Kyle Rovinsky's Blog

My life is dominated by my three year old triplets. Anyone that has spent any time around three year old boys knows that one of the main heros to the “three year old” is “Bob the Builder”. Bob is somewhere between an “All around Mr. Fixit” and Dr. Frankenstein with his ability to bring structures back from the dead. No wonder kids think he’s pretty cool. I think he’s cool, too.

This week I had the privilege of being invited to the Homebuilder’s of America Forecast Luncheon for 2012. Imagine me – in a room full “Bobs”, listening to them tell me EXACTLY what their new building clients want. Here is a list of the items:

Smaller floorplans – 4200 sqft instead of 6600 sqft
More yard around the house – clients do not want the footprint of the house to take up the whole lot. The area can be dramatically different if the building plan offers three more feet of space on each side.
No Formals – formal living and formal dining are a thing of the past. Build clients want open space that can be used by anyone all the time.
Big closets are more important than big bathrooms. Build clients want just enough room to do their business. They want to keep their stuff (and lots of it) organized.
A big, comfortable entry into the house. No tight gables, no tight doors. No tight entry halls.
More requests for LED lighting.
Big wine cellars or monuments to wine storage are OUT!
Media rooms are OUT!
Build clients are requiring foam insulation and more efficient effects as to keep utility costs down.
Build clients are requesting centralized electronics control.

As a Realtor who represents a number of buyers every year, I do hear many of these items time and time again. If you have a house that sports a few of these features, I will benefit you when it comes time to list…but as a homeowner, do not go out anr retro-fit your house to contain all of these features. You are not going to get a dollar for dollar return for the cost of implementing these upgrades.

See the “Bob the Builder” theme song here:

http://www.youtube.com/watch?v=os4W2CZcWS0

Once again, one of my New Years Resolutions is to blog more. I love sharing stories from the battlefield – I will always post those….but I have a huge pet peeve…

People who talk a lot with nothing to say.

It is not in my DNA to waste anyone’s time with boring info…so please understand that gaps in my blog are not because of laziness, it’s because there is nothing worthwhile to share.

Here is my first shot at 2012…

Every year I get asked the same question by my clients:

“What is the best time to list my house?”

Everyone defaults to the school year calendar…school is out from May to August. People want to be in their new hose before school starts – so list in April to sell over the summer. Right?

Wrong, MLS breath.

Sure there may be more buyers out in wamer weather, but there are also DOUBLE the active listings. With more competition, your house has to be FLAWLESS…and even if you are flawless, there is always another listing that was overpriced last season that will come back this year at a better price and also be flawless. In the “off months” there are fewer listings and buyers that are looking are usually more serious than the summertime “looky-loos”.

Looking at my personal business from 2011, my busiest closing month was July (6). Second busiest – December (5). Let’s take a look at the December closings:

10749 Les Jardins Drive – list price $429,000
——————————————————————-
Listed October 23rd – under contract November 18th. Closed December 16th
If this guy had waited until the spring, he would have accumulated four extra months of taxes, utilities, landscaping and pool pkeed costs. By listing in the fall (and doing it right) he saved himself about $6,000 in additional expenses. Also, if he had waited until the late spring, there would have been a ton more listing competiton -so the potential buyers would have seen his house AND 25 more – rather than his house and 10 more. His house looked better by comparison, so he got a higher offer in a quicker time frame.

6514 Barnsbury Court – List Price $319,000
—————————————————————–
Listed November 11th. Under contract November 19th. Closed December 22nd
This Tioga listing that goes to Brentfield Elementary had been listed all summer without transacting. For some reason, the seller hired an agent out of the area, and that agent did some bad factoring. This 3200 sqft house had a lot of great things goig for it, however location was not one of them. $115 per sqft would have been relevant if the house was south of Campbell and west of Hillcrest. So the original list price of $369,000 was VERY unrealistic. WI sat down with the seller, I broke down all the sales stats and told him that if he listed for $320,000 – he could expect to sell over 95% within 30 days. I’m right too often to be lucky.

6441 Bordeaux Avenue – List price $87,000
—————————————————————-
Listed Jan 11. Under Contract September 18th. Closed Dec 22nd.
This one was a beating. This condo was the perfect price for FHA financing, but the condo complex had let their FHA accreditation expire. I was on the complex’s HOA board like white on rice until I could get a firm answer about renewing the FHA relationship. It only took me 6 weeks.

2815 Sutter’s Mill – List price $127,500
——————————————————–
I represented the buyer on this one. A HUD foreclosure. Final sale price was $110,000 for this 4 ed/3.1 bath home (2700+ sqft). Property closed on Dec 27th and the buyer already had it leased for $1150 per month starting on Jan 1. PITI for the property is $697 per month. Looks like this dog is cash-flowing.

It looks like we are going to have a light winter (no jinx. please). If so, the selling season is going to start earlier. For me – the proof is in the pudding…9 transactions from October to January proves that it does not have to be baseball season to sell your house. Being the first, well placed, well priced property on the market gives you an overwhelming advantage to sell for an attractive price.

2012 looks like it’s going to be a fun year.

I pride myself on keeping my Real Estate blog to the subject of real estate. So many times you see a “Real Estate Blog” that uses the subject of real estate as a cover for a gossip blog. The properties become an extension of the people selling them. I have been guilty of this a few times, but the guts of my posts are about Real Estate…the values of properties, the trends in areas, and the frustrations of dealing with…well…frustrations. Today’s post is a value based post.

I have a client getting ready to list a great property in traditional North Dallas, so I had to run the comp sales in the area for 2011. This is meat and potatoes info that can benefit anyone in the area so here goes:

For properties in Area 11 (South of LBJ, north of NW Hwy – between Midway and Central Expy) for houses from 4,000 to 6, 000 sqft with pools on lots measuring .5 to .99 acres (big lots, but DEFINITELY NOT 1 acre or over).

There have been 20 properties to transact in 2011. Average sale price $1,368,150. Average price per sqft $259.47.

Median sale price $1,220,000

The question everybody asks is “How is the market”? Answer: market is always great! How do these numbers compare to 2010?

In 2010 there was a lackluster 15 transactions that met this criteria. 15 Transactions (up 33%). In 2010 the average sale price was $955,453 (the prices in 2011 are up 43%). Avg price per sqft $195.19 (up 33%).

Seems VERY STRONG. (Just to cap off this discussion – the average price per sqft for this niche of the market in 2007/2008 was $273 per sqft).

Notice I managed to complete this post without mentioning which house belonged to Wolfgang Puck.

23 Days ago I listed a great property in the Royal Lane/Midway area of North Dallas. Those who are incredibly optimistic would refer to this area as “Preston Hollow adjacent”. Others may see it as “Almost Midway Hills”. Half-Full or Half-empty.

Anyway…

This 5 bedroom, 3100 sqft gem on a half-acre lot got me to draw a suggested list price of $415,000. The seller (of course) wanted to list it higher – $440,000 because…well, just because. We came to a middle ground of $429,000 with the “hard and fast” rule that if we had no offers in 15 days we would reduce to $409,000. In my opinion, this would still give us time to transact for $400,000 – the number that all indicators pointed to from the start.

So on October 26th we were off and running – hitting the MLS with this listing at $429,000. The photos were magnificent. Gleaming parquet floors. Open kitchen. Huge gameroom. Swimming pool that looked like a vacation resort. Everything you would need to hit the ground running.

Response was brisk. 8 showings in the first week. Not a lot of strong feedback…but we did receive the strongest you can get. No offer.

We slid into week 2, again showings were brisk. 8 more showings. 2 second showings – but no one would take the time to write an offer. This is usually the time when home sellers make their biggest mistake. There is a hard strategy to reduce the price if there are no offers, but the seller says, “We’ve had so many showings…let’s just sit tight and see what happens.” Well, in this case, sitting tight would mean Thanksgiving…and an overall lack of motivation for any buyer’s to do anything. If you give a substantial price reduction, the buyer will feel motivation to jump on the deal before anyone else does. So the seller agreed to reduce to $409,000 as planned. Here is the “armchair quarterback” evaluation – tons of showings at $429,000 (with multiple ‘second showings’) shows that the price is relevant. The reduction should be enough to get someone to jump at $400,000.

Here is where the story gets funny…

The day of the price reduction, a Realtor presented an offer on behalf of his client. Tight offer. 30 day close. 1% earnest money. Offer of $390,000. I took the offer to the seller who responded “Give me 24 hours to come up with a counter”.

The next morning – before the seller presented a counter, the buyer’s agent called me. He was slightly agitated, I started the conversation…

“Hey, I’m glad you called. The seller has a counter offer for you.”

“Kyle,” the buyer’s agent asked, “Did you mean to reduce the price of the home by $20,000?”

“Yes we did. Why do you ask?”

“My client is furious. He thinks his offer is now too high – he wants to change his offer to $375,000″.

So wait – just because a seller reduced his price to motivate buyers, it doesn’t mean that the value of the home goes down, too.

“Ok, that’s fine. The seller’s counter is still $402,000.”

I could tell the buyer’s agent was really frustrated. He took the information and said he would get back to me.

3 hours later I got an email from another agent with an offer attached – qualified, 1% earnest, 20 day close…sale price of $395,000. Everything looked strong. So we are sitting at 2pm, not 24 hours after the price reduction, with an acceptable offer – right on the heels of a buyer that thought one reduction merited another.

4pm I get an e-mail from buyer #1 that he will raise his offer to $382,500. I reply to him that the seller’s counter has been withdrawn. Now free to work the second offer, it was an easy communication to get the offer up to $400,000.

BOOM! Right where I thought it would go. Contract executed on Friday. Inspections scheduled for Monday. We changed the status in MLS on Friday so it showed up as “under option” late Friday.

The first agent called back again.

“Under option?!?”, the agent questioned and exclaimed. “Why didn’t you tell me you had multiple offers?”.

“Well, I didn’t think it mattered. Your client’s counters did not indicate that he was serious about buying the house. I did not want to scare off the second offer with a brash announcement of ‘MULTIPLE OFFERS!!!!’ so we quickly worked the strong offer and got the deal done.”

So, it looked like the 1st buyer really wanted the house, but his self educated Real Estate 101 from watching “The Today Show” told him he could not POSSIBLY offer close to list for a property – even though his initial offer of $390,000 could have gotten the deal done.

Moral of the story – one price reduction does not merit a reduction in offer. Let a property sit for 30 to 60 days before going in low on a reduction. Also, a note to sellers…a carefully placed price reduction means the difference between hosting dozens of tire kickers and getting an offer.

Last night, as I was absorbing the news reports about the death of Steve Jobs, I was trying to get my triplet boys ready for bed. “Come on…to the diaper room…DON’T TOUCH THAT…Leave that alone…Hurry along…You can play with that when you’re done.”

I couldn’t help but wonder what Steve must have been like as a three year old? Did he always want to make things and figure out how things work? Did he talk back? Was he willful? Did he want his own way? Or did he always fall in line and do what his parents said? Did Steve always make good choices, or excel at every thing he tried?

I constantly find myself frustrated at the actions of the boys. Whether it’s Hiram asking “Why?” for the 100th time in a row, or Meyer saying “Watch this Daddy…” as he learns that if he turns the water hose on full blast into the charcoal grill, he can make his own version of play-doh. Or my favorite…when Leo first discovered he could move the “inchworm” over to the kitchen serving window, climb on it’s back and escape into the unexplored territories of the house.

What can I learn from Steve Jobs, a man that changed the world as we know it…and how will that help me raise my children?

Here are a few thoughts swirling through my head:

There are going to be a LOT of mistakes. Trial and error. No one creates the Macintosh on the first try without making a little mess.

If they break something open to see what is inside, use it as a learning experience, rather than get upset at a broken toy.

Let them do what THEY want to do, rather that what I want them to do.

As another example of an “outside the box” genius – I often think of an 18 year old Jim Henson sitting with his father (who at the time was holding a $5,000 inheritance check from Jim’s grandmother):

Jim’s dad: Well Jim, this is a lot of money. What are you planning on doing with it?

Jim: Well Dad, I have an idea about making this frog puppet…

I hope I can cultivate my children’s curiosity. I hope I can nurture their hunger to learn. I hope I never kill their desire to ask “why”. These items are way more important than forcing the kid to eat a green bean, exploding if they spill their juice on the carpet, or screaming if they get out of their chair at dinner.

Sometimes I will need to prod them with a suggestion, or help them lift something higher than they can physically reach. I want to be their sounding board and support their ideas. Pick them up when they fall down or cry with disappointment when their plans do not workout. I want to encourage them to work things out on their own, so they feel proud and accomplished when they have succeeded, yet willing to try and try again if things disappoint them.

I’m sure I will read and learn much more about Steve Jobs, and always wonder what would he have thought of next?

Maybe, years from now, you will buy an amazing, “can’t live without” product that one of my children has created! Or maybe they will grow to be the kind of person you like to be around. A person that cares about the world around them.

Because today’s Cowboys game got me so angry, I decided to look up how a former Cowboy is doing in another game.

Remember Wade Phillips? He was last year’s Cowboy head coach. He looks like a cross between the Stay-Puft marshmallow man and Baby Huey? Now you remember…great.

Wade was fired last year and picked up a gig in Houston. He was living in a posh spread in the heart of Preston Hollow. He purchased said pad in May of 2007 for a toney mark of $2,800,000. Never mind that the property was listed at $2,750,000 – he was spending that “Jerry Jones” money at the height of the real estate market. Just to evaluate, that comes to $319 per sqft. 8700(+/-) sqft, 3 car garage, less than .5 acre lot. built in 2006.

Fast forward to 2011. Ol’ Wade needs to sell. He hires the same toney realtor that let him overpay when he bought it. So let’s look at the stats in his market over the last 12 months…

If you average the top 7 transactions, the numbers are a sale price of $1,725,000 and a price per sqft of $246. They are also a little smaller – averaging a little over 7,000 sqft. The HIGHEST transaction was $1,900,000 ($272 per sqft – and it may not be fair to use this comp because this house was on a lot measuring over 1 acre).

Wade has a keen analytical mind. He knows how to read his competition. He will be competitive, right?

His house is listed for $3,250,000. ($376/sqft).

This one has been listed for 272 days with no price reduction. Owner is absentee focusing on how to stop AFC offenses, he’s not paying attention to his listing.

Last night I had the privilege of attending the Akiba Academy “Inspire!” Gala. The typical format – honor a few people who make great contributions to the community (Thank you AGAIN Sharon Blumberg and Helene Schussler), a nice dinner – then a live auction of several great items to raise money for the community.

Auctioneer takes the podium and a common theme was taking place. Auctioneer would read the item…Trip to Vegas…airfare for two…limo service to the airport…suite at the Bellagio…dinner are Aria…a package with a retail value of $4,000…

“LET’S START THE BIDDING AT $5,000!!!”

(hush falls over the crowd)

“COME ON!!!! $5,000 is the bid…..it’s for a good cause…

…and no one would raise their hand.

The auctioneer sheepishly would clear his throat, and then reduce the offer price a few thousand dollars…and the auction would resume…but the damage had been done. All of the energy was taken out of the room. The new price of the item was put into affect, and the final bid was markedly lower than it should have been.

One particularly lovely person sitting at my table (Hi Robin) made a rhetorical statement…

“Why is the auctioneer doing this? He is starting these prices too high, and no one is interested in bidding on anything.

EXACTLY!!!!

Robin, why is it that no one is interested in bidding at these prices?

“I don’t know. Maybe because they can go buy it somewhere else cheaper? Maybe they are embarrassed to make such a high purchase in front of everybody?”

EXACTLY AGAIN!!!! Just like Real Estate.

When you are in an extremely exciting position of adding a new listing to the MLS, why would you want to kill the excitement by overpricing your house? Nobody is going to want to overpay for the house.

Your prize auction item will just sit…and sit…and sit…

…until the auctioneer reduces the price.

The nationwide increase in leasing activity has caused an increase in the type and number of leasing scams perpetrated against potential tenants and owners.

Most common type of scam?

The most common scam is a type of advanced fee fraud. This is similar to emails we’ve all received for years where a Nigerian prince needs our help moving $20 million out of the country and all we need to do is give him our banking information. For some reason, many people suspend logic and reason when faced with a windfall and fall victim to having their bank accounts zeroed.

How does that work with Real Estate?

In real estate, the scam works like this:

Legitimate Realtor/Owner list property for sale and put it into MLS.
Scammer uses exact listing details, real owners name, and often the listing agents name and offers the property for lease online.
Scammer offers the property for lease significantly lower in price than comparable properties in the area
Potential Tenant sees opportunity to get a “steal” of a deal on a property and emails Scammer
Scammer claims to be an absentee owner or currently out of the country
Scammer asks for deposit to be wired to London, Madrid, California, etc to secure the property at that low price.
Potential Tenant suspends common sense and wires money to Scammer.

The average person that thinks they can “outsmart” the system may jump on this opportunity, only to be out a significant amount of money.

A client of mine fell for one of these scams. They saw a house in West Highland Park wher comparable lease houses were going for $3,500 per month. The ask on this ONE house was $1,500. They called the landlord, who told them that activity on this property was VERY HOT, and if they wanted to secure the property they needed to send a deposit of $1,000 that would be applied to their first month’s rent. They sent the money – went to meet the landlord at the house – only to find the property owners living there. The property owners had the home listed three months earlier, with no success of selling.

When they finally got around to calling me, I asked them “Why didn’t you call me first?”

“We didn’t want to bother you.” (Translation: we wanted to save a couple of bucks, instead we got fleeced).

If they had just done a quick drive-by of the property they would have seen no sign in yard and an indication that people were living there.

Use your head. Call your Realtor.

A client called me this morning about a new listing she had found. This client is a joy to work with. Pretty, great family, extremely motivated self starter. We are still about 4 weeks from listing her house, but she has be canvassing the listings in the area where she wants to move. I’m not going to call her “high maintenance” as much as “high energy”. She knows what she wants for her family, and she knows where she wants to be. I will refer to her as “over excited self starter”.“Kyle, there is a new listing on Trulia.com in “Wonderland Shores” (This is not the real name of the subdivision – names have been changed to protect the property values). It is a 4 bedroom 4300 sqft and it’s listed at $288,000. Can we go see it today?”I found it curious that there was no address given on the Trulia.com listing. I went to read the listing description and found this…Notice of Sale. This property is scheduled for a public foreclosure auction. A public foreclosure auction is scheduled when a homeowner in default does not stop foreclosure proceedings within a certain timeframe determined by state statute……blah, blah, blah.

This is the boiler plate wording for properties that show up on the monthly foreclosure report. This does not mean that they are available for sale. It simply means it is scheduled to come up at the foreclosure auction (typically, less that 10% of these postings make it to auction). I go to MLS to look up all listings on that street. No active listings. Hmm….

I just received an interesting e-mail from a client asking aboout the 2011 North Dallas market related to new (newer) construction homes. Her question was a s follows:

Do you see any reduction at all in prices for which homes in that area will sell or are they holding strong?

(my response was as follows:)

Your question gave me a chance to do a little research. Something I will turn into a blog entry. Here is the basic infornmation related to houses S of LBJ, N of NW Hwy, between Midway and Central Expy – houses built 2000 or after, btwn 4500 and 6000 sq ft. We are looking at Jan 1 to Aug 23 sales in each year:

Year           # of Sales             Avg sale Price     Avg price per sqft

——– ———— —————- ——————–

2011                     27                         1,242,293                       $232.32

2010                     30                          1,049,556                       $200.30

2009                     23                         1.105,503                       $211.00

2008                      37                         1,345,186                       $253.89

2007                     45                          1,312,498                       $250.86

2006                     31                         1,175,645                       $231.54

Looks like price per sqft is up about 15% over 2010.

(Her response…)

WOW! You should tell CNN that too so they will stop giving me false hope that house prices are coming down . Thank you for doing that . . .

(From me…)

They are still down from 2008. Remember – it is easy to shape the statistics to tell a good story. The older, remodeled homes in North Dallas are taking a beating. Let’s frame the stats I gave you…

In 2007 builders were getting money cheap and easy from banks. Market went into the crapper in Oct 2008 (I remember, because I was on the State Fair Midway with a hedge fund friend of mine that wanted to kill himself).

Banks started calling builder loans. Builders had overpriced specs on the ground. Banks foreclosed and sold the specs at 60 cents on the dollar (see the 2009-2010 prices).

Once the inventories diminished, there were very few specs to buy, so existing homes that were priced right started to experience nice sales. There were/are still a large number of sellers that are unrealistic – with prices that are too high. The ones that price right, sell.