Home Buying in Austin>Question Details

Otisdesign, Home Buyer in Austin, TX

If I want to spend $250K on a house, what listing price Should I be shopping in?

Asked by Otisdesign, Austin, TX Mon Apr 25, 2011

I am interested in Steiner Ranch and Falconhead. .but most of the listings I like are about $350K.. what percentage of asking price do most resale properties go for right now? Are there big discounts for a cash buyer? Also is it typically a better deal to buy from a builder or a resale home? Who is more willing to negotiate? Do DOM have a significant factor.. I have noticed a few $350K homes on the market for a LONG time.. 90 days

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Guessing by the questions you're asking, sounds like you're not using an agent. If you are, these would all be great questions for her/him.

First of all, 90 days is not a long day for a home to be on the market, in that price range. In fact, that's the norm. Since all Listing agents require that an offer is accompanied by a Loan letter, which means there is a pretty good chance the buyer is qualified, the only thing a seller has to gain, by accepting your cash offer, is about one mortgage payment. (of course, your agent will have to find the motivation for selling and I've found that many sellers agents give up way too much information.) Most resale properties are going for 96-97% of the asking price and that discount is disappearing. (not a lot of huge discounts in Austin, TX) In fact, if you submit a low ball offer, and a few of my clients can tell you this, recently, not only will the sellers perhaps ignore your offer, but you've just ensured that they will drag their feet, and the back and forth will cost you the home, as there's a pretty good chance someone will come in with a better offer. Remember, you're not under contract until both sides agree on a price and conditions. I'm not a "rose colored sunglasses" Realtor, but I assure you, that the market has turned a corner, i.e. multiple offers, etc. My broker just got a contract on a house, for full price, within 4 hours of being on the MLS!

Buy from a builder or a resale home? All depends on the motivations, again. Look at all the houses. Look at the comps. Buy the one you want after looking at all the data, and make an offer that supports the data. Know the supply of houses in a neighborhood, i.e. the absorption rate. That data alone, will tell you the market in your chosen area.

What you're looking for is about 60% of market value. Even foreclosures and short sales are priced at 85-90% of market value, so your expectation to pay 250K in a 350K neighborhood isn't likely. Nonetheless, best of luck!
2 votes Thank Flag Link Mon Apr 25, 2011
How does an agent in Sarasota County Florida comment intelligently about the market in Austin Texas?
2 votes Thank Flag Link Mon Apr 25, 2011
I think Charles provided the clearest answer to the question. There is a difference between a budget of $250k and limit of $250k. If that's the limit, I'd suggest looking in the lower $200k range - never fun when the eyes are bigger than the stomach. If it's a budget, I'm comfortable showing clients properties at 10% above the number to pull in homes that may come down to my buyer's number.

Best advice - find an agent. There are quite a few excellent professionals in the Austin area and it would be good to have one on your side.

Good luck!
Web Reference: http://www.crowehomes.com
1 vote Thank Flag Link Mon Apr 25, 2011
Simple answer is to shop up to $250K maybe $260K or so. You will have better luck with the house that's worth $275K and asking $250K because the seller is motivated and realistic about it. Hoping to wear down an over-priced seller is not going to be fun.
1 vote Thank Flag Link Mon Apr 25, 2011
Dear OtisDesign,
I would suggest if your approved for $250K to look just under that price. You don't want to be working/living just to pay the higher mortgage. You can get a lovely home for $225-240K. Leaving your self some breathing room will allow you to take vacations or be able to save more for college or retirement. There are four homes in Steiner Ranch under $250K right now. If you want more details on these homes just let me know and I can send them to you to look at. Your other option is if your confident about a $250K mortgage then look about $5-15K over your target price. Your agent should be able to help you get a slight reduction in price. The thing is homes are selling around 95%-97% of list price, so I don't see you getting $100K off the list price. If I may be of help just let me know.
Sincerely,
Betina

Betina Foreman - Realtor
Austin Home Girls Realty
1 vote Thank Flag Link Mon Apr 25, 2011
Seems like the consesus answer seems to be $250k. Don't forget about closing costs. Should be about 3% of the sales price. Try and find the best deal and don't think you are getting a deal just because someone comes way off their asking price. I know it's cliche, but have someone search for foreclosures. Banks love cash deals. Because they know the deal will go through, they will be more willing to negotiate with a cash buyer.
1 vote Thank Flag Link Mon Apr 25, 2011
Otisdesign,

Your best bet is to work with a knowledgable Buyer's Agent to discover which homes in these particular neighborhoods MIGHT be had for closer to your price point. If you can't find one closer to $250K, then expand your search in areas you would like to live (ie. other parts of Lakeway, Bee Caves, West Austin). I've seen homes in Steiner going for a range much closer to what your looking for ($250k - $300k).

There isn't as big a discount as you might expect for buying all cash. It's all relative to what the Seller's expectations are in gross proceeds they plan on netting from the sale of their home. I wouldn't expect to find a 10%-20% discount on a price unless you find a unique situation whereby a seller HAS to sell in less than 30 days and still has enough equity so they don't have to 'short sale' their home. That would be finding a needle in the haystack.

Regarding buying from a Builder or Reseller, most Builders have looked at their Austin operations (vis a vis the rest of the country) as a stronger performing market and are less likely to take a major haircut on price because they simply don't need to. Additionally, most builders are running a much 'leaner' shop and don't have a lot of speculative homes on the ground unlike a few years ago. I think you'd get more price movement from a Reseller than a Builder.

Homes with a higher DOM should be more open to a lower offer since they are a bit overpriced to start, but it's up to you and your negotiating skills on how low you can get them on price.

Let me know if you need any assisstance & good luck on your search.

Scott Butcher
Mortgage Banker, NMLS #313531
Maker Capital Group, LLC
2307 Lake Austin Blvd.
Austin, TX 78703
512-796-7738
scott@makercapitalaustin.com
1 vote Thank Flag Link Mon Apr 25, 2011
That is difficult to answer because each home stands on its own. If you are looking to spend $250,000 you probably need to stay in the $250-260k range. You may want to venture a little higher especially if the days on the market are high.

It would be very rare for you to find something listed at $350 that you could get for $250k, it's just not going to happen. Also when you look at homes priced $50-100k more than you are willing to spend I can guarantee you will like them and that will spoil the home in the range you want to be in.

Builders are not as flexible but when I present comparable homes I can typically save my clients money on a new build home. Everything is negotiable and knowledge is power. Make sure you do not buy a new build home by yourself... the builders sales representative's #1 job is to get you to pay top dollar for each home. Realtor commissions are part of their marketing budget and you do not ever get a better deal when buying one alone.

Good luck with your search and if you have any questions please let me know.

Don Groff
REALTOR | Mortgage Broker | Consultant
Buy - Sell - Lease - Invest
Keller Williams Realty | 360 Lending Group
o.512.669.5599 m.512.633.4157
listings@dongroff.com
0 votes Thank Flag Link Sat Apr 30, 2011
Keep in mind that Falcon Head has one of the lowest tax rates around (1.9%)....Steiner Ranch is in the 2.5% - 3% range...so you can get more for your money in Falcon Head.

As you have already heard, the builders are giving great incentives right now so they are are to compete with...unless you find a HomePath or HUD home.

As is everyone below, I too would love to help you find your home (maybe even that diamond in the rough)!

Sean Graff, Realtor
512-422-8327
0 votes Thank Flag Link Wed Apr 27, 2011
Hi Otisdesign!
You have gotten lots of advice, so I will just addd my experience.
My area of focus is as a Buyer's agent, which is what I suggest you use, to NEGOTIATE the best possible deal. You probably already know that there is no charge to use a buyers agent. (the seller pays the commission)

In my experience with cash investors and homebuyers, I have presented (and had accepted) offers significantly lower than asking. Often massively lower!!! This has been especially true with new home builders. They often have incentives on inventory homes. Many buyers and even some Realtors do not realize that you can negotiate and play hardball with new home builders!!

I have been nick named Bulldog Creevy by sellers in Austin, because I stubbornly fight for the best deal for my buyers. Obviously, how much you can negotiate on New Or resale depends on neighborhood comps & many other factors that other Realtors have already mentioned.

My best advice is get a Realtor that specializes in representing BUYERS and will find the best value for you & negotiate the best deal for you, in your price range!!

Let me know if you need a Bulldog on your side!!

All the Best,
Torquil "Bulldog" Creevy
0 votes Thank Flag Link Tue Apr 26, 2011
Good day to you. It is great to see so many good answers. It only reinforces my faith and belief in the Real Estate industry. In spite of a few "bad apples" I believe that most TRUE Professionals are genuinely focused on helping their clients reach their goals.
You ask a great question. Unfortunately as you can see there is no one definitive answer. Only the best answer for you in YOUR specific situation. Is your price of $250k a budget or limit? Those are two very different scenarios. Usually most homes are selling within 95-100% of the listing price depending on a multitude of factors.
Both desired areas you mentioned are nice areas. You can find both resale and new builder homes. As to which is best for you, that depends on what you require or desire in your new home.

In terms of overall value - i.e. the best deal, you will probably find the greatest opportunity with builders as they are pressured under the current market to move product. A resale owner at the end of the day does not in most cases have to sell. Sometimes they are forced to- financial loss, job loss, divorce, etc. But builders are in the homebuilding business. They always have to sell product. The trick is to be at the right place at the right time and negotiate the right home based on your needs/wants. All of the factors you mention in your question will come into play and should be considered but actually knowing how to best negotiate the deal in terms of "maximum value" or "maximum savings" is the key regardless of the home. Unless you have this background or experience, you need a professional who is skilled and experienced. Find a realtor who has the background, knowledge and experience you need to truly represent your best interest.
Feel free to visit our web site at http://www.CornerstoneNewHomeSolutions.com where you can preview both areas by new product or resale. If you have questions or need further assistance please feel free to contact me.

Stephen B. McClain, Broker / Owner
Cornerstone New Home Solutions
512 -876-3116
smcclain@cornerstonenewhomesolutions.com
0 votes Thank Flag Link Tue Apr 26, 2011
You've received many great answers. I'll just add my voice to the chorus: "find an agent". You need someone who you are comfortable with and will be with you all the way to closing and beyond.
Good Luck!
0 votes Thank Flag Link Mon Apr 25, 2011
You should know that in Texas the sellers pay the fee for both the sellers and buyers agents.
0 votes Thank Flag Link Mon Apr 25, 2011
OtisDesign, sounds like you don't have a Realtor yet to help you, and I HIGHLY recommend that! Being a design co., you probably understand the value of Realtors. Nevertheless, you got quite a variety of answers. I work in both of those areas and realistically each seller's situation is different, BUT most will negotiate somewhat, just not at the amount to close a $100 gap. I look about $25K+/- over your target price, sometimes more, and look for distress situations, long DOM (90 is not long, btw, in this market in those areas), etc. where I think I can get the sellers down to your target. A resale is usually cheaper overall (I have a great "New vs. Resale" comparison I show to all my clients on the fence or confused). If you would like to discuss possibly working together, please let me know. I have over 20 years negotiating experience, am a Top Rated Realtor, and do NOT charge Buyers for my services. Feel free to click on my name to the right to see my Credentials, Client Testimonials, and contact info. I can assure you if we work together you will not be disappointed!! Joe Jarusinsky, Realtor/Master Instructor, Keller Williams Realty, ranked #1 by Home Buyers 3 Years in a Row (JD Power & Assoc.) (512)497-0105
0 votes Thank Flag Link Mon Apr 25, 2011
Another thing to remember is real estate is very market specific. In fact it can vary from neighborhood to neighborhood, so you need to speak with someone local about the market your interested in. For example what is happening in California or New Jersey may not have any bearing on whats happening in Denver. While many states are seeing wildly depressed markets, Austin real estate is still moving, albeit slowly. According to the chamber of commerce says there are 1000 people a week still moving to Austin and I promise you they are not all renting. Find a Realtor to help you navigate the process. You will be glad you did.
Good Luck!
Betina
0 votes Thank Flag Link Mon Apr 25, 2011
Otis,

You have identified all the points to negotiate off the list price(DOM, cash, etc.) However, $350k to $250k is probably a stretch unless the home is already grossly over priced according the neighborhood comparables. As others have expressed, 96% of list is the average on correctly priced homes

I would be happy to run a price analysis on your target neighborhoods

Steven Nusinow
(512)922-7588
0 votes Thank Flag Link Mon Apr 25, 2011
Right now there are 4 homes in Steiner Ranch for 250k or below. Since January 1 there have been 7 at that price point that have sold per MLS and most have been in the 2000-2600 square foot range. The price range you mention is feasible; whether you can get someone at 350k to sell at that point may not be as likely. Homes in the 275-300 range could approach that price level. I typically will have my buyers see resale, builder and distressed (short sale & foreclosure) homes because any of them could be the best option at any given time. Hope that helps.

Bryan Faircloth
Keller Williams Realty
bryfair@kw.com
(512) 637-8495
0 votes Thank Flag Link Mon Apr 25, 2011
Otis,

Whae a buyer give a real estate professional a top number it is reasonable in the present market to look at homes up to $30,000 above their limit.

The best deals for buyers at this time appears to ne in resales since many sellers are coming to grips with the current distressed market and are now ready to make a deal and move on. The willingness for builders to accept the maket conditions and move on is non-existant. Their mode of survival is to modify the product and save on construction.

DOM is less significant that the number and frequency of price decreases. Through studying these patterns it's often possible to get a feel for a seller's level of motivation.

Good luck.

Bill
0 votes Thank Flag Link Mon Apr 25, 2011
Otis-
Majority of listings in the Austin area are selling close to list price, especially in the Steiner Ranch neighborhood. Cash is always good to sellers, however sellers are still wanting to recieve offers close to the list price regardless if its cash or financed. DOM does play into account, and can have more leverage for buyers. Both builders and sellers should be willing to negotiate good clean offers. It depends on the neighborhood in regards to going with new construction or resale. For example, in Steiner Ranch builders are in the last phases of construction, so it may be advantageous to go that route. Its always best to look into at the opportunity for resale, and Steiner Ranch offers schools in the highly rated Leander ISD- also the new high school will feed into Steiner.

Let me know if you are interested in more information about how I represent buyers, or more neighborhood information. I'll be glad to help!

Cynthia Mattiza, REALTOR
JBGOODWIN REALTORS
512-940-5293
cynthiamattiza@gmail.com
http://www.jbgoodwin.com/testimonials/testimonial.cgi?id=1248
http://www.cynthiamattiza.com
0 votes Thank Flag Link Mon Apr 25, 2011
Most homes are going to sell for very close to their value. The problem is that 65% of Austin REALTORs are part time agents and have little understanding of value. If the home is priced correctly in the $250K price range there should be less than 5% negotiation room. The builders normally over price their homes so buyers can feel good about getting a discount. You will normally pay more for new, but you also will be able to negotiate more off the list price of the home. In the current market, DOM has very little meaning to you. Increased DOM is a refelection of poor marketing or poor understanding of value by the listing agent. Unless you can determine the date of the last price change, DOM will give you very little idea of value. Cash buyers are only worth more than someone getting a mortgage if both offers are equal. You need to remember the seller gets the same amount of money either way. Again if the listing agent has done his job correctly, he will follow up on the lender letter from the buyer with a mortgage and he should make sure the mortgage is as good as cash before he lets his client sign the contract. Bottom line is that you need to work with a professional. Do not work with a REALTOR who sold less than 50 homes last year. I sold 145 homes in 2010 and will be happy to answer any other questions you have. Feel free to view my website searchingaustinhomes.com or call be at 512-964-5724.


Sincerely,
John Mick REALTOR
RE/MAX Capital City
0 votes Thank Flag Link Mon Apr 25, 2011
The average sold to list price in Steiner Ranch for the last year of homes from 200k to 450k is about 97% Cash of course is good but doesn't necessarily mean you will get that much better deal because in either case seller,s net is not much different. Home prices have dropped in the last 3 years but they are being priced more realistic to market in most cases for current market. There are some good deals out there but you may not get what you want home wise if your not careful about letting "GOOD DEAL" get in your way
0 votes Thank Flag Link Mon Apr 25, 2011
Well, in this market 90 days is not necessarily a long time. Although most homes are still selling for 95% of the asking price, there are some great deals. I would love to show you a few. Thank byou for the inquiry.

Wendy Weir-Boschert
Coldwell Banker United Realtors
1701 Williams Drive
Georgetown TX 78628
512-484-4200 cell
512-930-2000 business
http://www.cbunited.com/Wendy.Boschert
0 votes Thank Flag Link Mon Apr 25, 2011
Hi Otis,
An average list to sales price in these neighborhoods is around 96%. I'd love to help you find the right home. Please call text or email me.
Cindy
Cindy Crawford, REALTOR®, PSC
Keller Williams Realty
101 Old Settlers Blvd #190
Round Rock, TX 78664
(512)217-8990 Cell
(512)579-4241 efax
cindycrawfordrealtor@gmail.com



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Family, Friends and Business Associates. Thank You for Your Trust."
When it's time to buy or sell, give me a call. I have up-to-the-minute information on the real estate market in your area.
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Texas law requires all real estate licensees to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords: http://www.trec.state.tx.us/pdf/contracts/OP-K.pdf
0 votes Thank Flag Link Mon Apr 25, 2011
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