Last weekend we took a vacation to the Island House in Corpus Christi on North Padre Island for 4 days. While there, late one night, while checking email and logging into Facebook, I was presented with the following login message:

Your account was recently accessed from a location we’re not familiar with. For your protection, please review your recent activity to make sure no one is using your Facebook account without permission.

Reviewing your activity takes just a few moments. We’ll start by asking you a couple of questions to confirm that this is your account. (If we recognize your computer, you’ll be able to skip this step.)

I guess Facebook, in its infinite wisdom, thinks if I’m logging in from my laptop in another city (different IP address than usual), something might possibly be amiss, and I must therefore validate myself by passing a test. The “couple of questions” turned out to be a photo lineup of 7 “friends” whom I had to identify from photo arrays, selecting from 6 possible names for each individual, or choosing “I’m not sure”.

Only two selections of “I’m not sure” are allowed, and ZERO incorrect answers are allowed. Each “friend” has two photos to review, some which are indistinguishable, my favorite being when the square surrounds a tiny spec of a face within a picture hanging on a wall in the background.

But mainly, with most photos being of decent enough quality, the question remained, Who are these people?! (my “friends”). I don’t recognize any of them, let alone enough to go 5 for 5. Each failed effort requires a 1 hour waiting period before a new try. Meanwhile, my iPhone access still worked, as did the granted permissions from 3rd party tools such as Ping.fm, from which I make most of my status updates, so I wasn’t totally “gone” from the standpoint of status updates, but was unable to log in from a web browser and do anything on Facebook.

This morning I’d had enough. Somehow I would defeat this validation system and regain control of my Facebook account. I finally did. Here’s how.

First of all, how did I end up with a bunch (718) of “friends”, most of whom I can’t even identify in a photo? For starters, Facebook founder Mark Zuckerberg stated long ago that a “friend” on Facebook isn’t like a “real life” friend. He or she is simply a Social Network friend with whom you’d like to be connected for some reason, perhaps because you share a common connection such as graduating from the same college, or you’re both onto knitting, you’re friends with common friends, or you share the same occupation.

In my case, the latter category was the culprit. More specifically, as a former member of the Keller Williams “network” on Facebook, and as a Realtor, I accumulated a bunch of Realtor “friends” online. This would be the key to figuring out how to reclaim my login.

As I stared at the first set of photos this morning, again wondering “who the heck is that?“, it occurred to me that the unknown person was most likely a Realtor, and thus, if I Google their name + “Realtor”, there is a good chance I might find a photo of the Realtor with that name and be able to compare it to the photo I was evaluating.

And so, one by one, I cut and pasted each name next to each photo and added “Realtor” to the end. One was a dead on match. Easy. One down, four to go. For two others, reasonable guesses had to suffice because, oddly, the “real life” facebook photos of some Realtors (one male, one female), taken at a picnic for example, and grilling a burger, cause those poor Realtors to look 20+ years older than the professional photo headshot which appears on their websites!

This required a lot of back and forth, studying of eyebrows, nose shapes, hair style, shape of mouth, etc., to try to be as certain as possible. For the female, I just picked the one that looked most like a daughter of the subject. For the male Realtor, I had to enlist the help of my 17 year old daughter. “Could this possible be that guy?”, I asked, after ruling out all the others. She agreed that it could be him – the eyes looked sort of the same – but she couldn’t be sure either. Remember, no wrong answers are allowed. I made the selection and proceeded, fairly unsure if it was the right pick. For the next photo I lucked out and had a Realtor Convention Photo, and there right on his shirt, was a big name badge with the first name visible and readable.

For the final photo, in some sign of devine intervention since I was all out of “Not Sure” answers, I got someone I actually know and recognize in real life and who looks exactly like her photo. This was the first time it had happened in all my attempts.

And then the moment of truth… the final click… and …. low and behold, I was back in!

Jeez. I’m not even what I would consider “addicted” to Facebook, but it really irked me to be locked out like that. There is no way to reach someone at Facebook by phone – I tried. All solution efforts direct you to the help page, which says you simply have to answer the questions correctly. I’m now seriously thinking of unfriending people I don’t actually know again.

But, really, how stupid is it of Facebook to constantly be suggesting “friends”, trying to get us all to add people we don’t actually know, and then to use face recognition of said “friends” as the one and only way to prove that the account is yours after they lock you out.

The Austin real estate market is chugging through the summer and producing some interesting stats. By that I mean that the stats shown below look better than some of the actual outcomes we are seeing in the market. Some homes are selling fast, at or close to list price, and others are not moving. In years past, I could find segments of the market or trends to point to. We still have some of those – some general rules of thumb – but we see a lot of activity, or lack thereof, with no rhyme or reason.

Lets start with the Year to Date chart through July 2010. You’ll note that almost every row shows improvement over the same period a year ago.

Volume (number sold) is up 5%, Avg Sold price is up 3.5%, Median is up 1%, Days on market (DOM) is way down, and the number of Not Solds is down slightly. In other words, it’s all good news.

But for a lot of sellers, and buyers too, it doesn’t feel like “all good news”.

Many sellers are saying “where are the buyers?” and many buyers are saying “I’m just not finding anything I like”. And the deals we are getting done almost all seem to have “down market” obsticals, mostly grounded in trepidation about the market and whether the price is right. We see more often that a seller is convinced that the agreed sales price is way too low, and at the same time the buyer is laying awake wondering if they are paying too much. I don’t think I’ve ever seen a market with so much simultaneous buyer remorse and seller remorse  – about the same house!

Let’s take a look at the July stats for just the month of July.

For July 2010, we’re seeing incredibly strong Austin home price increases over the same period a year ago, but we’re also seeing a spike in the number of listings that fail to sell. 51% of the listings that departed the MLS in July did so as a failed sales listing. This is the cross-current I was referring to above, where the market seems to be producing stats that are not congruent. Normally, price increases are a result of increased demand. Increased demand would normally create fewer, not more, failed sales listings. But here, we see both.

Also, we still see a lot of homes selling for less than the 2007 value, which indicates sluggish prices still, yet check the graph below, showing the average and median sales prices in the Austin sales market from 1999 through July 2010 and note the uptick in pricing for 2010.

I need to dig around the stats a bit more, but I think the increase in sales prices is a result of fewer lower priced homes selling (tax break hangover) and an increase in higher priced homes selling (more $1M+ homes are selling), thus creating the illusion that prices overall are rising when in fact it’s just a shift in price range activity.

As usual, questions and comments are welcome.

A portion of our Texas Real Estate License dues goes toward funding the Real Estate Research Center at Texas A&M University. The Real Estate Center provides agents with press releases we are allowed to share. Below is the latest, which discusses the demographic shifts and population growth of Texas, both past future.

At the bottom is a link to the full article. It’s interesting stuff. If you don’t have time to read the entire post and the accompanying article, the takeaway is this:

Higher net migration (more people moving to Texas than moving out of the state) and the younger average age of Texas’ population should prove positive for real estate professionals. Both mean that more and more people will be looking for housing. The metro areas should continue to grow, while agricultural counties may continue to lose population.

Here is the write-up from the Real Estate Center, reposted with permission.

The Changing Face of Texas
By David S. Jones, Senior Editor, Real Estate Center
Release No. 23-0710

COLLEGE STATION, Tex. (Real Estate Center) — One word will have a significant effect on the future of Texas real estate – population.

More people are moving to Texas than are moving out. These new adult Texans need housing the day they arrive. That is more good news for a real estate industry that has already fared better most states during the latest economic downturn.

“Forty years ago, the Texas population was largely rural and Anglo,” said Gary Maler, director of the Real Estate Center at Texas A&M University. “Forty years from now, Texas will be largely urban and Hispanic.

“The state’s demographics will shift dramatically during the next several decades, and with change comes opportunity.”

In times past, Texas depended on “natural” increases for most citizens. That is, most Texans were born here. In the 1950s, 94 percent of the state’s population growth was of the natural variety. By the 1990s, just half of new citizens entered the state that way.

“The real estate implications are significant,” said Dr. Harold Hunt, a Center research economist. “Population primarily from net inmigration means there are more adults and more would-be homebuyers.”

While newly arriving households require housing, that can quickly become a negative should the state economy worsen and jobs be lost. Adults that migrate to Texas can just as quickly depart.

Between 2005 and 2008, more than 200,000 Californians moved to Texas. Whether they stay depends on how well the state’s economy holds up.

Texas’ population also is younger than the nation as a whole. At 33.2 years, the median age gives Texas the second youngest population. Through 2040, Texans 65 and older will increase three times as fast as the overall state population. Flattened incomes and falling retirement savings will lessen the demand for second homes. Many boomers age 55 to 64 will continue to work, thus reducing the number of future relocations.

“Americans born between 1977 and 1997, known as ‘Generation Y,’ are showing less interest in homeownership,” said Hunt. “Whether because of personal preference, economic reasons or both, they are expected to be renters for a longer time.”

Other demographic factors will determine the future of Texas real estate. Texas is rapidly becoming more urban, especially east of I-35.

“By 2030, the average density of the five major Metropolitan Statistical Areas is forecast to more than double,” said Maler. “Dallas-Fort Worth is expected to have the highest population density.”

Higher density means more multifamily dwellings, both for rent and for sale.

Sometime between 2028 and 2040, Hispanics will outnumber Anglos in Texas, according to the Texas State Data Center. Studies show that heads of foreign-born households currently are less likely to own a home.

“Home purchases by new Hispanic immigrants will continue to be limited because of income, education and language constraints,” said Maler. “However, as future generations become better educated, more skilled and more proficient in English, exceptional growth in the Texas Hispanic population could result in increased home purchases in the years ahead.”

For more information, read “The Changing Face of Texas” in the July issue of Tierra Grande magazine, the flagship periodical of the Real Estate Center. It is online at http://recenter.tamu.edu/pdf/1938.pdf.

The Crossland Family has Super-Down-Sized from our nice, big, 2-year old custom home in Oak Hill to a crappy old 1970s house in Westlake. Now Me, Sylvia and our two teenagers are “crammed in” to an 1859 sqft rancher compared to the former 3316 sqft home, and 3701 sqft in the home prior to that.

This new house has a bad sewer line (and slow flushing commodes), aluminum wiring, former slab repairs, cracked sidewalk leading to the front door, termites, small secondary bedrooms, a giant dead tree in back, leaking sprinkler system, old worn out carpet (layered on top, believe it or not, of an older worn out carpet underneath), and a punch list of needed repairs and fix-up things at least 20 items long and growing daily. I’ve had a parade of vendors in and out of the house since we moved in two weeks ago and more on the way. This place was a rental home for 20+ years. I couldn’t move a renter into a house like this without hearing an earful of complaints, but we did it ourselves. And we couldn’t be happier with our new home. We absolutely love it.

Why are we so elated about our move into this dump? Location, first and foremost. More on that in a minute. But, also, we’ve grown weary of maintaining nice big houses on acreage and the accompanying expenses of that lifestyle. I mowed my own lawn 2 days ago for the first time since 1999 after me and my new neighbor spent an hour working on the old mower, taking apart and cleaning the carburetor, and getting it running.

I don’t need lawn service once a week anymore. We don’t need maids to come keep everything clean and shiny every 2 weeks. We don’t need a professional window washer to clean gigantic picture windows twice a year. This new house has 1 A/C filter to keep changed, the old one had 5 filters and I needed a 10ft step ladder to get to them all because of the nice high ceilings we had. The old house had high-end fussy appliances that were expensive to repair. This house has Plain Jane appliances that work surprisingly well, especially the black dishwasher that doesn’t match our white gas range and stainless fridge, all tucked nicely underneath a fabulously 70s seven foot two inch kitchen ceiling with yellowing plastic covers over the fluorescent lights. The new house has 32 light bulbs, the old house had over 100 light bulbs. You get the point. To sum up the lifestyle change in one word, I’d have say I feel “unburdened“.

But our primary motivation in leaving our beloved Oak Hill was location, getting closer back in to the core of Austin and living in a home from which we can walk places and better enjoy the Austin lifestyle.

Our oldest daughter will be able to walk to Westlake High for her senior year instead of commuting from Oak Hill as we have for three years. She has friends in the neighborhood. Our younger will have 4 years of walking to Westlake High, though we will have one year of backward commute to the Waldorf School in Oak hill so she can finish 8th grade there. One more year of fighting traffic at the dreaded “Y” in Oak Hill, but we’ve already lined up carpooling.

But now we can walk to not only the school but any number of establishments in less than 15 minutes, including Trianon Coffee house, where I often meet people to sign papers, Thundercloud Subs, a Yogurt shop, Chipotle, Kinkos/FedEx, Redbox at McDonalds, the post office, the library, and much more. We’ve already been taking advantage of this walkability. And if that’s not good enough, the bus stop for the Number 30 Barton Creek Mall/Downtown is a 6 minute walk from my new front door.

Last Saturday, Sylvia and the girls headed to Zilker Park (5 minute drive) at 4PM and laid out a blanket to stake out a spot for the Zilker Hillside Theater free showing of Annie at 8:30PM. Then they swam in Barton Springs Pool and hung out with friends (while I worked). I planned to meet them there later. The way this worked before is I would drive there and we’d end up with two cars to drive home afterward. This time, from the new house, I hopped the #30 bus at Walsh Tarlton for $1 and made it from my front door to our blanket, stage center, in exactly 23 minutes, including walk time through Zilker from the drop off at Barton Springs Rd. Awesome. Easy. Practical. And only one vehicle to bring home.

This #30 bus will get us into the heart of 78704 along Barton Springs Rd. and up into downtown in minutes. Dinner at Roaring Fork on Congress? No parking hassles. SXSW Festival? No parking hassles. ACL Fest? I’ll be the one getting off the bus at the front gate. Concert at Auditorium Shores, Plays at Zach Scott Theater, lunch anywhere on Barton Springs or downtown, SoCo, Casa De Luz, or a walk around Town Lake – all a quick, easy bus ride while the car and its operating expenses and parking hassles stays home.

We’ll be empty-nesters in 5 years and this home is the perfect size and location for Sylvia and I as we head into retirement and hopefully spend more time having fun and traveling once the kids are on their own. We don’t want to be trying to take care of a big empty house. This one is all we need, and yes, we will fix it up and make it nicer eventually, and we got such a great deal that the condition items don’t matter.

Finally, the thing that’s really hard to quantify or explain is simply the feel, the vibe of being close to people and things again. Feeling like an Austinite living in Austin instead of just outside it. The walk-ability and the freedom of not feeling 100% dependent on a 15+ minute drive to go places and do things. The closer interaction with neighbors instead of a shout hello and a wave from 300 feet away across our professionally manicured 1+ lawns.

The small things too, like true single-stream recycling service, and the bus service. No HOA fees, but city enforcement. We can vote again for local governance instead of being stuck out in the County with no voice in city elections.

And, even though we do still drive most places because of the nature of our work, these seem like short quick jaunts instead of tiring journeys through the dreaded Y in Oak Hill. Coming South on Mopac or 360 and exiting Bee Cave is a lot different than continuing on down through the Y in Oak Hill, especially between 4PM-6PM. The back way to Rudy’s BBQ on 360 is 4 minutes from my house, with no freeways. I’m in heaven.

So, as we’ve encouraged our buyers over the years to buy as close in to Austin as you can afford, because we believe there is value in proximity, we are now once again finally enjoying the benefits of that ourselves. And it’s really great to be doing so.

As the seller of a home, do you have to read the buyer’s inspection report if the buyer presents it to you? No, you don’t.

And if you are a seller represented by the Crossland Team, we advise that you don’t look at or read a buyer’s inspection report because we don’t want you getting stuck with someone else’s inspection report, produced by an inspector you don’t know and didn’t hire, and which you’ll then have to staple to the back of your Seller’s Disclosure notice if that buyer flakes out and terminates the deal. Then all your future prospective buyers will read that report, for better or worse, and it’s best to not let that happen.

Not all Realtors subscribe to this “I don’t want to see it” philosophy. We sometimes catch flak for this from buyer agents who want to leverage inspection report items to gain price reductions during inspection periods, and they sometimes become angry when we inform them that our seller doesn’t need to see or want to see buyer’s inspection report.

Why not just look at the report?

Section 7 of the commonly used TAR Seller’s Disclosure Notice asks sellers:

Within the last 4 years, have you (Seller) received any written inspection reports from persons who regularly provide inspections and who are either licensed inspectors or otherwise permitted by law to perform inspections? lf yes, attach copies and complete the following:

Most Seller’s Disclosures say “No” on Section 7. Once you receive your buyer’s inspection report, and if the deal craters, you have to change section 7 to “Yes” and attach the report you received, whether you agree with the findings or not, and no matter what mis-characterizations and false assumptions the report might contain. This opens a huge can of worms and can affect the answers you must provide in other parts of the Seller Disclosure.

Additionally, you are already under contract for an agreed price, as-is, and there is nothing in your Texas sales contract that requires you to make repairs (unless specifically written in the initial contract) or look at buyer’s inspection. Buyer has an Option Period, usually 7 to 10 days, to examine the property and conduct whatever other due diligence buyer deems appropriate. During this Option Period, the ball is entirely in the buyer’s court. If the buyer does not terminate prior to the end of the Option Period, the deal continues unchanged.

In almost every deal, however, buyers come back and seek a price adjustment based on conditions that were not factored into the agreed contract price. These range from small and reasonable adjustments to hysterical and ridiculous demands. It is the manner and style in which these adjustments are calculated, communicated and resolved that reveal huge differences in real estate agents and how we advise clients and conduct negotiations. Is there a “right” way and a “wrong” way to go about this? I believe there is.

First of all, a buyer purchasing an older 1960s or 1970s home should have already been prepped and warned by the buyer agent that most of the inspection items are going to be flagged as “out of code” and/or “Deficient”. Especially the electrical and plumbing. Expecting otherwise is like hoping your 80 year old grandma would, upon examination, be found to be in the same physical condition as your 21 year old son. That ain’t gonna happen. Thus, the “ugly” inspection report ought to come as no surprise to the properly informed buyer and her agent. It’s always unfortunate when buyers who think they want an older home closer in simply can’t survive the type of inspection reports those homes produce because they are unable or unwilling to view the inspection report in its proper context.

What is the best procedure to address needed repairs?

After inspection, good agents normally contact the listing agent and ask if they have a preference in how repairs are requested. Some agents/sellers actually do ask to see the entire report, and when on the buyer side, we gladly provide it because we think it strengthens our negotiation position.

When I’m asked as a listing agent, I say “just boil your justifiable repair items down to a dollar amount and send over a signed Amendment with the amount in para 12(a)1b (buyer closing costs paid by seller). If we want more detail, we’ll ask for it after we see your amount, but all we need to start with is the amendment without explanation or details”.

We want dollar amounts instead of repair requests because a) lenders don’t like to see repair language in contracts and b) dollar amounts are not subject to opinion or debate as to whether they are completed properly or not. If you agree to $800 in closing costs that’s a whole lot different that trying to agree to “seller to repair and paint rotted wood at rear trim”, or something of that nature. One or two professional trade repairs can be ok, such as “seller to have licensed roofer repair flashing at chimney”. But money is always the easiest and surest approach for both parties if the amount can be agreed upon.

Once I have the Amendment and the amount requested, I’ll call the buyer’s agent and ask for a general overview of what the amount is intended to cure and how it was calculated, in general, so I can communicate that information to the seller. If it’s a small, reasonable amount that the seller is willing to give back, perhaps to replace a water heater we already know is old, or to fix an actual roof leak that we didn’t know about before, we have the seller sign the Amendment and we’re done. Or we’ll counter with a smaller amount, sometimes zero.

If it’s a large amount being requested, we’ll find out more about it, but never do we venture outside the scope of what comprises the specific amount being requested. Almost never do we request or need to see the actual inspection report, unless the seller desires to do so. I’m not saying this never happens, but it should be carefully considered first.

Occasionally an agent, unannounced and with no prior communication about it, sends over the entire inspection report, a letter from the buyer, and/or sometimes a bunch of bids from various vendors to fix things the buyer thinks ought to be fixed for free. This is usually via email attachment. We don’t open the attachments or look at them, but instead respond to the agent saying (I’m paraphrasing for brevity) “we only want to see any proposed Amendment you might be offering, nothing else. We have not and will not look at or review the inspection report or other documents sent. The attachments are being deleted and not viewed”.

This is when some agents get pretty bent out of shape and want to argue, and want to cram the inspection report down the seller’s throat. But there is no upside for our seller to see that information, at all. All we want to know is “does the buyer still want the house and, if so, do you have a proposed Amendment seeking a price adjustment or a specific simple repair that can be performed in one trip by a licensed tradesman?”

Incredibly, some agents and their buyers can’t articulate what they want. I’ve heard more than once a vague sort of response such as “we just want your seller to review the inspection report and tell us what he’s willing to do”. Uh, that’s not how it works. Shame on agents who can’t do better than that, or can’t council buyers into a more effective approach. That’s Realtor/buyer negotiation at its worst. When pressed in that way, I simply tell the agent that the seller is happy to move forward “as is” and that we think the contract price already reflects the property condition and that the buyer is getting a fair deal.

Does the seller have an obligation to offer to make repairs? No. Does the seller have to read letters, look at reports and/or bids? No. Does the seller have to take into consideration the feelings, fears and worries of a buyer? No. Does the seller have a duty to try to “understand where the buyer is coming from?” No.

The seller simply agreed to sell the house, as is, at an agreed price. If issues were encountered during inspection, it won’t come as a surprise to the seller, because every home inspection reveals something, but there is no unwritten agreement that seller will fix anything at all.

It’s the responsibility of the buyer to determine whether or not the property condition is acceptable and, if not, make an offer to change the agreement or terminate the contract. The seller often does want to learn about and know what the buyer’s concerns are, to the degree necessary to negotiate, and we will seek to find out whatever we think we need to know on the listing side, and we will try to make the deal work. But we do so mostly in general terms unless we decide to dive into the buyer’s issues in greater detail.

It’s a poor listing agent, in my opinion, who allows his seller to come into possession of unknown documentation which could harm the sales effort if that buyer decides to bail out and leave the seller holding a potentially egregious and harsh inspection report prepared by an unknown inspector, and/or bloated bids from unknown vendors.

Recently another agent said to me, in trying to force an inspection upon us, “if it’s a licensed Texas Inspector, it’s a valid report and you can’t ignore it”. Yes we can ignore it. It’s your buyer’s inspection report, not ours. And, like Realtors, the quality and experience of inspectors varies greatly, so just because someone is licensed doesn’t mean they know what they’re doing.

I once saw a 70 page inspection report conducted by an inspector who filled every item with scary boilerplate warnings, whether the item was flagged as “Deficient” or not. Why should that inspector’s lazy boilerplate garbage be allowed to become part of my seller’s disclosure to future prospective buyers?

Some inspection reports are intended first and foremost to reduce the liability of the inspector by over-stating every condition and recommending for all major component items that the home be inspected by a licensed Plumber (or Electrician, or HVAC person, or Roofer, etc). As a seller, once you agree to accept and receive such a report, everything in it becomes your “knowledge”of the home, whether it’s the inspector’s guesswork or not, and you have to pass it on to all future prospective buyers whether it’s a garbage report or not.

We don’t think you should subject yourself to this sort of uncontrolled variable. For the same reason you shouldn’t click on unknown internet links because you don’t know the content you are agreeing to receive until the damage is done. As a seller, you shouldn’t allow someone to simply dump “mystery meat” into your sales effort stew. You’re the chef, you decide what ingredients go into your sales effort, and whether you want your Seller Disclosure to include an inspection report, not some random buyer who can flake out and leave you holding his inspection report.

It’s best to simply work with buyers in a more controlled, methodical fashion when negotiating repair issues. You and your listing agent should control the process and flow of information, not the buyer. Make sure you don’t accept or come into possession of written inspection reports that were prepared for the benefit of a buyer instead of you.

Google Voice is now open for signup. You don’t need an invite. You might be wondering if getting a free Google Voice account is something you should bother with. I think you should. I’ve been test running Google Voice for a few months now. Like a lot of the Google products it is fantastic in some ways and limited in others.

I currently utilize it in the following manner:

Calls to our main office line are forwarded when no answer/busy, or out of office, to a (non-Google) hosted voicemail service that provides call options to reach Sylvia or me. (i.e. press 1 for Steve, 2 for Sylvia)

If the caller selects me, that call is forwarded to Google Voice which in turn rings my cell phone if the call is during a time for which I have it set to foward, which is pretty much all day every day until nighttime. If I don’t answer, Google Voice, takes the message, transcribes it into text, and emails it to me.

From my Gmail account, either at my desk or on iPhone, I see the voice message alongside my email messages. I can either click to listen, or just read the text. Sometimes the text is a perfect transcription, sometimes it’s a garbled mess, depending of course on how well the caller speaks and enunciates. Usually, it’s a mix but readable.

Below is a sample message which is typical, though slightly altered. I changed the phone number and the message slightly.

Voicemail from:  (512) 555-1212 at 11:19 AM
Hi Steve, this is Sandra Bullock. I’d be Roger’s I spoke to Brian about co-staring with you in my next movie. He said that we can meet tomorrow. Give mea call and just confirm that you got this message. Thank you. Play message

For most messages, you can get the gist of who’s calling even though the text isn’t perfect, and you can discern what they’re saying. Google dims/greys the text for the parts of text it wasn’t sure about. It saves a lot of time otherwise that would be spent listing to messages, especially long rambling ones. And it makes for some sometimes humorous text content.

I also have my iPhone programmed to use Google Voice as my voicemail instead of the ATT voicemail, so if someone calls my cell direct and I don’t answer, the message is left in Google Voice (you program this through your phone). This allows all my messages, personal, office, business, etc. to funnel into  the same voicemail bucket and then end up consolidated into my Gmail inbox so I have a single point of communication retrieval for all voice and email.

When Sylvia and I were in Mexico City for 5 days earlier this month, it would have been real expensive to call in and check voice mail every couple of hours. With Google Voice forwarding all messages, including Sylvia’s,  into my Gmail, I was able to stay on top of things with little trouble by just checking email on my iPhone. I forwarded many of the messages to our agent Penny and she was able to take care of things by simply reading the text and calling the number.

If I’m out driving and/or away from the office, and it’s not safe or convenient to check email, I call in to Google Voice to listen to messages over the phone. I press 2 while listening to a message and it calls the person back, we talk, I press * when done, press 7 to delete the message (though a permenant copy remains in my Gmail archive forever), and move on to the next message without having to hang up and without having to fiddle much with the phone while driving.

With earplug/mic on, this makes it really easy to knock out a bunch of return calls during a 30-45 minute drive across Austin. Callers see my GV number as their caller ID, but that’s not really a problem as it’s become a defacto second cell number since that’s where it forwards to.

Google Voice will also record inbound calls if your press 4 after answering. The conversation is recorded and then emailed the same as voice messages. I don’t use this functionality, but it would be handy as an emergency maintenance number whereby the call is documented as well as a fax or email. I could say to a tenant, “ok, I’m going to record this call, so as soon as you hear the recording announcement, state your name, property address and describe the issue you’re calling about, and speak clearly”. I’d end up with a recording of the call, a transcript, caller ID of the caller, time and date stamped. Pretty cool. Haven’t tried it yet but I’ve been thinking about it.

Google Voice can also screen and/or announce calls, but I don’t use that either. I just have the calls come straight through because I’d rather answer and talk than deal with lots of voicemail later. It’s also easier for the caller to not have to say your name. But because I’m receiving unscreened/announced calls, I don’t know when my cell rings if it’s a direct call to my cell number or if it’s been routed through our office line -> GV -> cell.  But you can set Google Voice to show the GV number instead of caller ID on all inbound calls, and then you’d know it’s being passed through.

It will also handle calls different for different callers. For example, if I were to have all “Friends” set up under a “Friends” group in my Gmail contacts (which links to Google Voice), I could tell GV to handle that call different and play a different voice message  greeting to all callers from the “Friends” group.

Likewise, you can set individual contacts to be handled as you wish, such that calls from your kid’s cell phone ring through 24/7 but calls from your ex-wife are set to “blocked” and she hears a “this number is no longer in service” message. If Granny is hard of hearing, you could set the message played when she calls to {loudly} “HI GRANNY, IT”S ME BILLY. START TALKING AFTER YOU HEAR THE BEEP, OK? I’LL CALL YOU BACK LATER, OK? BYE” Pretty cool.

You could set up Contact Groups for any subset of Contacts in your Google Contacts account and set call handling settings and greetings appropriately. I don’t do any of that, but it could be done. The call handling capabilities are very powerful.

All that said, the call quality sucks. There is a lag or delay which causes you to talk over each other. I’ve learned to compensate by pausing longer after I think someone is done talking, but it’s still my biggest complaint and it can be very annoying. But my ATT iPhone isn’t much better by itself and drops calls all the time. I think we’ve all become so use to poor call quality that it’s not deemed as our fault, or a lack of professionalism. It’s just how it is.

Google Voice  is not set up to provide auto-attendant or business features. It’s basically a free consumer service (I didn’t cover the free long distance and super cheap international calling available with GV) so it’s not a good multi-user product yet. Mainly that’s an issue if you want to be able to transfer live calls or forward voicemails to someone else, but for me, I just forward the email instead.

That’s the basic overview. I haven’t even scratched the surface of the capabilities of this service, especially when combined with iPhone, Gmail and a clean Google Contacts database of all your people. But the Google Voice site has a lot of videos and info about what you can do with the service. It’s a good service, free, and like most Google Beta stuff will surely improve over time, and now you don’t need an invite to sign up. Just go to Google Voice.

Take a look at this chart showing the number of homes that go under contract, or “Pending”, in Austin each month over the past several years. The green line is 2010. I could almost stop writing at this point and just let the chart tell the entire story. But have a careful look at the Austin real estate market behavior for the past several years, and then see what our government caused to happen in April and May with the $8K tax credit.

The writing was on the wall last month when I wrote about the Tax Credit Effect on the Austin Real Estate Market. We had a record number of homes go Pending in April, and May was looking pretty slow, and that didn’t change. So we end up with a record high followed by a record low month in terms of number of homes going under contract.

And in June, the hangover persists. As we head into the last weekend of what is historically the second busiest month of the year, the Austin real estate market is getting ready to lay another rotten egg. Thanks Tax Credit, for sucking the life out of the market, even with interest rates yesterday at 50 YEAR LOWS!. At present, we have about 1250 homes that have gone Pending in June, so even if we have a brisk next 6 days, you can look at the chart and see that June will remain substantially below the expected level under normal conditions.

What does this look like out in the field?

Well, it’s the old Tale of Two Markets. Some homes, not many, but some, seem to have had the proverbial magic faerie dust sprinkled on them and they are selling just fine. Sellers of these homes should thank God for picky buyers who get emotionally attached to one home. Other listings seem stranded, stagnant and dead in the water, even after huge price drops.  Of the homes that went Pending in May and closed, the median days on market was 43, meaning half of all sold homes sold in 43 days or less. Not many sellers would complain about that. But the Sold to List Price (Original List Price) ratio was 93%, indicating bigger than normal price drops averaging over 7%.

So where do we go from here?

It’s hard to say. The slow summer was something we assumed would happen because of the tax credit, but I’m surprised at the severity of the high/low swing. The other counter-intuitive thing that might happen though, is a busier Fall. We can only guess at this, but our Austin real estate market has been moving in off-cycle ways for over a year now, making it hard to predict trends. If that happens, the green line on the chart above may actually cross over the other three and finish Oct-Dec higher than preceeding years. This may be wishful thinking on my part, but I still thinks it’s a distinct possibility if jobs and the economy pick up by September in Austin, and interest rates start rising.

Sylvia and I do receive gobs of “Huge Price Reduction” emails from other listing agents daily though. One yesterday dropped from the high $600Ks to below $500K. Curious, I ran a CMA on the property and, based on sold comps, the high $600Ks didn’t seem over-priced at all. So pricing has become very difficult for sellers and listing agents. The sold comps mean less than they normally do and we instead have to look at absorption rates and competing home prices.

We thought interest rates would have started ticking up by now (which, oddly, will increase buyer activity when it does happen). The trouble in Greece and Europe actually caused our interest rates to drop instead, and now it seems rates could stay below 5% for the rest of they year, which wasn’t supposed to happen. Meanwhile, tighter lending rules, caused by government incompetence (like “accidentally” eliminating owner financing for non-owner occupants, and letting FEMA flood insurance expire such that no flood insurance can be written at all – stalling or killing the sales of homes for which flood insurance is required – including one of our listings), keep eliminating more and more quality buyers due to the over-correction of lending standards and stupid new rules. We have no investors to speak of because even quality borrowers are having trouble with the new ratio requirements. And many otherwise qualified buyers who would move up are instead stifled by these onerous new underwriting rules. Again, our government making things worse than it would be if it did nothing.

Bottom line:
Sellers and listing agents must increase the margin of error accounted for when pricing homes. My margin of error use to be 0%-3% on listing/sold price. Three years ago if I told you I could sell your home for $295K, the worst that might happen is a sale for $285K. Of that, I would be very confident.

Today, because things are so sluggish and hard to read, the margin of error is 0%-12%. Yes, 12%.That’s embarrassing. If market data indicates your home should sell for $295K, it might very well do so, but it would astound none of us if it ended up only fetching $260K. For sellers, that sucks. For smart buyers, that rocks.

I just finished adding one of our new listings to the Austin MLS. Years ago, this took about 15 minutes. There was far less data included and only 8 photos with no comment space for photos, no pdf attachments, and far less space to type the general description of the property.Today, a nearly overwhelming amount of data, photos and attachments must be included with a properly entered MLS listing, and it takes a while to enter it all in.

How long do you suppose it takes today to enter a real estate sales listing into the Austin MLS, from start to finish, sitting down at the computer with photos, files and info all ready to go? This includes 25 photos to upload and type in comments for, several pdf attachments, 512 characters of description (both agent-only and another 512 for the public sites), and (I haven’t actually counted) what must be well over 100 fields and data-points, including driving instructions to find the property right down to trivial data such as whether the 2-car garage has one door or two and which compass direction the property faces.

The one I just completed took me about 70 minutes. I started at 7:42AM and completed it at 8:50. It’s best to do it late night or early morning to reduce interruptions. Sometimes it can take as much as 2 hours, or longer if interruptions occur, or sometimes we have to save as “incomplete” and finish later before posting live.

But it’s important to get it done, start to finish because not all of the listing feeds update properly. This means that if I add a half dozen photos to start with and decide to finish the rest later, the initial data feed that sends listings to the vast array of public facing websites will send out an incomplete set of photos.

Some photos will update later, but others will not, and those sites will retain only the initial set of pics. So, in the case of adding a new listing, first impressions are literally the only impression in many instances. So it’s important that your listing agent knows how to gather everything needed ahead of time, including all 25 of the best photos to be used, virtual tour links, and all of the data points needed so that every photo and every field on your listing is correct right out of the gate.

An impatient seller might ask, “what’s the big deal. Can’t we hurry up and get the listing in this weekend and add the better photos later?

Not a good idea. Remember that many buyers also have “search portals” set up by their agents which notify them daily, or sometime instantly, of new listings that match their auto-search. When the buyer clicks that listing link from inside her email inbox, you want the buyer to see ALL the photos, not a temporary shot of the front of the house with a car in the driveway and a trashcan sitting at the curb. This might be the one and only look they have of the home, at which time they dismiss it as not interesting enough.

Sad but true. Buyers are often ADD with short attention spans, and they give undeserved weight to the initial perceptions created by the photos. Your listing better capture their attention immediate if you want them to look further and call their agent to schedule a showing instead of getting back on Facebook or sending their next tweet.

So how long does it take, all tasks included, to actually list a home, including appointments, phone calls, CMA time, staging, scheduling virtual tours, downloading via ftp the photos and tour, gathering the data and making sure it’s right, chasing down the seller for loose ends, namely missing disclosures, the survey, survey affidavit, HOA info, utility company info, drives to the property, walk-throughs, etc?

I’m just guessing since I’ve never actually tracked it, but I’d say by the time a listing goes live in the Austin MLS, we probably have 8-12 hours of time invested, and about $500 in professional photos and staging, for a typical home.

I once spent about 5 months helping a seller prep the home, including hauling multiple loads in my truck to Good Will, scheduling repair vendors, landscapers, etc. Other listings are fairly easy and quick and are almost ready to go as-is, just because the seller takes great care of the home, keeps it clean, and has nice furniture. Those are nice but rare. In the end it all averages out.

You may have read the news that Austin has been selected as the location for Formula One Racing in the U.S. A brand new 3+ mile Formula One Racetrack will be built probably somewhere near the airport that will seat 100,000+ fans. I’m thrilled about F1 coming to Austin, but I have one simple question:

What’s the carbon footprint of F1 going to be, and what does it do to Austin’s fanatical desire to be viewed as a progressive green city on the forefront of emissions reduction and alternative energy policy?

Am I the only one seeing the irony in this?

I mean, we’re being forced to get Energy Audits on our 10+ year old homes before selling, we’ve built this incredibly expensive and useless rail line to Leander, we have these little Go-Cars running around town that I still don’t fully understand, we’re trying to convert the entire City Fleet of vehicles to alternative fuel, and you’re not allowed to chop a tree on your own property without permission from your city government. If that’s not enough, we have the most generous green energy rebates in the country for upgrading your HVAC system, replacing old appliances, adding solar screen, insulation, weather striping, etc, etc, etc.

In short, Austin, (Boulder notwithstanding) has to be the most incredibly hypersensitive, wannabe-progressive, eco-nut city in the U.S.. That’s who we are and that’s ok. Part of it is to puff the political pride of our glorious political leaders, and part of it is in fact well intended and justifiable concern about energy consumption, and the desire to avoid building another coal burning power plant as Austin expands over the coming decades.

But that being the case, what are the real gains of these formal efforts in terms of carbon footprint and energy consumption reduction, and how much of those gains will be completely erased by a decade of Formula One Racing in Austin, and its accompanying carbon footprint?

I just find the irony of this very interesting. Why was Austin chosen in the first place? It seems sort of weird, doesn’t it? The explanation provided in the Formula One press release is:

“This is a case of the right timing in the right place. As many Americans know, Austin has earned a reputation as one of the ‘it’ cities in the United States. Austin features that rare combination of ideal geographic location and beauty. Its fine dining, world-renowned hospitality and excellent transportation infrastructure make Austin ideally suited to host and manage an event of this magnitude. Few cities if any in America could rival the connectivity of all the key elements needed for hosting a Formula 1 event as well as Austin. Now, many people around the world will have the opportunity to experience a world-class event, facility and city.”

Cool. I’m in. So is Austin’s Mayor Lee Leffingwell:

City of Austin Mayor Lee Leffingwell continued the positive sentiments, adding “The City of Austin will be proud to host this magnificent event and I look forward to welcoming the participants and fans of Formula One to our City.”

Anyway, I don’t know how to calculate the carbon footprint of any of the aforementioned, but on the face of it, the best way I can sum it up is by saying this seems like a really cool, fantastic opportunity for Austin that runs counter to everything it tries to stand for environmentally.

As someone who’s bought and sold a bunch of rentals, and helped other investors buy, sell and manage investment property in Austin for a number of years, I’m about to ask a question that might seem counter to my professional mission of being in service to real estate investors.

Is rental property investing in Austin still a good way to build long term wealth?

My answer, for a lot of people, is “probably not”.

Let me rephrase the question.

Is rental property investing in Austin a good way to lose money and create financial stress in one’s life?

Absolutely. More so than ever.

So, am I saying you shouldn’t invest in real estate in Austin, or elsewhere? No, I think everyone should consider doing so. But I do think, after careful consideration, a much higher percentage of people should decide against it than would have been the case 15 years ago. The opportunity for mistakes, bad decisions and cash flow disruption for the real estate investor today is much greater than in past years.

In other words, your margin of error is very thin. You better know what you’re doing, or have a good adviser. Success is harder to achieve than if you started in the 1980s or 1990s simply because today’s ratios are thinner. The financial and psychological profile of a good candidate real estate investor today has a much higher bar to clear than in years past. Let’s take a look at why that is.

Positive Cash Flow Harder to Achieve
The very first rental property Sylvia and I bought in Austin was a 959 sqft, 2 bedroom house on Avenue G in Hyde Park. We paid $58K. Then we immediately spent $7K to redo the kitchen and bath and rented it out for $825/mo, which provided $300/mo positive cash flow. This was in 1994.

18 months later we sold that home for $95K. We took the equity proceeds and bought another fixer-upper house for $60K in South Austin 78704, which we completely rehabbed and sold 4 months later for $129K.

We then took the proceeds from that sale and bought another home in South Austin 78745, and so on. We continued to “ladder up” as years passed, buying, selling, keeping homes. Making some mistakes but hitting more home runs than strikeouts. Such were the opportunities. Success was not dependent on bubble appreciation or low probability luck.

In 1999 I sold one of our investment properties in South Austin 78745, which I like to use as an example when discussing the erosion of our rent/value ratios over the past decade. At that time, the home was rented for $950/mo and it sold for $92,500.That means an investor could buy a home like that with 20% down payment on a 15 year loan at 6.5% interest and, because taxes and insurance were lower relative to rent value back then, have a total PITI payment of about $850/mo. on a house that rents for $950/mo.

That same 1400 sqft brick home in Cherry Creek would sell today for about $170K but would only rent for about $1195. In 1999, it took about 2.5 month’s rent to pay the annual taxes and insurance. Today it would take 3.8 month’s rent. That’s over a month’s rent each year, down the drain in higher taxes/insurance.

Appreciation Potential
In the old days, we didn’t worry so much about appreciation potential. It wasn’t ignored, but it wasn’t a “must have” to make the numbers work. After all, the property was paying for itself and would be free and clear in 15 years. Solid value appreciation was just a bonus, sometimes even a windfall, but never expected or taken for granted.

Today, if you don’t carefully consider the long-term viability and demand of the rental property you purchase, you will be failing to properly factor in appreciation potential. You have to ask yourself if the property is one that has a good chance of enjoying increasing demand because of location, and thus greater value appreciation than less desirable areas.

Failure to ask this question is the mistake so many dummy investors made during the bubble years. These wannabe investors and seminar buyers with low down payments and the easy-to-obtain loans assumed, for no good reason, that the price of all real estate would rise, no matter what and no matter where.

In a strange way, these “appreciation” buyers were partially right in desiring appreciation, but were unrealistic in their underlying analysis, primary location selection. If you are not willing to pick a quality location, and sacrifice a bit on cash flow, then all your extra cash flow could easily be lost in value slippage as has happened to the investors who bought further outside Austin from 2005-2007.

Is it a good idea to bet on appreciation only? No, obviously not. But you can’t ignore the fact that the tighter ratio numbers of today require some value appreciation to make things work out over time. That means sticking to quality product in good locations.

Repair Costs
In the 1990s, we had an abundance of $25-$35 hr vendors who could fix just about anything in a home. Not anymore. We paid $350 total to swap out a 40 gallon water heater in 1999, today it’s $750. Stoves and dishwashers had simple parts that were cheap to fix or replace, today everything has an expensive computer chip and/or control card. Older appliances and HVAC systems lasted 10+ years, sometimes 20+ years. Today’s stuff often breaks down during the first year, especially cheap foreign made A/C coils that develop freon leaks. Everything today costs at least twice as much to repair as it did a decade ago.

What this means to you as an investor, is that the number and type of repair events that can wipe out an entire month of rent, or more, is substantially greater than in years past. A good analogy would be the comparison between rising health care costs and wages. Wages have not kept up and we all pay a greater percentage of our income toward health insurance and medical costs than a decade ago. So too does the landlord pay a greater percentage of rental income toward repairs today than was the case a decade ago.

Ten or fifteen years ago, our repair costs across an entire portfolio of management properties ran at about 8% of annual rents, including major replacements such as roofs and HVAC systems. Today it’s about 12%. In 1999, it cost 2 month’s rent to replace a roof ($2,000). Today it would cost 5.4 month’s rent to replace the roof ($6500) in my Cherry Creek example above. Luckily, roof replacements are few and far between, and often covered by insurance due to hail damage, but still.

Conclusion
Despite all this, I still invest in real estate and I’m still a buyer. The S&P 500 ended 2009 at about the same point it started in the year 2000, so at least in that decade, real estate was the winner for those of us who didn’t get sucked into the bubble mentality and stuck with basic decision-making rules. But real estate investing is not for everyone, and it makes sense for far fewer people today than it did in the past. Mainly because the opportunity to experience financial stress as a result of your rental property ownership is greater than before. People without sufficient reserves are the most vulnerable and should simply stay out.

Is there a safe way to get started?

The best way, I think, for someone to start in real estate investing is to convert your existing home into a rental when you move up, provided it’s well located and has the attributes of a good rental property, which means it’s not too big or small and will attract quality tenants.

By converting your existing home, your financing is already in place, you know the home and its location well already, the new owner-occupied loan you obtain for your next house will be much easier to obtain than a new investment loan, and if you’ve lived in the property at least 2 years, you have a 3 year window during which you can still sell with zero capital gains tax if it doesn’t work out for you. Then start saving for your third home and just keep leaving a trail of accumulated rental homes behind as you go.

This will be even more effective for those able to improve a home in disrepair while living in it, thus increasing its value (appreciation) more than whatever the natural appreciation rate might be.

And there are a number of other strategies for those with higher risk tolerance, but for most, starting slow and having a long term strategy and sufficient financial staying power is going to be key to success. If you don’t have at least 6 month’s rent set back to cover turnovers or unexpected repair events, you are in a weak position as a real estate investor, and your lack of funds can start a cascading series of bad decisions that eventually drag you down.

Play it safe, be smart, don’t make wild optimistic assumptions. Put at least 20% down, more if you can. Always assume the worst and ask if you can handle that. If not, don’t do it.