginning with vowels other than the zillow itself).  Well, to me it's kind of zannoying!

The time does go quickly.  I can't believe it has been over a week since I wrote anything so it looks like I have some catching up to do with you this week - so let's get started...

First, there are a few articles in the Statesman that I found of interest:

This article is about how the internet has changed the real estate business for buyers, sellers and Realtors.  This isn't exactly anything new or profound, but it bears discussion.  As I mention to every one of my sellers, 77% of homebuyers used the internet to search for a home in 2005, and this is a number that has been increasing every year.  I have noted a leveling off of sorts over the last couple of years as we reach some type of critical mass.  The more surprising facet is that nearly one-quarter of all buyers found their home through an internet search - a ten percent increase over the prior year.  This is one reason why I stress property presentation so much to my sellers.  If you look at my website, and in particular the exlcusive listings section, you will notice that I take a great deal of care and time on presenting each listing so that homebuyers can really grasp what a home is about.  Too often, in fact far too often, I see agents who have put no pictures or 1 photo or dark photos up on the internet or in the MLS.  I'm not sure what those agents are thinking when they do that.  It certainly is not going to make a buyer think that they want to see that home.  Time and time again buyers tell me that if there are no photos are bad photos of a property they skip right through the property and cross it off the list.  Additionally, I try to write a description of each property so that the home buyer can visualize what I can't really show in photos.  For the home seller, the goal needs to almost be 'not being eliminated' at this juncture in the real estate business.  With buyers controlling far more of what they see, which is a good thing, it is important to put on the best 'face' you can.  Many sellers need to ask themselves, is my agent really showing my home in the best possible light?  If the answer to that question is no, the seller probably needs to have a discussion with their listing agent or maybe even find another. 

Also of note though is that 81% of those buyers who used the internet to search for homes did use a Realtor.  Of course this brought out the whole "Realtors need to be prepared because we're no longer the gatekeepers of the information", which always makes me laugh.  Honestly, if all you, as a Realtor, could provide was which homes were on the market and the ability to show them, you really shouldn't be in real estate.  Of course, that is just my humble opinion.  A Realtor should be a resource for their client on the transaction, the market, the values and should make their client's lives less stressful and make the purchase as smooth as possible.  There are too many agents who actually interject themselves too much into the transaction and thus disrupt it or cause more drama than is necessary.  Maybe I'm just a little more prepared to embrace the changes in the industry, after all I did spend four years with eRealty or, as they were known in Austin at the time, the devil.  Of course that experience actually brought me to where I am today with my company.  Too often with these 'internet' real estate companies (you know who you are!) they lose sight of what is most important in a real estate transaction - trust!  Too much of the focus is placed on reduced commissions and, due to the reduced commissions, volume becomes the paramount issue because the profit margins are so slim.  In the end when you focus on volume the company starts to lose sight of the individual - the home buyer or seller - and, as my old broker who shall remain nameless used to say 'they just want you to treat them as johns'.  (Yeah, it sounds as horrible now as it did then.)  How disheartening that thought was.

My creation of West Elm Properties, Realtors was in direct response to my experience at eRealty.  I still wanted to be on the cutting edge of technology, to use it in any way that would benefit by clients, but I wanted to get back to the roots of the fact that the real estate transaction is a very human thing.  Buying or selling a home is one of the most stressful things to do and can stir up a whole lot of emotions.  Its important to not only use the best tools available for a buyer or seller but to also 'see' and understand the very specific, very unique needs of each client.  I really believe that having West Elm Properties helps me accomplish the marriage of the two facets new and old, better than any other company out there.

jb