barrettraven.com

Experiencing real estate in Austin, Texas

Math Lesson! (September’s Market Stats Update for August)

The Austin Board of Realtors just released the newest round of stats for the month of August.  Check out the video below where I break down (what I think are) the most important take-aways!  Everyone knows this market is a bit nutty.  But how nutty is it, you ask?  Watch the video and judge for yourself!

If the video doesn’t show up below, check it out HERE on my YouTube channel.
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The Beast (July’s Market Stats Update for June!)

The Austin Board of Realtors recently release their June stats for the Austin area.  Honestly, last month was more of the same (for the most part).  Average and median prices are increasing; inventory is super-tight; more and more Austinites are moving to the suburbs for more reasonable prices; at the same time, migration to Austin is growing evermore!.

 

What I personally find interesting is digging into the numbers of specific areas/zip codes.  Check out the video below where I take a tiny dive into the stats of one central Austin zip code.

 

If the video doesn’t show up above, check it out HERE on my YouTube channel.

 

There. Is. No. "Typical".

One question I often get from clients is:


“How does (fill in the blank) typically work?”  


“Devastating termite damage is pretty typical, right?”  (photo courtesy of Wikimedia Commons)
Here are a few specific examples:

  • How long does it typically take for a seller to respond after an offer is submitted?
  • Sellers won’t typically contribute to a buyer’s closing costs, right?
  • Do the washer and dryer typically stay?
  • Do sellers typically repair any items in the inspection not up to code?
  • Will a buyer typically pay over asking price for a home like mine?
  • Homes in my neighborhood typically sell pretty quickly, right?
  • I could go on and on…

Well, I’m here to tell you that there is no “typical” in real estate.  Before getting into real estate, I was a middle school math and economics teacher for about eight years.  In teaching, there were certainly many obstacles- many of them you couldn’t prepare for.  However, most of my day was literally planned out by me or someone else.  Our curriculum was planned a year in advance.  I knew what lessons I’d be teaching each day; I knew when grades and report cards were due; and if any of my students misbehaved, there were plans of action.  Especially with respect to the academic content- there were rules and theorems that had to be obeyed in order to succeed.  I mean, none of my students ever asked, “Mr. Raven, if I were to divide 56 by 8, would I typically get an answer of 7?”  

This was on the door of my classroom for a couple of years.  

So, back to real estate!  One of the things I love most about this (Realtor) job is that everything is different virtually all the time.  Every property is different and comes with its different quirks.  Every seller is different.  Every buyer is different.  Every listing agent is different.  Every buyer’s agent is different.  Every mortgage lender is different.  Of course, the market can change on a dime.  Lending laws change all the time.  Even the real estate sales contract changes occasionally.

Let’s break this idea down with one simple scenario:  I’m sitting in front of a home with my buyer clients and they love it.  They say to me, “Barrett, we love it.  But we really want to pay $20,000 less than what they are asking.  But sellers in this market don’t typically consider offers below asking price, right?”


  1. In this example, the outcome primarily depends on the seller’s motivation.  (e.g. Are they just selling to see what the market will bear?  Do they even care if they sell or not?  Or did the husband just get a job in Chicago and they need to sell FAST!?)  If the seller is highly motivated to get a sale done, they might be willing to give a little on price.
  2. Is the home priced appropriately?  The price of any given home on the market may or may not be based on reality.  In my opinion, a good real estate agent should give you an accurate projection of the market price before you ever offer on a home.  If it appears the market supports a price $45,000 less than where they are listed, there’s a decent chance a $20,000 price reduction may be successful.  Or maybe there are obvious defects present in the home that the seller did not take into account when they listed.  
  3. Another important factor in this scenario is the method and strategy by which your agent presents the low offer.  In the end, someone wants to sell their home and someone else wants to buy that home.  This is a very cooperative process.  There’s no reason to present a low offer in an insulting or condescending way.  We are all on the same team here!  As a buyer’s agent, I am still helping the seller get their home sold.  Of course, I must do this while representing the buyer’s interests.  I could write about this particular topic all day.  But if my client’s interest is to buy the home for $20,000 below asking, I believe I am much more likely to achieve that for them if I treat the listing agent with kindness and bring data to the table demonstrating that my client’s offer is a reasonable one.  (Someday, I will write a post just about this…but this one is getting too long.)
  4. Of course, there are market factors at play.  For example, if the average days on market in a particular neighborhood is 15 days and you are asking for a $20,000 price reduction on the third day, you’re probably not going to get it.  But you never know!
  5. Lastly, there is the financing component.  Are you paying in all cash?  If so you may be able to get a price reduction.  If not, how much are you putting down?  
There are even more pieces of the puzzle than this!  So, to just say that you can’t typically get this or that is oversimplifying things pretty drastically.  What a beautiful process we get to experience together!



Be a Better Buyer (Part Two): 7 Tips for Improving Your Credit

As promised, here is the second post in the series we’re calling “Be a Better Buyer”.  In this installment, we are addressing the issue of creditworthiness.  In the Austin real estate market, we have a lot of home-buyers who purchase their homes with all cash.  However, the overwhelming majority of you out there will be taking out some sort of home loan.  Many prospective buyers are shocked when they find out they do not qualify for a loan.  After all, they make plenty of money, don’t have a lot of debt, and they can more-than-afford the projected monthly payment.  So…what the heck?!  


Think of it this way:  If you were hiring an employee to take care children at a daycare, you would probably want to know the applicant’s criminal record, right?  You would want to know if the man/woman interviewing for the job has demonstrated character worthy of supervising small children.  Well, banks who loan money out think of their mortgage (re)payments as their little children.  These banks look to your credit history just like a criminal record.  They want to know that you have demonstrated that you can take care of your debt obligations and that you have proven that you get those payments in- healthy and on time.  (Huge caveat:  Of course, when reviewing an applicant for a job, you would obviously want the criminal record to be blank.  However, when a lender reviews your credit report, they want it to be full…just full of good stuff!  But maybe I’m taking this analogy too far…)

Anyway, check out this amazing article published by Realtor.org!
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7 Tips for Improving Your Credit

Here’s how to clean up your credit so you get the least-expensive home loan possible.
Getting the loan that suits your situation at the best possible price and terms makes homebuying easier and more affordable. Here are seven ways to boost your credit score so you can do just that.

1. Know your credit score

Credit scores range from 300 to 850, and the higher, the better. They’re based on whether you’ve paid personal loans, car loans, credit cards, and other debt in full and on time in the past. You’ll need a score of at least 620 to qualify for a home loan and 740 to get the best interest rates and terms. 
You’re entitled to a free copy of your credit report annually from each of the major credit-reporting bureaus, Equifax, Experian, and TransUnion. Access all three versions of your credit report at www.annualcreditreport.com. Review them to ensure the information is accurate.

2. Correct errors on your credit report

If you find mistakes on your credit report, write a letter to the credit-reporting agency explaining why you believe there’s an error. Send documents that support your case, and ask that the error be corrected or removed. Also write to the company, or debt collector, that reported the incorrect information to dispute the information, and ask to be copied on any materials sent to credit-reporting agencies.

3. Pay every bill on time

You may be surprised at the damage even a few late payments will have on your credit score. The easiest way to make a big difference in your credit score without altering your spending habits is to diligently pay all your bills on time. You’ll also save money because you’ll keep the money you’ve been spending on late fees. Credit card or mortgage companies probably won’t report minor late payments, those less than 30 days overdue, but you’ll still have to pay late fees.

4. Use credit carefully

Another good way to boost your credit score is to pay your credit card bills in full every month. If you can’t do that, pay as much over your required minimum payment as possible to begin whittling away the debt. Stop using your credit cards to keep your balances from increasing, and transfer balances from high-interest credit cards to lower-interest cards.

5. Take care with the length of your credit

Credit rating agencies also consider the length of your credit history. If you’ve had a credit card for a long time and managed it responsibly, that works in your favor. However, opening several new credit cards at once can lower the average age of your accounts, which pushes down your score. Likewise, closing credit card accounts lowers your available credit, so keep credit cards open even if you’re not using them.

6. Don’t use all the credit you’re offered

Credit scores are also based on how much credit you use compared with how much you’re offered. Using $1,000 of available credit will give you a lower score than having $1,000 of available credit and using $100 of it. Occasionally opening new lines of credit can boost your available credit, which also affects your score positively.

7. Be patient

It can take time for your credit score to climb once you’ve begun working to improve it. Keep at it because the more distance you put between your spotty payment history and your current good payment record, the less damage you’ll do to your credit score.
G.M. Filisko is an attorney and award-winning writer who keeps a close eye on her credit scores. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
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Barrett Raven
C:  512-970-2648
O:  512-910-7403

Be a Better Buyer (Part One): 7 Steps to Take Before You Buy a Home

One of my favorite websites, Realtor.org, recently posted a series of articles about home-buying that I’m going to share here on my blog.  Because they are each filled with so much wisdom and awesomeness, I’m just going to post them one-at-a-time over the next month or so.  Seriously, if you are thinking at all about purchasing a home in the near-to-distant future, you should read all of this stuff- even if you’ve purchased a home before!  I’m calling this series “Be a Better Buyer”.   

Background image:  My wife, Kristen, and I after purchasing a home earlier this year.

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7 Steps to Take Before You Buy a Home  By:  G. M. Filisko

By doing your homework before you buy, you’ll feel more content about your new home. Read

Most potential homebuyers are a smidge daunted by the fact that they’re about to agree to a hefty mortgage that they’ll be paying for the next few decades. The best way to relieve that anxiety is to be confident you’re purchasing the best home at a price you can afford with the most favorable financing. These seven steps will help you make smart decisions about your biggest purchase.

1.  Decide how much home you can afford.
Generally, you can afford a home priced two to three times your gross income. Remember to consider costs every homeowner must cover: property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care if you plan to have children.

2.  Develop your home wish list.
Be honest about which features you must have and which you’d like to have. Handicap accessibility for an aging parent or special needs child is a must. Granite countertops and stainless steel appliances are in the bonus category. Come up with your top five must-haves and top five wants to help you focus your search and make a logical, rather than emotional, choice when home shopping.

3.  Select where you want to live.
Make a list of your top five community priorities, such as commute time, schools, and recreational facilities. Ask a REALTOR® to help you identify three to four target neighborhoods based on your priorities.

4.  Start saving.
Have you saved enough money to qualify for a mortgage and cover your downpayment? Ideally, you should have 20% of the purchase price set aside for a downpayment, but some lenders allow as little as 5% down. A small downpayment preserves your savings for emergencies. 

However, the lower your downpayment, the higher the loan amount you’ll need to qualify for, and if you still qualify, the higher your monthly payment. Your downpayment size can also influence your interest rate and the type of loan you can get. 

Finally, if your downpayment is less than 20%, you’ll be required to purchase private mortgage insurance. Depending on the size of your loan, PMI can add hundreds to your monthly payment. Check with your state and local government for mortgage and downpayment assistance programs for first-time buyers.

5.  Ask about all the costs before you sign.
A downpayment is just one homebuying cost. A REALTOR® can tell you what other costs buyers commonly pay in your area — including home inspections, attorneys’ fees, and transfer fees of 2% to 7% of the home price.  (ed. We don’t have these “transfer fees” in Texas…yet!) Tally up the extras you’ll also want to buy after you move-in, such as window coverings and patio furniture for your new yard.

6.  Get your credit in order.
A credit report details your borrowing history, including any late payments and bad debts, and typically includes a credit score. Lenders lean heavily on your credit report and credit score in determining whether, how much, and at what interest rate to lend for a home. The minimum credit score you can have to qualify for a loan depends on many factors, including the size of your downpayment. Talk to a REALTOR® or lender about your particular circumstance. 

You’re entitled to free copies of your credit reports annually from the major credit bureaus: Equifax, Experian, and TransUnion. Order and then pore over them to ensure the information is accurate, and try to correct any errors before you buy. If your credit score isn’t up to snuff, the easiest ways to improve it are to pay every bill on time and pay down high credit card debt.

7.  Get prequalified.
Meet with a lender to get a prequalification letter that says how much house you’re qualified to buy. Start gathering the paperwork your lender says it needs. Most want to see W-2 forms verifying your employment and income, copies of pay stubs, and two to four months of banking statements. 

If you’re self-employed, you’ll need your current profit and loss statement, a current balance sheet, and personal and business income tax returns for the previous two years. 

Consider your financing options. The longer the loan, the smaller your monthly payment. Fixed-rate mortgages offer payment certainty; an adjustable-rate mortgage (ARM) offers a lower monthly payment. However, an adjustable-rate mortgage may adjust dramatically. Be sure to calculate your affordability at both the lowest and highest possible ARM rate.


Visit houselogic.com for more articles like this.
Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

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Barrett Raven
C:  512-970-2648
O:  512-910-7403

"I’m with the government and I’m here to give you free money."…said no one ever.

In this installment of “Barrett’s Corner”, I- with the help of an awesome Mortgage Broker- answer the question “What is an FHA loan?”  

If you have ever bought a home and didn’t pay all cash then chances are you have spoken with a mortgage lender a time or two.  One things you will learn quickly is that there are dozens of options out there to choose from for financing your home purchase.  In the mortgage industry, they call these options “loan products”.  For example, you can go 30 yr, 15 yr, 10 yr, 5 % down, 20% down w/no PMI, 3% down w/PMI wrapped into the interest rate, jumbo, wrap, 7/1 ARM, 3/1 ARM, conventional, FHA, VA, USDA, and more!  It’s like going to Cabo Bob’s, choosing your ingredients,  and building a huge mortgage burrito.   So many options!

Most home loans that are given are conventional.  However, ever-increasing in popularity are what some call “government loans”.  Those are FHA, VA, Rural, and others.  Talking with people all the time about real estate, I have learned that many are under the impression that these are loans funded by the U.S. Government.  Nope!

Photo courtesy of WikiCommons

In this short video, Gena Caudle (GoodLife Mortgage) breaks down what is probably the most popular of these government loans- the FHA loan.  Enjoy!

(If the video doesn’t show up below, click here to see it on my YouTube Channel!)