Kyle Rovinsky’s Blog

I had the priviledge of assisting one of my clients with a tax protest.

My client built a new home over in the area near the Cooper Aerobics center. Med. style, 7500+ sqft on almost 1/2 acre. Tax value in 2007 was 990,000. In 2008 it was $1,050,000. It 2009 there was a slight adjustment…

$1,757,000

WHAT!!??!!??

A $700K increase in one year? There is a law that states tax values can be increased as much as 10% in any one year, or 30% over a three year period. This change reflected a change of 68%.

My client (who lives in Los Angeles) asked me if I would kindly handle the protest. Using relevant comps and a friendly demeanor with the appraisal district, I helped him get his tax values lowered to $1,170,000.

Some quick math, his tax values were lowered by $587,000. If Dallas Co. taxes are estimated at 2.8% of the tax value, I helped my client save over $16,000 in taxes for the coming year.

Glad to do it.

I was looking at my blog history. My last post is from May 4th 2009. It seems I have gone almost 2 months without posting anything.

Why?

Well, things have been tough in the streets. I have had several transactions this month, but each one has been a difficult line of communication…from initial offers, to repair amendments, to mortgage committment. My mother always taught me, “If you don’t have anything nice to say, don’t say anything at all”.

So there was nothing nice to say. After looking at my slim blog, I decided this was not good. I am going to start publishing at least twice per week, whether the news is positive or not. It is a trying time out there right now. All I can do is try to bring buyers and sellers toghther.

Be careful what you wish for.

When I first started in Real Estate, I used to lament “If I could just break into that $1 Million market, then things would be aces for ol’ Kyle Rovinsky”.

Now I am there, routinely carrying several $1M+ listings at a time. I have had great success transacting them as well, always satisfying my clients by exceeding their expectations.

Lately this market has become…sluggish.

Slow.

Stagnant?

Here is a snapshot. Using any address that is in City of Dallas - priced from $1,200,000 to $1,300,000 - there are currently 78 active listings, one under option, and four addresses that have sold.

Four.

In four months. It’s not hard to figure absorption here. If one property sells per month, and there are 78 active listings in Dallas (this does not coult Highland Park, University Park, Plano, Frisco…), this would represent an available inventory of 78 months. At this rate, it would take 6 1/2 years to sell all of the available inventory.

The other interesting fact…Properties listed between $1.2M and $1.3M…do you know the average sale price? How about $1.1M.  The average transaction is happening at 86% of list price. Average Days on Market…267. Let’s compare this to past years…

 In 2008 from 1/1 to 4/30 there were 16 transactions. The average sale price was slightly over $1.2M - properties selling at 95% sale price to list price. Average Days on Market…199.

In 2007 there were 15 transactions in this time period with an average DOM of 220.

Look at the three year trend…number of transactions went 15…16….4.

I have been working a deal on a lovely home in Plano. Listed for $284,000; contracted at a great price for a super-fun couple relocating to the area from the east coast. Everything is going great, except for one major flaw. This one is equivalent to the old joke…”Other than that, Mrs. Lincoln, how did you like the play?”.

Over the last three years, I have closed over 85 transactions, so I have a pretty good sample to consider when I say this is the WORST communication I have ever had with a mortgage company. Today, we are 10 days past the original contract date to closing, and I have just counted 12 unreturned calls and e-mails that I have sent to the mortgage contact. My buyer is constantly being pressured by the sellers, we call looking for answers - and the mortgage person will not answer, or even return phone calls.

Today’s mortgage climate is very tight. In years past, a mortgage request could easily get thru underwriting in 5 days. Now, with all of the issues regarding mortgages, underwriting is commonly taking 21 days. This is why now, more than EVER, the mortgage broker has to be communicative…not only with the buyer, but the buyer’s agent AND the title company. My client says she has communicated with the mortgage contact a few times, but every deadline she mentioned has been missed.

“Documents will be there by the end of the day Friday”.

Deadline comes, and no docs. I have heard nothing. Title Company has heard nothing.

“Documents will be there first thing Monday morning”.

Deadline comes, and no docs. I have heard nothing. Title Company has heard nothing.

“Documents will be there first thing TUESDAY morning”. (notice how the deadline keeps shifting)…

Deadline comes, and no docs. I have heard nothing. Title Company has heard nothing.

All it would take is one 5 minute phone call to me, and one 5 minute phone call to the title company to set the timetable. Instead, we rely on heresay from the buyer and there is no tangable communication from the entity ACTUALLY SUPPLYING the money. It has caused a great upheval in the transaction.

All I will say here is this mortgage company is in San Antinio. If you want the specific name, I will be happy to give it to you. If you are going to use this person, please consider thoughtfully. If this experience is the normal way she operates, you are putting your transaction in jeopardy.

In the world ofmajor league baseball, games that start in the early afternoon are commonly known as “Businessman’s Specials”. Businessmen can arrange their schedule to go out to the stadium for lunch, grab a couple of hot dogs and watch a game.

I have a friend who used to work for an ad agency in St. Louis. His office was downtown, and from his office window you could see into Busch Stadium, home of the St. Louis Cardinals. Once, I was lucky enough to be visiting when the Cards had a “Businessman’s Special”. We left his office, walked over to the stadium, got our lunch, and hunkered down for some baseball. The stadium was filled with men and women in suits, who looked like they just popped over from whatever job they held downtown, for a few innings of great baseball.

St. Louis. What a baseball town.

Here in North Texas, The Rangers try to grab on to this persona. Tomorrow is a 1:05 start at The Ballpark in Arlington. The Rangers try to bill it as a “Businessman’s Special”.

Unless your business is goat farming or manure manufacture, one can not have a “Businessman’s Special” in Grand Prarie”. It is an oxymoron.

The team owners should have thought of this when building the stadium in this god-forsaken area. When you see highlights of Thursday’s game, and attendance is sparce, think of what the seats would have looked like if the stadium was built in the shadows of downtown Dallas.

I have a client who owns rent houses. When you think of a landlord - an image may pop into your mind like “Mr. Roper” from “Three’s Company”. Old crumudgeon…stained white t-shirt…chomping on a cigar…trolling around for the rent check.

This client is nothing like that.

First of all, SHE is a very elegant lady who has lived all over the United States. Both coasts and heartland america. In 2005, she sold 3 California properties and 1031′d the money into 8 houses in Frisco and Mckinney. In hindsight, it looks like she was “on the ball”. She e-mailed me a few weeks ago and said she was interested in spinning off one of the McKinney houses.

When I read this, I rolled my eyes and shrugged my shoulders. “Oh, great” I thought. I get to compete with all of those foreclosures in Mckinney. I told her I would do the homework and get the latest information to her. Here is the e-mail I sent her regarding her property…

Denise,

Last weekend was the first “brisk” real estate weekend I have had in a while. I wrote two contracts for clients and received offers on two different properties. Things are starting to perk.

Related to (ADDRESS WITHHELD):

In the last 6 months (very sluggish overall market) there have been 5 closed transactions in the subdivision and there are currently 6 homes listed for sale. The 5 sold properties had an average days on market of 83 (average for collin county over the last year is 125 days on mkt). Three of the sales actually happened in less than 20 days.

The average sale price has been 203,000 ($79.28 per sqft). Including (ADDRESS WITHHELD)(3 bed/2.1 bath/no pool) which listed for $219,900 and went under contract in 5 days for $217,000.

The average listed price in the neighborhood is $235,000. The lowest priced active listing is a 3000+ sqft house on (ADDRESS WITHHELD), listed for $223,900.

I recall you paid $195,000 for (ADDRESS WITHHELD). Let me know your thoughts.

Kyle

You see in the e-mail, I took concerned opportunities to relay common themes in the Real Estate market. Sluggish activity. Low sale prices. These are themes that constantly punch me in the face while watching national news or reading newspaper headlines. These themes are then echoed to me by buyers whom I represent, so my e-mail took this tone when replying to my client. Here is her response to me…

Kyle,What would you recommend listing at? I haven’t contacted my tenants yet. I’m still thinking about it, but getting more serious about it daily. Actually, your market doesn’t sound sluggish at all to me - but I guess it’s a matter of perspective! I lucked out with one home in North Carolina and sold it in 40 days, the other one was on the market 6 months. My own house in Massachusetts was on the market 7 months last year and the condo I have on Cape Cod has been for sale since Labor Day without even a nibble.

Denise, Thank You for helping to reframe my perspective. The market here IS NOT sluggish, it is strong. We are very lucky to live in this part of the world.

I was born in Dallas, Texas in December of 1967. My parents brought me home from Baylor hospital in a Christmas stocking to our home on Yamini Drive. A wonderful split level ranch built in 1965. Just like every house built in North Dallas late in the sixties, it was a RANCH.

My mother sold the house in 1999. The new owners tor out her pink kitchen and laid in granite counters. They reworked the master bathroom with glass tiles. They gave the finish a wonderful, contemporary flair. But you know what…it’s still a RANCH! It is not Mid-Century modern.

This is my new pet peeve in Real Estate. Somehow or another, the term ranch has become boring. What do people do to combat this? They try to come up with a sexier term for what they are. It’s the same thing as “middle aged lady”. A very frumpy description. But call that same “middle aged lady” a “cougar” and you have transformed her genre.

Just try to remember this - if it was built north of Walnut Hill lane after 1960, it is a 99% chance that the house is a Ranch. Please do not insult the memory of Frank Lloyd Wright by trying to call it a “Mid-Century”.

6301 Clear Ridge in Brentfield Elementary is one of those homes that stays with you.

The first time I walked it, I was infatuated. Great spaces, expansive master bedroom, huge yard…then reality set in.

Small kitchen, yard was cut up by bad fencing, master bedroom was pink. Too much “bad” to keep you excited about the “good”. Also, the living room had great built in bookshelves that were stacked top to bottom and side to side with ceramic puppy dogs. A heart warming collection, but a stager’s nightmare. It looked like these things were invented to collect dust.

Anyway, someone fixed the problems. The backyard fence has been homogonized to contain the ENTIRE yard; so instead of having four small yards, you now have one HUGE one. Kitchen is still small, but it is useable. It does back to McCallum, but the way the subdivision wall is built, it is not a real objection.

Priced at $499K, this one is one of the best in Brentfield. It should go. Let me know if you want to go see it.

6238 Lakehurst in Preston Hollow is a puzzle. It is a Gage Home, and Gage Prichard knows what he’s doing. It’s 7400 sqft with 5 bedrooms on a huge 125 x 150 lot. It had been listed for over 400 days at $3.4M. Now the listing is cancelled. I wonder it it’s being listed, or did he sell it?

It’s been a little while between posts for me. 1st quarter is about planting the seeds that blossom in late spring, early summer. The national news is a little overbearing related to Real Estate, making it a little more difficult to build consumer confidence. I think a lot of people are going to slow-play themselves into a dissapointing position this selling season.

Example: I have many savvy clients asking me to keep my eye on certain marquis properties in the area. Properties that started with a high(?) sale price and have enjoyed a lengthy stay on the market. Well, over the last 7 days, more than a few of these properties have gone under contract. Here are a few:

6465 Mimosa - 5 bedroom, 6200 sqft. Listed For $1,299,000. On the mkt for 77 days - under contract

7515 Azalea - 5 bedroom, 6200 sqft - Listed for $1.699M. Reduced to $1.495M. On the mkt for 140+ days - under contract

This Azalea listing is very intriguing. A traditional elevation with a very modern/contemporary level of finish. Being on the 7500 block of Azalea puts it a little outside the common “go to” area for houses over $1M. I had a client that was infatuated with the house. He asked me to let him know when it could be had below $1.2M. Well, it looks like that day will not come for this house.

7016 Lavendale - 3 bed - 3700 sqft - Listed for $650,000. On the mkt for 167 days - under contract

5117 Ursula Lane - 6 bed, 8300 sqft - Listed for $5.6M. This one was the BIG DADDY. On the mkt 172 days and yesterday…under contract!

All in all, there were 16 properties under my watch that were being used as indicators of a lagging market by my clients that went under contract in the last 7 days. This fact tells me two things:

1)If you are thinking about selling your house - get it ready and get it listed.

2)If you are looking at a house that you love, but are waiting for prices to go lower…don’t outsmart yourself. Things are going under contract.

I have a very demanding client with a wonderful estate property in North Dallas. It is good size with good trees. Three years ago, he could have sold it for close to $400k. Market has changed since then. Here is a recent e-mail update sent to the client. I’d love to know what you think of this situation:

————————————————————————————————————————–

Dear Client (to remain nameless):I wanted to send you a market update for 1234 Your House (address also to remain nameless - just know it is south of LBJ in an are RIPE with new construction). I want to give you up to the minute market profile so you know where your property fits in the marketplace.

5811 Preston Haven 752303 bed, 2 bath - 1587 sqft house on lot that measures 120 x 130Originally listed for $369,900

Best Lot value south of Forest, large corner lot next to 2 new construction, oversized lot with great frontage.Home is being sold AS IS, Tenant occupies property and can not show,house still in good condition and rentable can be shown with contract, wood floor, updated kitchen, Granite tile counter.Evaluation:South of forest lane is a superior location to Your Street. Property at corner of Preston Haven and Jamestown - so not badly encumbered by commercal property.

2 bed, 2 bath - 1972 sqft on lot measuring 80 x 140Originally listed for $434, 000

Wonderful opportunity to own a vintage home in the heart of North Ridge. Turn it into what it was in years-gone-by or build your dream home on this deep interior lot. Hardwoods, built-in shelving in the office & plenty of windows. Property to be sold as-is with no repairs or concessions to be made by Seller. No utilities so if showing at night, bring a flash-light. No utilities to be turned on if inspections required.Evaluation:This is a prime Preston Hollow location, although a smaller lot than the average Preston Hollow lot. You can see a $100K reduction in price and lot still sold for $30K below that number. If this happens in Preston Hollow - it is an excellent barometer for the marketplace.

3 bed, 2 bath - 2091 sqft on lot measuring 100 x160Originally listed in Feb 2006 for $399,900

This thought-provoking Preston Hollow area home is a true example of subdued sophistication. The gourmet kitchen features granite counter tops. The multiple open living areas awaits your escape. The oversized wood deck is perfect for your next dramatic function. Office-Shop out back. Reminiscent of your dreams, this house is formal and fun with hardwood floors. Astonishing open space, inspiring style, and irresistibly priced.Evaluation:This home was purchased out of foreclosure in 2005, torn to the studs and remodeled for sale again in 2006. Horrible location (backing to car wash - corner of Forest) could not be overcome by thoughtful updates.

3 bed, 2 bath - 2223 sqft on a lot measuring 100 x 133Originally listed 7-8-2009 for $449,000

Nestled beneath native live oaks and pecan trees this Preston Hollow home exudes charm while containing lots of updates. The exceptional floor plan has large entertaining spaces and quiet private areas for the bedrooms. Located close to North Park and Preston Royal, the owner of this home will have easy access to local conveniences.Evaluation:Again, preferred Preston Hollow location on a property that had to effect a price reduction of more that $100K to get attention.

3 bed, 2 bath - 1916 sqft on lot measuring 100 x 169Originally listed on 5-23-08 for $459,000

Preston Hollow Traditional on Oversized Treed Lot in Prime Neighborhood with Much New Construction. Terrific Floor Plan with Separate Formals. Hardwoods Under Carpeting Except Den. Spacious Living Room with Fireplace. Oversized Utility Room Provides Great Storage. A Well Cared for Home In An Outstanding Neighborhood. Attached Garage, Too.Evaluation:This is the best lot on the list. Considered prime in every aspect of location and topography (beautiful, mature trees). Any savvy, Real Estate person would consider this area of Preston Hollow at least equal to - if not superior to your area. This lot in 10′ deeper and 1′ wider than your street. They started at what they felt was a relevant price (and at the time, I’m sure it was).