If you’ve been keeping an eye on the Austin real estate market lately, you’ve surely heard that the ATX has become one of, if not the most, competitive markets for home buyers in 2021. You’ve probably heard about homes flying off the market at record speeds, selling for hundred of thousands of dollars over asking price, and new builders only being able to sign 1 or 2 contracts a month for homes that won’t even be completed until 2022. However, something you may not have heard about yet is the subtle shift in the Austin real estate market over the past two weeks. I’ve seen homes sell for asking price, homes that only had a few offers, and the return of due diligence periods.
This shift is subtle, and if you are not actively working in it everyday, you may not even notice it. But I feel it, and if it continues, it will have implications. You may be wondering why this may be. All of the signs point towards continued demand and thus higher prices. And, that is still true, but the market is behaving slightly differently. I hypothesize this subtle shift is due to a few different variables.
Many individuals looking to purchase in the Austin market are quite simply beginning to feel defeated. I have a few buyers who have been trying to buy a home for the past few months, and are still empty handed. They’ve offered well over asking price, waived their appraisal contingencies, and offered 5 digit earnest money deposits yet they still haven’t been able to get an accepted contract. After the 4th or 5th time of this, some buyers begin to feel like they simply cannot win in this ultra-competitive market. Some of these buyers decide to stop trying altogether, or opt to purchase in another city altogether. Others are still observing from afar, but are less motivated to make offers on available homes.
Sold Home Data is Starting to Show the Truth of the Market
In order to determine an appropriate asking price for a home, you need to look at the sold prices for comparable homes. Since the home sale cycle from list date to close date is usually around 30 days, sold stats are constantly lagging behind the market. Over the past few months, most homes have been appropriately listed at prices determined by the sold comparable homes. However, the majority of those homes went under-contract at a price far higher than the asking price. We are now beginning to see those homes close, and new listings are being priced using those sold stats.
For single-family homes listed in the Austin MLS, the median list price/sqft increased from $197/sqft in February to $213/sqft in March. As listing prices are increasing, I foresee this leveling out the difference between asking price and contract price. This is not to say that the majority of homes will not continue to sell for above asking price. I think that trend will continue, but I think we will see the difference between asking price and sold price decrease. Earlier this year we saw some homes selling for hundred of thousands of dollars over asking price; I foresee the ratio of list price to close price decreasing in the coming months.
Increase in Inventory
The February storms caused a serious strain on an already tight supply of inventory in the Austin market. Some homeowners that planned to list in February were forced to wait to list due to unexpected repairs as a result of storm damage. Others simply decided to wait to list, since the city was essentially shut own for an entire week. In February, we had 2,360 new single-family residential home listings in the Austin MLS. In March, we had 3,745 new single-family homes hit the market. Historically, we see the largest inventory increases in the Austin real estate market between March through July. So far, the number of new listings in 2021 has been lower than what we saw last year (even with the pandemic). However, it looks like the trend for increased listings in the spring to summer months will continue for 2021.
What This Subtle Shift Means for Austin Buyers and Sellers
This subtle shift should benefit those looking to purchase in the Austin market. Home prices likely will continue to be the highest they have ever been, BUT as sold comps catch up to the true market it will be easier for buyers to purchase homes. Appraisal waivers (essentially agreeing to purchase the home no matter what it appraises for and agreeing to bring the difference between the appraised value and the offer price in cash to closing) were almost mandatory over the past few months. This made it nearly impossible for someone without a ton of extra liquidity to compete in multiple offer situations. It was particularly detrimental to those buyers looking to purchase a home using a VA or FHA loan as these loan programs expressly prohibit the use of the Appraisal Waiver Addendum. Now that we are beginning to see the new market sales data, homes are more likely to appraise at or closer to offer prices. This has huge implications for any buyer using a loan to purchase a home.
For someone considering selling their home in Austin in the near future, you can still expect your home to sell for top dollar. In fact, you will likely get more for your home in the coming months than if you had listed your home for sale in the first quarter of 2021. However, you may not get all of the other offer terms that many home sellers received earlier this year. We saw home sellers receiving offers where the buyer incentivized the seller with a complimentary lease back. Sometimes, the buyer offered for the seller to stay in their home for an entire year for free after the buyers purchased the home. These will likely become more conservative or dissipate entirely. You also may see the re-emergence of typical seller expenses such as the title policy, and buyers may begin requesting a seller paid for home warranty again. All in all, these nominal expenses will not adversely affect your bottom line. You can expect to still sell your home for the highest price, but you may arrive there with fewer offers and more buyer preference in regards to offer terms.
If you have questions about the Austin real estate market, or need advice when contemplating your next move, contact me.
One great aspect of Austin is that it is home to two lakes. Lake Travis and Lake Austin are both technically dammed portions of the Colorado River. Lake Austin is a narrower meandering constant-level lake while Lake Travis is much larger and deeper, but it is subject to varying lake levels. Both lakes offer ample opportunities for recreation. If you are ready to enjoy the lake life in Austin, but not quite ready to plunge into buying a waterfront property, you may want to consider one of these communities which offer boat ramp access to residents. Purchasing a property in a community with lake access guarantees that you will be able to get out on the water with ease, and avoid the crowds at the public boat launches. There are numerous great communities in Austin which offer residents access to Lake Travis or Lake Austin. Here are some Austin communities with lake access you may want to consider.
lake Austin Communities
Apache Shores is located off RR 620 in the acclaimed Lake Travis Independent School District. The community offers a diverse array of property types, and residents enjoy access to a number of amenities including a community boat launch. There are also several boat docks available for day use as well as a large area with picnic tables and grills where you can relax after a long day on the lake. Other community amenities include a pool, tennis and basketball courts, childrenâs park with a playscape, and a disc-golf course.
Cuernavaca is located off Bee Cave Road between 360 and 71 in the exemplary Eanes ISD. Cuernavaca has a voluntary HOA. Membership in Cuernavacaâs Lake Hills Community Association grants members access to the community pool, private boat launch and a waterfront park.
Lake Point is located 12 miles from downtown Austin off Bee Cave Rd in Lake Travis ISD. Residents of Lake Pointe enjoy access to a waterfront park and day docks. Unfortunately, there are no motorized boat launches in Lake Pointe. Community amenities include pools, golf courses, and trails. Also enjoyable is the short journey to the Hill Country Galleria and all of the retail opportunities that entails.
Greenshores is located in the Austin ISD. Locals enjoy access to a private park on Lake Austin with a boat ramp.
Lake Travis Communities
Rough Hollow is located off 71 just west of Lakeway. Residents have access to an array of amenities, including the Yacht Club & Marina which offers complimentary paddleboards and kayaks, a fitness center, a water themed village, and 22 miles of hike and bike trails.
Tessera On Lake Travis
Tessera On Lake Travis is located in Lago Vista in the Lago Vista ISD. Amenities include a private boat launch, gorgeous pool, exquisite hiking and bike trails, and over a mile of shoreline.
Lago Vista POA
Lago Vista is located on the Northshore of Lake Travis. Residents enjoy access to boat ramps, lakefront parks, golfing, tennis courts and more all nearby. Residents also enjoy community exercise facilities, pickel ball courts, a small airport & much more.
Lakeshore Ranch is located in the Lago Vista ISD, sitting on the Lake Travis shoreline. Lakeshore Ranch has a private HOA waterfront park with a boat ramp. Residents enjoy easy access to the Balcones Canyonlands National Wildlife Refuge, prime shopping, nearby trails, zip-lining, and fantastic restaurants.
Located in the town of Spicewood, homes in Laguna Vista also feed to Lake Travis ISD. Residents love the private community boat ramp, swimming, fishing, and living an outdoors life.
Paleface Ranch is located west on Highway 71 in the Lake Travis ISD. Residents enjoy access to a community boat launch. This neighborhood is located on the Pedernales River arm of Lake Travis so it may go dry when we are experiencing extreme droughts.
Bee Creek Estates
Bee Creek Estates is located off of Highway 71 in the Lake Travis ISD. Only a short drive from the Hill Country Galleria. Locals enjoy the private park with a boat ramp for lake activities and nearby golf courses, and wineries.
Naumanns Camp is a small community located in Spicewood, on the northern side of the Pedernales River. Lot sizes ranging from 0.5-5 acres. Naumanns Camps feeds to Marble Falls ISD.
Paleface Homesteads is located just north of Pedernales River in the Marble Falls ISD. Locals enjoy golfing at Pedernales Golf Club, owned by Willie Nelson. You can also find comfort at Spicewoods Vineyards and Gaucho Winery.
It’s been over a year since our beautiful world shut down. We said goodbye to large weddings, parties, the nightlife, concerts, theaters, and so much more. Who’s ready to have fun again? I know I am! Let's take a look at some fun activities in Austin, TX to make you feel like you're living your best life again.
Barton Creek Greenbelt:
The Barton Creek Greenbelt is located in South Austin and stretches over 12 miles of land. The Barton Creek Greenbelt is known for its beautiful hiking trails, swimming spots, biking, rock climbing, and is an overall great way to spend a day in the outdoors. Read my full Insider's Guide to the Greenbelt here.
This interactive museum gives you a fun way to enjoy numerous exquisite works of art! Snap countless photos and make sure you post them on Instagram for all of your friends to see. This is a museum for all ages to enjoy. Bring your kids, bring a date, bring Bob from 2 houses down. You will enjoy the day and see many pieces that will open your mind to exploring places you never thought possible. Learn more here.
Relax while sipping delicious wine and having some laughs with your friends at the Austin Winery. Enjoy the many selections to choose from and have a snack while you sip. The friendly and knowledgeable staff make it that much more enjoyable. The Austin Winery is located in South Austin's St. Elmo district. Learn more here.
Feel like dipping your feet in the water? Head over to Rowing Dock where you can select from kayaks, canoes, and paddleboards to experience Ladybird Lake like a true Austinite. Located at 2418 Stratford Dr, Austin, TX 78746, the Rowing Dock is open daily from 9AM-8PM. What are you waiting for? Bring your friends, come alone, or load up the family and head over now! Learn more here.
Roam South Congress:
Enjoy the fun boutiques, eat at some delicious restaurants, view the street art, and enjoy what only Austin can bring you. Try on some crazy costumes at Lucy In Disguise With Diamonds, Have a yummy cone at Amy’s Ice Cream, stop in at Hotel San Jose for some amazing frosé, and don’t forget to snap a pic at the famous “I love you so much” mural at Jo’s Coffee. There's also an entire new section known as Music Lane which has some great restaurants and new shops to explore too!
If you’re trying to purchase a home in the Austin area right now, you know it’s nuts out there. It makes finding toilet paper in April of 2020 look like a piece of cake. Securing that coveted PS5 last month - a walk in the park compared to buying an Austin home. Needless to say, it’s a challenge. I like challenges and if you do too, keep reading to learn how you can buy a home in Austin right now.
Appease The Sellers
Sellers in Austin obviously have the upper hand right now, so you need to do everything you can to make sure they like you and your offer. Find out what makes them tick, what terms they will find most favorable, and how you can win them over. This may involve some deep cyber stalking. After you learn that seller Mary has been pinning recipes for banana bread you could deliver your offer with a loaf of MeMa’s famous bread and even include her secret recipe. Or, you may just be able to ask what the seller's plan is in order to craft an offer that is most appealing to their needs and timeline. If the home is vacant, they probably want to close as soon as possible. However, if the sellers still live in their home, they may favor a closing date that is farther out or a lease back for a few months so they have enough time to find a new home. Sellers know that the market is in their favor right now, so many have already outlined the terms they find most favorable before their home even hits the MLS. Make sure to inquire as to what these are so that you can draft an offer to match.
Cash offers always rank favorably among home sellers. When a purchaser is paying cash they can close quickly and there’s no potential for a contract falling apart due to issues with funding. In today’s omnipresent multiple offer situations, cash offers are becoming quite popular. If you can pay cash for a home, offer cash! You can always finance after you purchase the home. Don’t have a few hundred grand under your mattress? Just sell your first born child. Rob a bank or perhaps it’s time you start trying your luck with the Powerball. I hear there’s a jackpot of $970 million up for grabs tomorrow night. With that kind of payout you may be able to secure more than one house in the Austin market!
All jokes aside, there are ways you can leverage yourself to place an all cash offer on a home. You may be able to get a secured loan that uses your investments in stocks as collateral or perhaps you have a wealthy relative that will make you a personal loan. If you need to sell your current home before you can buy a new one, there are various companies such as homeward who will put a cash offer on your new home for you. They then lease your new home back to you until you sell your old home. Once your old home sells, you can get a traditional mortgage to buy the home back from them at the same price they paid for it in cash. Of course, they do charge a fee for this service. Ultimately, mortgage rates are at an all time low, but everyone knows it. If you can find a way to offer cash up-front, you will have the upper hand.
Waive Your Appraisal
If you didn’t win the lottery or scourge up enough capital to be able to offer cash for your dream home, you best consider waiving that appraisal to some extent. Austin homes are selling so quickly right now, they are outpacing the market data. People are paying more for homes than they are worth based on the published comparable home sales data. This means your home may not appraise at the purchase price.
Without an appraisal waiver addendum, the sale of the home is contingent upon the home appraising at the contract price. For sellers, this is a risk that the sale may not close. By adding the appraisal waiver addendum you are increasing the likelihood of your offer being accepted. But, if you couldn’t afford to pay cash for the house, you probably don’t want to waive the appraisal entirely. You may be able to do a partial waiver in that case. In this scenario, you would be agreeing up front that if the home appraises for less than the contract price you would be willing to bring additional cash to the table to make up the difference. And, you are capping the amount of cash you would bring making this a partial waiver.
Let’s say you put in an offer on a home for $500,000, and you are planning to put 20% down ($100,000). You do have $200,000 in cash. If the home appraised for $400,000 and the lender required you to put 20% down they would only loan you $320,000. Technically, you could still afford to make up the difference. So you may want to do a partial waiver of your appraisal contingency. This ensures that if the home appraises for less than $400k you don’t have to move forward with the offer and your earnest money will be returned, but if the home appraises for between $400-$500k you will still be on the hook to comply with the contract and purchase the home. You should definitely consult with your mortgage lender before agreeing to waive your appraisal contingency.
Forget about an Option Period
When you put in an offer on a home in Austin you usually pay a few hundred dollars to the seller for an option period. The amount of option money you pay and the length of the option period are both negotiable. The option period allows you the time to do all necessary inspections and you can back out for any reason during the option period and get your earnest money back. I used to say the typical amount for an option period is a few hundred dollars for a week long option period. Today, that’s not going to cut it.
Many buyers are foregoing their option period all together or offering thousands of dollars for a very short (1-2 day) option period. While I wouldn’t necessarily recommend giving up the opportunity for an option period all together, you may want to modify how you approach the option period. Make it as short as possible. If you can get in an inspector within 24 hours, you do not need a 7 day option period. If you are fairly confident there aren’t major issues with the home that would be deal-killers you may want to increase the amount for the option money. At the end of the day, option money is money that you may lose if you don’t go through with the deal. It’s kind of like gambling- only put in as much as you are comfortable possibly losing.
Pay for Everything
In normal times, the seller typically pays for the owner’s title policy in Texas. These are not normal times. Offer to pay for the title policy. If you need a new survey, pay for that too. A designer handbag for the seller- it could work. Were you thinking of asking for the seller to contribute towards your closing costs? Good luck with that. Perhaps you assumed getting the sellers to pay for a home warranty was standard practice- not anymore. These days, the buyer who pays for negotiable items is often the buyer who wins in a multiple-offer situation.
All in all, don’t lose hope if you want to buy a home in Austin in the near future. While this slightly satirical commentary on the state of the current Austin market has many truths there are still ways to buy a home in Austin without throwing your entire life’s savings into it. Take a look at my other post, How to Win in a Multiple Offer Situation for less risky tips for crafting an appealing offer.
Pay close attention to homes that have been on the market for a few weeks that others may have overlooked. You may not be able to buy your dream home right now, but that doesn’t mean you can’t make a home your dream home. Homes that look beautiful and show wonderfully will go quickly and with many of the terms outlined above. Some home sellers mistakenly choose a poor listing agent who decides to market their home with inferior quality cell phone photos that make me cringe. This does not mean the home doesn’t look great in person.
Buying a home in Austin right now can be a challenge, but I know you are up for it! If you want help navigating this insane Austin market, contact me today.
Last year was a whirlwind for almost all aspects of our lives, and the real estate industry was no exception. In the midst of a world-wide pandemic we saw something unusual occur in the Austin real estate market, there was no slow down. Usually, the Austin market is fairly predictable. Spring is the busy season. This is when there are the most active buyers looking to purchase a home, and the largest percentage of home sellers choose to sell during the same time frame in order to capitalize on the highest sales price potential. This year was a bit different. Buyers didn’t stop at the end of July, and they are still out there buying anything they can get their hands on. However, that isn’t much since sellers are not deciding to list their homes at pace with buyer demand. At the time of writing this, there are only 71 active single-family home listings in Austin for under $500K!
A number of factors have contributed to the omni-present buyer demand in the Austin real estate market. Buyers are taking advantage of record low interest rates. People are looking for more space as the reality of working from home indefinitely sets in, and large corporations are moving here in droves. All of these factors have resulted in a shockingly low level of homes for sale in Austin. In December of 2019, there were 1,285 active single family home listings in Austin. In December of 2020, there were only 521. As with any case of supply and demand, this is driving prices through the roof. Multiple offer situations that push the sales price well above the asking price are common occurrences at almost every price point in the Austin market. If you are submitting an offer to purchase a home right now, it’s not unusual to provide an appraisal waiver addendum that declares you are willing to bring additional cash to the table if the home does not appraise.
What does this mean for you?
If you are considering buying a property in Austin right now, understand that the market is incredibly competitive. You may not be able to get your dream home, or you may have to place offers on multiple properties before finally going under-contract on one. There should be an increase in listings this spring that will alleviate the market to some extent, but I would also expect prices to rise throughout the typical spring selling season. The bottom line is that if you are prepared to deal with the harsh conditions that the Austin market presents right now, you are likely better off buying now than waiting.
If you are thinking about selling your home, there has never been a better time. You can expect to sell your home quickly and for an unprecedented price. That being said, if you hold off until the spring, you may make a bit more. Ultimately, it’s up to your unique situation to determine if now is the best time to sell for you.
If you have specific questions about what’s happening in the Austin market and your best course of action, feel free to contact me anytime!
Selling an investment property is quite different than selling your primary residence. When you are considering selling a property that is tenant-occupied you will need to think about how the tenants may impact the sale of the home. The lease terms and your selling timeline will dictate how you can sell the home. You could sell the home with leases in place or wait for the leases to terminate before listing the property. If you wait for the leases to terminate you will appeal to a larger buyer pool, and the selling process can be facilitated more easily. That being said, there are benefits to selling an investment property with tenants in place ( hello instant rental revenue!) If you determine that selling with tenants in place is the best option for you, following the advice below will help you sell your rental property with relative ease.
When you’re considering selling your rental property, the first step is to locate your lease or leases if you have multiple tenants. Look at when the lease term ends and the monthly rent. Does the lease terminate at a time of year that is favorable for selling for the highest dollar? Does the monthly rent match the market rate? If you’re not sure, you should contact a real estate professional to find out! If your rental revenue is below market rate, and the tenants have a considerable amount of time left on the lease it may be better to wait until closer to the lease termination date to sell.
Next, you will want to look at the fine print in the lease that dictates how the property can be marketed. Identify what rights you as a landlord have to market and show the property. Some leases will allow for showings within a certain amount of days prior to the lease ending. Other leases may state that the tenant can pay a fee to waive the landlord’s right to allow showings during that time period. If you determine that listing your home for sale with tenants in place is the best strategy, you MUST adhere to the showing terms dictated by the lease. Furthermore, you will want the tenants to be cooperative in the process.
Communicate your intentions to sell early on; you will want to ensure they understand that the lease terms will stay the same when the property is sold. The only difference will be the landlord is changing hands. At closing, the security deposit will be transferred to the new owner, and the new owner will deliver instructions for paying rent to the tenants. You also need to make sure to have a plan for how showings will be allowed and how much notice the tenants need prior to showings. Will you communicate showing requests by a text or phone call? Do you need to inform all tenants or is their one point person with whom you can communicate? Are there certain times or days that will never work for showings? How much notice does the tenant need to allow a showing?
In addition to clearly communicating showing notice protocols, it’s also important to set expectations for how you would like the home to be presented fo showings (free of clutter, clean counters, beds made, etc). Ultimately, you can’t force the tenant to ensure your property appeals to buyers. However, you may be able to incentivize tenants with a discount on rent, a gift or you could offer a free home cleaning prior to an open house. In the end, this small expense is well worth it to ensure the home shows well and thus yields a higher sales price.
Selling your rental property with tenants in place means you are selling your property to an investor! Investors have one primary goal - to purchase a property that will provide a return on investment. In order to determine how profitable the property may be, investors will want to know all the figures. Make sure that the monthly rents are marketed. If you have detailed records of expenses and improvements to the property you should provide these. If you installed a new roof last year, or your property has a 10% cap rate, these are facts the investor will want to know! Make it as easy as possible for an investor to see the financial benefits of your property.
Do you have questions about selling your Austin area rental property? Give me a call, and I’ll be able to help you determine the best strategy for your unique situation.
One great benefit veterans who have previously served or are currently serving our country are eligible for is the Veterans Administration home loan aka a VA loan. The VA loan allows for a zero down home loan for qualified veterans. However, just because you served the country does not automatically qualify you for a home loan. Although the VA does not have specific credit requirements for buyers looking to utilize the VA loan, private lenders facilitating these loans often do. In addition, you will also have to show that you have the financial means to pay the mortgage and home insurance moving forward. That being said, if you have a decent credit score and a debt to income ratio of 41% or less, you will likely be able to qualify for a VA home loan.
There are many benefits of the VA home loan. The most well-known of which is the ability to purchase a home with zero money down. However, veterans who purchase a home with a VA loan also have the benefit of no mortgage insurance (a requirement for home buyers putting less than 20% down with a conventional of FHA loan). Additional protections for home buyers using a VA home loan include limitations on closing costs and prohibiting early payment penalties.
The VA home loan is designed to protect the veteran, and thus there are a variety of property specific requirements for buyers looking to purchase a home with a VA loan. If you are shopping for a home in the Austin area, and are planning to use your VA loan it’s important to understand these requirements so you don’t waste your time looking at properties that may not be eligible to purchase with a VA loan.
Purchasing a New Construction Home with a VA Loan in Austin
If you are thinking of purchasing a new construction home with a VA loan, the builder must be registered with the VA. If the builder is not registered with the VA, that does not necessarily mean that home is off the table. The VA builder registration process is relatively simple, and a VA builder ID can be procured within a week in most cases. However, the builder must be willing to go through this process.
Purchasing an Austin Condo with a VA Loan
If you would like to purchase a condo in Austin using a VA loan, you will need to make sure the condo complex is on the VA’s approved condo list. For a condo to be approved it must meet the following criteria:
Just because a property meets the criteria above does not automatically mean it is eligible for a VA loan. A condo must be listed on the VA’s approved condo list. You can view and search for VA approved Austin condo buildings on the VA’s website.
Minimum Property Requirements to look out for when shopping for an austin home to purchase using a Va Loan
Whether you are buying a new construction home, a condo or an existing home with a VA loan you will need to make sure the property meets the VA’s minimum property requirements. These requirements are designed to protect the veteran from safety related issues as well as future economic burdens. Here are some of the minimum property requirements to look out for while shopping for an Austin home:
This list is by no means exhaustive, but if you are looking to purchase a home in Austin using a VA loan, it should give you a basic idea of what to look out for when considering your options. If you want to utilize your VA loan to purchase an Austin home, I’d be happy to help you navigate the process. Contact me today so we can start working to find the perfect home to meet your needs.
An accessory dwelling unit, aka an ADU, may be the perfect solution to all of your 2020 problems. The idea of a back house is nothing new to the Austin real estate market. They’ve been becoming more and more popular over the past decade as property values have increased throughout central Texas. They are great for buy and hold investors looking to capitalize on their investment by creating more opportunities for rental revenue. Similarly, more and more developers are building two units on one lot and then selling both units separately as detached condos. However, this year, more than ever, the benefits of an ADU as more than just an investment strategy are clearer than ever before.
Our houses have become places for much more than resting our heads at night and gathering for family dinners. Our homes now are someplace we spend the majority of our time. We work from home, workout from home and so much more. With all of the time you are now spending at home, you may have started to feel a bit confined by the four walls and space available. If you’re feeling a bit claustrophobic in your current home, an ADU could help. This accessory dwelling unit could be used as a home office, a class room, a home gym and so much more.
If you’re thinking about building an ADU on your property, you will first want to do your due diligence on if your zoning allows for a secondary dwelling unit. The rules will vary from one municipality to the next. In the City of Austin, they have very clear rules on building an accessory dwelling unit. The rules are based on lot size ( in order to build an ADU you must have a lot size of at least 5,750 sqft ), the property’s zoning, and impervious cover requirements. You can view the complete requirements in the City of Austin’s Land Development Code.
If you determine that you can physically build an accessory dwelling unit on your property, the next step would be to speak to a builder to determine what the costs would be. At this point, it would also be wise to speak with a trusted real estate professional to see if the costs to build an ADU would be recouped when you eventually sell your home. You may determine that building an ADU is not the best economic move, or that the construction timeline is too long to stay sane while doing everything in your current home.
If you still have your dreams set on the idea of a secondary dwelling unit, you could purchase a new home with an existing ADU on the property. There are some properties with secondary dwelling units for sale in the Austin market. There are also other properties, that have a secondary structure that could be remodeled to serve your unique needs.
Here’s a list of Austin area homes with ADU potential currently for sale:
If you’re looking for a home with an accessory dwelling unit in Austin or have questions about building an ADU at your Austin home, feel free to contact me today.
If you are considering selling your Austin area home, you are likely wondering what fees are involved in the sale. In order to determine if selling your home is in your best financial interest you need to understand all of the costs associated with selling, and have a good idea of the price at which you can sell your Austin area home. Many of the costs associated with selling your home are negotiable items in the standard Texas real estate contract; however, there are items that are typically seller expenses and other fees that you are certain to pay when you sell your Austin house. Below is a break down of the various fees you can expect when selling your home in Austin, Texas.
Real Estate Broker Commissions
If you are going to be listing your home for sale with a real estate agent, you are going to have to pay commissions. Although there are no set commissions in Austin, the vast majority of homes listed for sale in the Austin Board of Realtors MLS will show a 3% buyer’s agent commission. Real estate broker commissions are negotiated when you sign a listing agreement with a broker. In the Austin real estate market, it’s quite typical to pay 6% of the sales price as a commission fee when you sell your home. 3% of this fee usually goes to the buyer’s broker and 3% will go to the listing broker. However, as I mentioned earlier these fees are negotiable, and many brokers such as myself will offer a discount to the commission fee when you are buying and selling a home at the same time. For example, if you are selling your Austin house and buying a new home in the Austin area, I will reduce the listing broker fee to 2%. These fees may seem like a lot to you, but they cover all of the expenses and work involved with selling your home. The listing broker will pay for all photos, videography, and marketing. In addition they will respond to all inquiries about your home, show the home, negotiate on your behalf and much more. If you’re thinking of doing this on your own, you can learn more about listing your home FSBO here. Spoiler Alert: It’s a lot more work than you think and usually ends up costing you more!
The title policy protects against any unknown claims of ownership to the property. The cost of the title policy is negotiable in the Texas real estate purchase contract. However, it is very common for the seller to pay the cost of the owner’s title policy in the Austin real estate market. Occasionally, in competitive multiple offer situations, you will see the buyer offer to pay the owner’s title policy. This is vary rare, and not something to count on when estimating the fees associated with selling your Austin home. The owner’s title policy cost is regulated in the state of Texas. No matter what title company you use, you will pay the same amount for the owner’s title policy. These rates are based on the sales price of your home. You can view the full rate chart here. As an example on a $400,000 home sale you can expect to pay $2,413 for the owner’s title policy in Texas. If the person purchasing your home is financing the home purchase a lender’s title policy will also be required. This is typically a buyer expense.
Another negotiable item in the Texas real estate contract is the home warranty. In the contract it is referred to as a residential service contract, and the contract is worded in such a way as to presume the seller will pay up to a certain amount towards a home warranty coverage program. This is a negotiable amount, and the buyer may or may not request the seller contribute towards this expense. Home warranty fees vary but you can expect to see a buyer request a seller contribution of $400-$600 towards the buyer’s home warranty.
There will also be fees charged by the title company to facilitate the transaction. These are known as escrow fees. These fees vary from one title company to the next, and are usually split between the buyer and seller. However, if you are simply looking for a rough guess as to what to expect, you can estimate $500 for the seller’s portion of the escrow fees. You may also have to pay attorney document fees, recording fees, or notary fees. These should total less than a few hundred dollars.
Property taxes are paid in arrears in Austin. Thus, you will need to pay your portion of the property taxes for the time you lived in the home at the closing. These will be calculated based on the number of days you occupied the home and the most recent property tax bill available. Your pro-rated share of the property taxes will appear as a debit to you (the seller) and a credit to the buyer on your final settlement statement at closing. You can look up your property taxes on the county tax appraisal district’s website by simply searching for your address; here’s a link if you live in Travis County. Find the annual tax bill amount, divide by 365 and then multiply by the number of days you expect to have lived in the home for the year.
You may encounter other fees when selling your Austin home. If you live in an area where there is a home owner’s association, you may need to pay for a portion or all of the HOA document and transfer fees. You may also be asked to contribute towards a buyer’s closing costs. You could need to make repairs or make monetary concessions for repairs found during the buyer’s inspection. Again, all of these items are negotiable and that’s why it’s important to have a strong real estate broker by your side to guide you through the process and negotiate on your behalf.
If you’re thinking about selling your Austin area home, contact me today. I can give you an in-depth evaluation of what your home is worth and provide a highly specific estimate of all of the fees involved in the sale of your Austin home. Don’t worry, if you’re not ready to sell I’m not going to pester you with consistent calls or e-mails either!
Purchasing a home is a big deal! It’s a huge move (literally and figuratively) for you and your family that will have significant consequences. If you don’t prepare and use caution in your home buying journey, you could end up in quite a pickle. That being said, if you recognize the following common mistakes, you will be primed for success when buying your Austin home.
Not Being Financially PrepareD
There’s no point in looking for homes until you know what you can afford. One of the biggest mistakes a home buyer can make is looking at homes before you have spoken with a lender. After all, how do you even know if you can afford to buy a home or what your budget for a home is. Unless you are paying cash, your first step in the home buying journey should always be to speak with a mortgage professional. Another common pitfall many prospective home buyers make is to only speak with one home lender. Do yourself a favor and don’t fall victim to this common mishap. When you speak with a number of different lenders, you increase your odds of finding the best rate and the best personality fit. If you need recommendations for Austin lenders, I’m happy to provide recommendations. Just make sure to compare lenders within a two week time period so that your credit only received one hard inquiry.
Wanting it AlL
Before you begin your Austin home search, think carefully about what you must have and what you want it a new home. Make sure to bring in anyone else who will have a say in the home purchase, and compare your lists. Once you are on the same page, it’s important to take a good long look at your list and really narrow down those must-have features. A common mistake I see among Austin home buyers is that they are looking for the perfect house. The perfect house may not exist! Although buying a home is often an emotional decision, it’s also a financial one and you may need to be flexible in your criteria.
Caring More About Features Than LocatioN
Although most Austin area home buyers I work with often have an idea of the location they would like to live in, they sometimes fail to recognize the importance of location over property attributes. Time and time again, I find myself re-iterating that you can change the carpet, you can paint the walls, you can add a double oven BUT you can’t change the home’s location or lot size. Think carefully about the neighborhood, the school district and the attributes of the lot itself.
Have questions about buying a home in the Austin Area? Contact me today.
Erika Rae Albert
Sharing my Austin real estate updates, home owner tips, & more.