By Cassandra Majors
Texas real estate can be pretty weird. In the rest of the country, for example, the idea of paying a seller a small fee in exchange for giving the potential buyers a window of time in which they can just change their fickle minds and walk away scot-free (the “option period”) sounds insane. Personally, I love this quirky feature of Texas real estate and think it could be applied to other kinds of contracts…like marriages, for instance. “Do you take this man to be your lawfully wedded husband as long as you both shall live, including a 6-month option period for the bargain price of $500 during which you can dissolve the marriage with no legal consequences in case he turns out to be one of those guys who leaves his nail clippings on the carpet?” Why yes, I do!
Even though Texas real estate does have its quirks, I guarantee you we’ve got it pretty good here. To prove my point, please grab your passports and join me on a whirlwind trip around the globe to see how crazy buying and selling property can be in other countries. Once we get back, I think you’ll be even more grateful for good ol’ Texas real estate.
Enter Through the Debt-Free Door
Have you ever heard that painting a home’s front door red will make it seem more welcoming and homey and thus command a better price when you sell it? The jury is out on whether or not this actually works (a study by Zillow actually found that the magical money colors were navy blue and slate gray), but you may notice more red front doors when you’re driving through neighborhoods in Scotland. The Scots aren’t trying to get a better price, though—it’s actually a common practice on the island to celebrate paying off your mortgage by painting your front door red. Who knew? It does seem like a nice way to remind yourself every day when you come home that your house is paid off, and it’s not a bad way to show off to the neighbors. And it could come in handy for real estate, too—when I bought my first house years ago, the sellers revealed three days before closing that they were underwater on their mortgage and couldn’t afford to close. So I spent the next six months living out of a suitcase and crashing on friend’s couches while my lawyer and I fought to turn the deal into a short sale before I finally got to move in. If I had just passed the house the first time and seen the front door wasn’t red, I might have saved myself some trouble and kept driving!
Scatter the Ashes, but Keep the Heat
Here in Texas, renewable energy is growing by leaps and bounds, and you can often assign a portion of your home’s electricity to come from wind power. In Denmark and Sweden, you can similarly enjoy a portion of your home’s warmth in the winter from…corpses. Yes, the local crematoriums are kind enough to lend some of their heat to local residential utility companies when the weather turns frosty. Imagine putting that as a green home feature in a listing description! Waste not, want not! Denmark’s most defining national concept is that of hygge, which roughly translates to “coziness,” or the feeling you get from sitting around a cheery fire with loved ones while drinking a hot cup of coffee and wearing warm fuzzy socks. So next time you’re visiting the Danes and getting hygge with it, just try to enjoy the warmth and forget about where some of that coziness is radiating from.
That’s Not a Sales Price—THIS is a Sales Price!
The land down under has an interesting upside-down real estate feature. Here in the U.S., you might strongly suspect that a seller has padded the sales price for negotiating, but in Australia, it’s actually built in. Instead of listing a house for $300,000, for example, a realtor in Australia might instead list it in a range of $295,000 – $305,000. I find this superior to the American system, if you’ll forgive a little Aussie-envy. Think about it—if you’re listing the house and a potential buyer knows he won’t pay over $300,000 for anything, he may never even see your listing in his own internet searches or in an IDX feed from his realtor with that hard upper limit in the search criteria. But we all know that a $300,000 home could sell for slightly less than asking price, so why do we let Boolean search parameters hide our listings from those buyers? All homes are ultimately listed in a price range whether it says so or not, so I’m with the Down Under on this one.
Also, while most sellers in Australia list with an agent, most buyers don’t have one, probably because the fees are capped by law at 3% of the purchase price no matter what and the listing agents aren’t keen to share the spoils. (And if you were curious, no, I do NOT agree with Australia on this one. I’m a professional real estate analyst with full MLS access, and even I wouldn’t buy a house without a realtor. I’d rather walk into a sword fight with a butter knife.)
At Least You Don’t Have to Worry About the Home Inspection
The last ten years in Texas have seen an amazing appreciation of existing homes, with major metros seeing a whopping 4-5% annual appreciation in the last decade. But if you lived in Japan, you would probably never expect your home to appreciate, as the vast majority of houses lose value after purchase. Why, you ask? Because more often than not, the new buyer will bulldoze the home they just bought and start from scratch. This is why Japan has four times as many architects and twice as many construction workers as the U.S., even though Japan’s population is actually shrinking compared to ours. Half of all homes built in Japan are demolished within 40 years, and 60% of current homes were built after 1980. For this reason, homes in Japan are usually just considered a place to live rather than an investment. Check out this fantastic podcast from Freakonomics to learn more about this weird phenomenon.
Stop! It’s NOT Hammer Time!
Ever heard of those horrible eminent domain cases, where some poor grandmother is forced to sell her 100-year-old family farmhouse to the government so it can build a highway right through her wraparound porch? We’ve seen some of these cases in Texas over the years, but the really bad cases are relatively few and far between; often the homeowners are happy to just take a big check and move on. In China, however, exploding populations and mind-blowing expansion of new buildings and highways have led to a lot of citizens fighting the government to keep their houses. Many have lost their battles, but enough have won or are stuck in years of litigation that the developments have just built up all around the houses while leaving them intact and bizarrely out of place. These homes have come to be known as “nail houses,” like a nail that’s sticking up because it’s refused to be hammered down. The Atlantic has a fantastic slideshow of pictures of these stubborn houses awkwardly trapped in the middle of huge commercial developments, and I love every one of them. What can I say? I always root for the underdog.
And the Bizarro Award for Weirdest Worldwide Real Estate Goes to…
We’ve seen a lot of strange sights on our real estate journey around the world, but I want to end at the country that (for me) is the #1 strangest place on earth for real estate: France!
Do you like having an exclusive listing agreement with your sellers? Well, don’t move to France, because it’s very common for sellers to list their homes with multiple agents, and may the best agent win! Like many countries around the world, France has no centralized MLS of any kind, whereas in America MLS services are pretty much ubiquitous. Having no MLS doesn’t just mean you can’t easily search all listings at once—you also can’t easily find comps or property history when you’re trying to come up with a sales price for your listing or an offer for someone else’s. Agents in France just have to be experts in their local markets and learn all they can from clients and other agents to help buyers and sellers make informed decisions. Won’t that help you feel more grateful next time you’re painstakingly setting up a listing in Matrix?
In fact, the lack of a centralized MLS usually means that in Europe in general, the idea of a “rock star” agent is pretty foreign. Most real estate is handled by small outfits catering to very local markets. Branding yourself, selling yourself, becoming a top producer…these are near-universal goals of most full-time real estate professionals in Texas and the U.S. in general, but in Europe, agents tend to blend in and work quietly. Laurence Demure, a realtor who has worked on both continents, describes this difference in a fascinating article for Inman: “The [European] agent is expected to be like all other agents. It’s almost like the old image of an IBM employee when they all wore the same suit, white shirt and tie. There is no differentiation.” Imagine a Texas realtor trying to work under those conditions! Forget that glitzy billboard on I-35, buddy—you just have to wait until someone wanders into your office and you happen to know the area they want to buy in.
How would you feel if you had to ask permission from your kid to sell your house? Because of French inheritance laws, if you buy a home with your spouse and he or she passes away, you still usually have to share ownership with your children, who can block you from selling or renting out the house. It’s actually not a bad idea, now that I think about it; I bet my parents would be a whole lot nicer to me if we had this law on the books here.
And finally, I’m more than a little disturbed by the French practice of Le Viager. I’m sure you’ve heard of a reverse mortgage, where a bank pays a homeowner in monthly installments for the equity in their homes, slowly taking ownership over the years in exchange for providing monthly income for mostly elderly homeowners. Le Viager works similarly…except it’s SUPER creepy. Instead of a bank paying you for the equity in your house, it’s just a regular person who wants to buy the house that you’re aging in, and they’re willing to put up money for it and then…wait. The buyer usually pays a bigger lump sum to the seller at the beginning, then continues with monthly payments for as long as the seller lives. Only when the seller kicks the bucket does the deed finally transfer to the buyer. So when you enter into one of these arrangements and you want a good deal, are you basically betting on how quickly someone will die and hoping they don’t live too long? Seems kind of morbid to me, France, but hey, different strokes. Personally, I would sleep with one eye open if I were one of those sellers.
Home Sweet Home
Welcome home to Texas! Thank you for joining me on this trip around the world. Now doesn’t that option period seem way less weird? Plus, here your house can appreciate over time without getting ripped apart by bulldozers, there’s no “dead bodies” setting on your thermostat, no one is paying you to wait around for your death, and you can sell your house without first having to beg your millennial kid to move out from in front of his Nintendo 360. As much as I love to travel, I still have to say: God bless Texas!
Cassandra Majors has been a market analyst and data guru in the Austin real estate industry for over a decade.
At the TREC Commission meeting on November 13th, the Texas Association of Realtors, along with concerned real estate professionals around the state, sent in letters to express concerns about the proposed three-day requirement for delivery of earnest money (Paragraph 5). In the revised standard TREC contracts, the proposed language currently reads, “Within 3 days after the Effective Date, Buyer must deposit $___ as earnest money with __, as escrow agent, at __(address).” Critics argued against the ambiguity of the language, pointing out that weekends and federal holidays could easily make this deadline impossible for some buyers. Vicki Fullerton, 2017 TAR Chairman, pointed out the flaw: “First, the Association echoes the concerns expressed by several of the Commissioners at the August 7th meeting, chiefly that the three-day time period may be problematic in some transactions. For instance, if the contract is executed on the Friday evening before Labor Day and the title company is closed, despite the buyer’s intention to perform, the seller may be able to terminate because of a mere oversight.” Most of the letter-writers agreed, some in stronger terms than others, but most agreed that there should be some distinction between calendar days and business days.
By Cassandra Majors
By Mark Sprague and Cassandra Majors
By Cassandra Majors, Independence Title
by Cassandra Majors, Independence Title
With a list of proposed TREC contract changes up for discussion, have you ever wondered how TREC decides when to change the promulgated forms? Typically, the forms are revised every other year following the Texas Legislative Session. TREC’s Broker Lawyer Committee meets first, and their proposed changes are discussed at the August TREC Commission meeting. If the commission approves the proposed changes, they are posted to the Texas Register and open for public comment – this is where we stand now.
by Cassandra Majors, Independence Title
