In an effort to increase the current housing stock, the City of Austin has passed a number of initiatives in recent years to ease the process of adding an accessory dwelling unit (ADU) to your lot. These separate stand-alone residences essentially allow for two independent fully livable buildings that can be legally separated as well. Traditionally, if you wanted to build two homes on one lot and sell them to different purchasers you would need to have the lot subdivided. Now, owners and developers can do a simple condo regime to account for the two units.
Originally, the ordinance only allowed for the development of such secondary units on lots of at least 7,000 square feet. However, amendments in recent years have reduced the lot square footage requirements. Additional regulation changes included removing cumbersome parking requirements, increasing the maximum size of the accessory dwelling unit, and decreasing required setbacks between the two buildings. If you are considering building a secondary dwelling unit on your lot, the best place to start is by looking at the exact requirements as outlined in the city code. A few highlights from the code in relation to ADUs are as follows:
These secondary units represent a great opportunity for Austin to expand the affordable housing stock available, increase density while limiting urban sprawl, and allow residents to make a profit on their existing investments. If you're worried about the hassle of red tape involved, feel free to give me a call. I'm happy to walk you through the process.
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Austin based developer, Capsa Ventures, is creating a buzz in Austin surrounding the group’s latest venture in Austin’s incredibly popular East side neighborhood. The development, coined Fourth &, by Capsa Venture’s CEO, Rance Clouse, is named after the idea of endless possibilities. Rightfully so, the project is full of green features, technical building advancements and resident amenities (resort-style pool, club room, conference room, a lobby, key fob access, movie lounge, a dog wash and more). Situated within walking distance to popular eateries and bars such as Counter Café, Whislers, Chicon, The Grackle, Yellow Jacket, and many others, the project is being built to complement its surroundings. The mixed use development includes residential units ranging from 510 sqft. micro lofts (efficiencies) to 1464 sqft., 2 story town home style units called urban walk-ups. Additionally, the ground level includes 42,000 feet of commercial space (for sale) so local businesses can own the space they work from. While these amenities are sure to entice, the coolest features of this development are not apparent from an initial glance. The exterior of the building is built with a Syntheon Accel-E thermal panel wall system made from recycled steel. The panel system boasts 4.5 inches of foam that creates a thermal envelope that is virtually unbroken on the entire exterior. The interior is framed with light gauge steel and there is virtually no wood throughout the project. Solar panels line the roofs, LED lights are omnipresent, and the building uses variable speed air conditioning systems so you don't waste energy in heating or cooling your unit. They are currently on track for an estimated completion date of late summer 2017, and are accepting reservations now. For more information on pricing for individual units, and commercial spaces, email me. The term comps refers to comparable properties. Whether you are buying or selling, you will want to know the sales price for similar properties. It's important to note I said sales price, NOT list price. You may think that the pricing of nearby properties is the only factor when you're looking at comps and trying to set a price for your listing. But, it's actually a bit more complicated. Here are five things that affect comps that you might not be aware of.
Property tax rates vary significantly across Austin and the many communities that make up Austin and surround Austin. When you are purchasing a home, investment property, or lot in Austin, it’s important to consider property taxes. We do not have a state income tax in Austin, but we do have property taxes. Often, I am asked, “what’s the property tax rate in Austin ?”. My response is usually, “what’s the exact address of property ?”. Within the same zip code, school district, or even street, Austin property taxes can vary significantly.
I was recently hosting an open house at a duplex on Spyglass Drive in the 78746 zipcode- great property, fully remodeled, right next to the greenbelt, and only one exit from downtown via Mopac. The property also happened to be in EANES ISD. A guest at the open house asked me what the tax rate was for Austin. I explained that rates vary significantly, and when I got home, I decided to do a little more research. This duplex had a total tax rate of 2.25% in 2016 (the latest available values provided by the Travis County Appraisal District). It is located within the taxing jurisdiction of the City of Austin, Travis County, EANES ISD, Travis County Healthcare District, and the Austin Community College (ACC) District. A property on the other side of Mopac, less than 1 mile from this property, also in the 78746 zip code and also in the EANES ISD school district has a property tax rate of 1.98%. This property is located in the City of Rollingwood, and is not a part of the City of Austin or ACC taxing jurisdiction. Approximately two miles from the duplex on Spyglass Drive is a hidden gem of a neighborhood called Westwood Terrace. This neighborhood is also in the 78746 zip code and in EANES ISD. However, this neighborhood is not in the City of Austin, the City of Rollingwood or the City of Westlake Hills. The property tax rate for Westwood Terrace according to the Travis County Appraisal District for 2016 was 1.8465%. It is important to understand the taxing jurisdictions when you are considering buying or selling a property. As a buyer, you want to understand how much you will actually be paying in property taxes. As a seller, it is important to be able to tell prospective buyers what they will likely be paying. Usually the estimated taxes provided in the MLS, on Zillow and by the listing real estate agent are from the previous year. These estimates may or may not be close to the figures a new purchaser will pay. It is important to consider what exemptions the current owner takes and what the appraised value of the property is. The appraised value takes in to account the characteristics of the neighborhood and the physical conditions of the subject property. In Travis County, the appraised value of the property can be contested. Another important concept to highlight is the fact that Texas is a non-sales disclosure state. What this means is that the appraised value is not necessarily the same figure as the sales price. The Travis County Appraisal District does work to determine the sales price of properties by contacting real estate agents and brokers as well as buyers and sellers. Through this process they receive some of the sales information, but not all. If you are considering purchasing a property in the Austin area or selling your Austin home, please give me a call today. I’d be happy to walk you through the intricacies of taxing jurisdictions in the Austin area among other things. Oftentimes, I’m working with one of my Austin clients, and we are discussing the various options that are best for their needs. I’ll be speaking quickly, excited to share my real estate knowledge with them, and I will throw out some industry specific term. They interrupt, “what the hell does that mean” or “CMA, what does that stand for”? A CMA is a comparative market analysis, used to illustrate a property’s relative value in comparison to other recently sold properties. Another such term that often is received with a furrowed brow or an inquisitive glance is "warrantable condo".
Condominium buildings are either warrantable or non-warrantable. It is important to know the difference between the two types when you are purchasing a condo, and imperative to know the difference when you require financing to purchase the condo. A condo is warrantable when a loan used to purchase a condo can be sold to Freddie Mae/Freddie Mac. Conversely, a non-warrantable condo is one in which the loan used to purchase the unit cannot be sold to Fannie Mae/Freddie Mac. If you are considering purchasing a non-warrantable condo, that does not mean that you cannot use a loan to do so. However, you will want to make sure your lender is able to provide a loan for a non-warrantable condo. Also, in most cases, lenders require a larger down payment when purchasing a non-warrantable condo. A lender can help walk you through these intricacies when you are financing a condo. However, first, I’m sure you want to know what exactly makes a condo non-warrantable. The Federal Housing Finance Agency (FHFA) determines the guidelines that define which loans can and cannot be sold to Fannie Mae & Freddie Mac. The FHFA is a regulatory agency; therefore, loans that are non-warrantable are considered riskier by the FHFA. However, these guidelines are not black and white. Sometimes, a condo project has an element that makes it non-warrantable. However, purchasing that condo is not necessarily a risky investment. In fact, both Fannie Mae and Freddie Mac occasionally make exceptions to the eligibility requirements based on specific property attributes or economic conditions. Generally speaking, the following factors determine the warrantability of a condominium complex:
If a condominium development is involved in any kind of lawsuit, it is unlikely that the condo units will be warrantable. There are a number of additional variables that determine if a condo is warrantable. For more specific information on Freddie Mac’s requirements, click here. For more information of Fannie Mae’s requirements, click here. If you are looking for a condo in Austin, give me a call today. I’d love to help you navigate the Austin real estate market! Do you understand the difference between earnest money and option money? My clients in the Austin area often ask me about the difference between option money and earnest money. In Austin, and the rest of Texas, the buyer must provide two checks once under contract for a property. Both must be delivered in a timely fashion, and are usually used in residential transactions in Texas.
The option money is non-refundable; however, a good real estate agent, like myself, will make sure the contract specifies that the option money will be applied to the sales price if the buyer determines they want to move forward with the purchase during the option period. The option money is essentially payment to the owner for the right to enter the property and perform any inspections or due diligence necessary within a specified amount of time. This check is made out to the seller, and the seller can cash it immediately. The amount of option money and the length of the option period are specified in the contract; however, both are negotiable amounts. A good general rule of thumb in the Austin real estate market is that the option money should by .1% of the sales price. Thus, for a home with a sales price of $300,000, a $300 option fee is generally an acceptable amount for a 7 day option period. The option period countdown begins the day after the contract is executed and commences at 5 p.m. on the specified date. For example, if you had a 7 day option period, and the contract was executed on the 9th, the option period would end on the 16th at 5 p.m. Holidays and weekends DO NOT matter when determining the date the option period ends. If the real estate market is incredibly competitive, such as the current Austin market, a shorter option period and/or a higher option money amount is more favorable to the seller. If the buyer backs out of the contract during the option period, all he or she will lose is the option money, and any money spent on inspections. The seller prefers a shorter option period since he or she must essentially remove their home from the market while the buyer is "in their option period". Although the home is not technically off the market, many Austin real estate agents will not show homes that are under contract or "pending back up" status in the MLS. Similarly, a higher option money amount demonstrates a greater interest in the home since the buyer has more to lose if they decide to back out of the contract during the option period. The earnest money check is made out to the title company that will be handling the transaction. The earnest money will also be applied to the sales price of the property, and similarly shows what is called consideration. Essentially, these are the "money talks" portions of an offer. By delivering the earnest money check, the buyer is demonstrating serious interest in and an intent to purchase the specified property. It is common practice in Austin for the earnest money amount to be 1% of the sales price. If we return to the earlier example of a $300,000 sales price, this equates to a $3,000 earnest money check. Again, this is just a recommended amount and can be any amount agreed upon by both parties. The earnest money check is also "cashed" by the title company. The money leaves the buyer's account and is held in an escrow account. If the buyer backs out of the contract during the option period, the earnest money will be refunded to the buyer. Understand, this is a major difference between earnest money and option money; the option money is not refunded if a buyer backs out. After the option period, the earnest money is essentially held to make sure both parties comply with the requirements of the contract in the time frames specified. There are a number of clauses that protect the buyer's right to have the earnest money refunded if the seller fails to comply with certain provisions within specified time frames. For example, if the contract specifies that the seller must deliver the seller's disclosure statement within 10 days of the executed date, and the seller fails to do so or delivers it on day 12, the buyer may terminate the contract, and the earnest money will be refunded to the buyer even if they are outside of the option period. For more example, check out this Austin law firm's post on earnest money refunds in Texas. Do you understand the difference between earnest money and option money in a Texas real estate transaction now? Want to take a look at homes for sale in Austin, view available houses for sale in Austin now. If you have any further questions about option money or earnest money, or real estate in general, reach out to me directly! by email e@eraerealty.com or phone 512-779-7597 |
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