Austin Real Estate Blog - AustinRE.com
The Austin Real Estate (www.austinre.com) Blog provides information and resources to assist you in locating a place to live in Austin and it's surrounding areas.
Monday, January 05, 2009
Should I Pay Points?
This is a question asked by every borrower these days. Because no one wants to pay anything unnecessary, the prospect of paying a couple of thousand dollars never appeals to anyone. Consequently, a lender's offer of a zero point loan sounds enticing. Indeed, they are very popular with borrowers these days. One lender recently told me that in over 80% of refinance transactions, the borrowers are paying no points. We both said, "How sad. Too bad they didn't get better advice."
Now it seems like a zero point loan is a good deal. What's wrong with FREE? And it is a good deal, but for the lender, not the borrower. Here's why. Borrowing and lending is what is called a zero sum game, like poker. What one player wins, the other loses. As the borrower, you are playing poker with the lender and if the lender can talk you into paying more money, he wins.
So why would the lender be willing to do something for FREE? Well, you probably heard that they raise the interest rate to do zero point loans, a case of pay me now or pay me later. The lenders always use the word "slightly " as in, "The rate for a zero point loan is slightly higher." When you look at the dollars, however, it's not "slightly more," you're paying "a lot" more, thousands of dollars more.
To demonstrate that, when you compare two transactions, with and without points, the differences are startling. On a loan amount of $200,000 and using a period of eight years, the period many people own their homes these days, by talking you into a zero point loan, the lender receives $7,548 more in interest and you still owe them $7,549 more, a total benefit to them of $15,097 and all they gave up was $2,000 in the first year. Of course, it being a zero sum game, YOU paid $7,548 more in interest and YOU still owe $7,549 more.
Now I know that many people find it difficult to comprehend that there could be this much difference. It's also not easy to make those calculations. The lenders are counting on that. They just love it that people seem to want to choose the loan which is so much profitable to them.
That's exactly why you should go through the mortgage process with someone who is willing to help you make these decisions in the most intelligent way. Getting a mortgage is a process, not buying a thing, and your search should start with getting referrals for someone to help you through the process.
Finally, there are people for whom a zero point loan does makes sense, usually those who will only be in a property for less than three years. But for most people, it makes more sense to pay points.
Wednesday, November 26, 2008
Austin Real Estate Median Home Price Rises
Defying the national trend, the median price of existing homes in Central Texas rose last month by 7 percent, figures show. But the U.S. housing and econominc downturn still has the region in its grip, as sales fell 25 percent, the steepest monthly decline since May 1997, according to the Austin Board of Realtors.
Some Central Texas sellers are reducing price.
"It's a buyer's market," said Moreland Properties agend Cord Shiflet, who specializes in homes priced at $1 million and up.
In October, 9,944 homes were on the market, 5 percent more than a year earlier. Sales scheduled to close in November were down 37 percent.
Nevertheless, the Austin market is still fairly strong with people employed and moving to Austin from elsewhere.
Austin is seeing a consistent drop in the prices over the entire spectrum of the market.
Monday, November 10, 2008
Finding a Broker
If you are a first-time home buyer, you will probably want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, but remember that most brokers are working for the seller, and in the end, their primary obligation is to the seller and not to you. An alternative is a so-called buyer's broker. This indivdidual does work for you, and therefore is paid by you. Seller's brokers are paid by the seller.
Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5 percent to 7 percent and are split between the listing broker and the broker that eventually sells the home. Don't be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.Home Buying Costs
Down Payment 0% - 20% of purchase price
Home Inspection $200 - $500
Points $1000 and up for 1% - 3%
Adjustments 3% - 8% of purchase price
Once you've determined a price range and location, you're ready to look at individual homes. Remember that much of a home's value is derived from the values of those surrounding it. Since the average residency in a house is seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.
Although it can be difficult, try to remember that you will probably want to sell this home someday. The more research you do today, the better your decision will look in the years to come.
Labels: austin real estate, broker, buyer
Monday, September 29, 2008
Austin Homebuying - How To Interview A REALTOR
Savvy homebuyers will ask for recommendations from friends, family and relatives for a REALTOR to represent them in their first home purchase. Then they interview a REALTOR to make sure there's a good personality fit.
The Buyer's Representation Agreement from the Austin Board of REALTORS is essentially an employment contract. It allows the agent to give advice and opinion, and information that can help your negotiating position such as a home's time on market. It gives permission to the agent to work on your behalf.
One thing you should be sure of is that you and the REALTOR can get along, but beyond that it's good to ask a few questions.
What are the questions that you should ask a REALTOR who you are going to ask to represent you when you buy your first Austin home?
What is your average list price to sales price ratio? I think that this question is reasonable - buyers want to know that they are going to get an experienced negotiator working for them. The answer itself can be very insightful. It's not a figure I carry around in my head - mine may be around 95% - I'm not sure. I take this question as an opportunity to discuss the other terms in a contract, and the idea that the price you pay is determined by the value to the buyer whereas the list price may be higher or lower than the fair market value.
Will you provide references? If the REALTOR isn't already a recommendation from someone you know, you may want to contact past clients or view testimonials to see what their experiences were.
Will you explain the homebuying process? It's crucial to work with an effective communicator who has empathy for your situation when you're making one of the biggest purchases of your life. If the agent can't articulate the buying process in a way that you can easily understand, don't work with them!
What are your fees? Most REALTORS in Austin will represent you at no cost to you. But some have different operating models and may charge you per home viewed, per contract written or per hour spent. This is the time to nail down these details.
What services do you provide, how will you help me in the purchase? If a REALTOR answers that they provide "full service", ask them what this means. How many homes are you likely to view? Will they provide documents for electronic signature, or will you have to fax them everything? Will they collect and deliver documents and checks for you? Will they accompany you to closing?
What areas aer you familiar with? This is especially important for new residents and relocators who may not know which areas will meet their needs. An agent should be able to listen to your requirements, and suggest homes in appropriate areas.
Buying a home is an intensely emotional experience for first time homebuyers, so it's important to select a partner who you feel will make the process simple and easy for you!
Monday, September 08, 2008
I just saw the latest Austin real estate market statistics from Alamo Title Co. and this is of note:
Units for Sale: (compared to August 2007)
New listings were down 18.87%.
Pendings were down 21.28%.
Solds decreased by 23.21%.
As for Average Prices:
The "New Listings" average list price is up 3.90% to 312,594. In August 2007 the average list price was $300,849.
Sold average sales prices decreased 7.95% to $276,954. For August 2007 it was $256,553.
Did you know that we had 11,103 active listings during the same week in 2007? Today there is 12,647 active listings! That is a 13.9% increase from last year.
Now isn't a good time to sell unless the seller is going to be aggressive. This would definitely be a reason for prices to be lower. Sell right or don't sell at all! Now IS a good time to buy!
Tuesday, August 19, 2008
Austin has weathered the national housing downturn better than most cities, according to Mark Dotzour, chief economist and director of the Texas A&M Real Estate Center. Dotzour also says, as builders here have done a good job of cutting back sharply on new starts as tighter lending standards have made it more difficult for people to buy, causing sales to slow sharply. But it should be much better in the summer of 2009.
So start planning now for a 2009 purchase. You can read all about the above and more in the just released Texas Real Estate Market Reports.
The 2008 real estate market reports for the state's 25 Metropolitan Statistical Areas (MSAs) are now available. The reports cover census data, employment and unemployment, major industries, business climate, education, transportation and infrastructure issues, growth patterns and much more. Best of all, they are available from the Center's website for free.
Go to http://recenter.tamu.edu/mreports/
for this very informative online report. PDF downloads are available here for your particular area including the Austin/Round Rock area.
Saturday, August 16, 2008
Austin Real Estate aka AustinRE.com - About our revised and updated website
Austin real estate can be a little overwhelming. Finding an Austin realtor that will provide you with information, but won't pressure you can be even more overwhelming. We specialize in helping people buy homes or investment property in the central Austin area. Our goal is help you through the buying process and make it as stress-free as possible. Our style is to give you the information you need to make an educated decision and let you make that decision, no pressure.Search Austin Real Estate Properties - Click on the Search Austin Homes button above
To assist you in your Austin home search we can set up daily email notifications so that you can receive new properties as they come on the market. The Austin Real Estate market is checked once a day for new listings and anything matching your criteria will be emailed to you. If we find something interesting, we can head out to take a look at it. To set this up, simply to to the Search Austin Homes button above, set up your criteria for searching and then you will see a link to email you new listings based on your search criteria. Good hunting!!
Labels: austin, estate, properties, real, search
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