How Much Should Buyer Expect To Pay Below List Price?

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You have found that perfect home!  It has beautiful landscaping, vaulted and tray ceilings, crown molding, granite bathrooms and a kitchen every chef envies!  So, what do you offer for the home? Every client asks this very question expecting their agent to provide professional and valuable insight.

To be a successful Realtor agents must constantly follow the housing market, utilize various negotiation techniques, and apply tricks to acquire knowledge about sellers and buyers in order to determine the final selling price for a home. Almost every home sold has a final price below the listing price, but on average how much below list should a buyer and seller expect to “seal the deal”?

The market and housing inventory has a large influence on the final sales price of a home. When fewer homes become available some will begin to receive multiple offers.  The difference between the sales price and list price will decrease.  Thus, what values should a buyer or seller expect once negotiations begin?

The Real Estate Center at Texas A&M University considered this very question. The results were extremely interesting.

List Price / Sales Price Spread 1998-2012

List Price / Sales Price Spread 1998-2012

During the dot-com boom of the late 1990′s the average spread between the list and sales price of a home dropped to below 1%. During this era many homes sold above list price. Once the dot-com bubble burst there was an immediate uptick with averages jumping to over 4%.  Eventually this trend started to reverse with the housing boom during the mid 2000′s. However once again the bubble burst resulting in another uptick in the spread with it reaching levels of over 5%.

Over the past several years the spread has once again begun to decline. As previously reported in our market analysis sellers in Houston and surrounding areas are witnessing multiple offers so our prediction for 2014 is an average down near the 2% level locally.

Since actual values fluctuate by neighborhood CCLR advises all buyers and sellers to seek out a licensed Realtor.  They are the best source when determining the actual value of a home.

Posted in Home Values, Houston, Houston Single Family Homes Sales Data, Houston Statistics, Investment Property, Sugar Land | Leave a comment

Celebrate May With A 1% Listing Fee!

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To celebrate Mother’s Day CCLR will be providing a 1% listing fee! To qualify a just sign a listing agreement within the month of May allowing CCLR to utilize our standard professional listing and advertising services to help sell your home. This offer saves 2% off the sales price over your standard Realtor rates. This offer is subject to a maximum of five clients and ends May 31st so act quickly and don’t miss out!

This exclusive rate allows each home owner to receive our standard professional advertising and marketing program for their home including photo’s and a virtual tour from a professional photographer.  Other websites and companies that historically cut back on advertising as their listing fee decreases but not at CCLR!


Posted in Houston, Houston Single Family Homes Sales Data, Investment Property, Marketing, Sugar Land | Leave a comment

Housing Market Status for Houston’s Fort Bend and Harris County!

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The housing and rental markets in Houston have seen significant changes compared to one year prior.  For single family homes every yearly quarter other than the third quarter of 2013 has witnessed an increase in the price/sq.ft. of single family homes. Two quarters observed an incredible 10% rise. As the inventory levels have continued to decrease there has been a subsequent decrease in the amount of time to sell a property with the average now well below two months (60 days). Unless inventory levels begin to rise the current price increases may accelerate to levels seen just prior to the house bubble. While everyone desires increasing home values the large jumps seen currently can end up doing more harm.  We need to see reasonable steady increases!

The rental market has seen an amazing increase in the rental rates over the past year. Similar to sales there were only two quarters since 2011 where the rental rates declined.  In addition the total number of renters has increased over the past two years along with the number of property management companies.  The number of days a rental is on the market has remained relatively constant although there are season fluctuations, but landlords have still successfully sought out higher rental rates. A large majority of these tenants will eventually become first time home buyers but currently with tighter lending practices obtaining a mortgage is far more difficult for the younger generation.

An increase in inventory for sales along with fewer rentals on the market is required to maintain a healthy housing market in and around Houston.

Homes In Sugar Land - Housing Stats

Fort Bend and Harris County Single Family Sales Statistics


Homes In Sugar Land - Rental Stats

Fort Bend and Harris County Single Family and Townhome Rental Statistics


Posted in Economy, Home Values, Houston, Houston Single Family Homes Sales Data, Houston Statistics, Property Management | Leave a comment

Property Management – Wrap-up of Fees!

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Houston Property Management

Here is our last article regarding property management fees and services. We will now break down the last eight methods property management companies make money.

10. Late Payment Fee – Not only do late fees help provide incentive for on-time rent payment but they also allow management firms to collect additional fees for the increased time required to process rent and make payments to owners. Late fees are typically charged following a grace period after the rent is formally due.

11. Returned Check Fee – Standard fees for returned checks and payments from financial institutions.

12. Fee for Sale of Property – An owner may decide during the process of leasing to sell the property to the current tenant or to a separate individual procured by the firm. Under both circumstances the owner may be required to pay a percentage of the sales price as a fee back to the management company.

13. Sale Coordination Fee – A fee in which the owner sells the property and requests the management firm to coordinate showings, inspections, appraisals, or other matters related to the sale.

14. Termination Fee – If the owner elects to terminate the relationship with the firm while under the current management agreement a fee may be applied. The amount could be equivalent to the remaining monthly management fee or other amount as specified in the contract.

15. Referral Fee – Agents and brokers licensed in the state are allowed to charge referral fees from other licensed agents and brokers. If the tenant moves out of the firms area of operation and the firm is utilized to locate another firm they may request payment for providing a new client.

16. Tenant Repair Deductible – These deductibles are unfortunately becoming more common. Owners believe passing on deductibles to tenants saves them additional costs. In reality this is a rental increase passed on to the tenant since requesting deductibles convince some tenants to perform their own repairs. Our opinion is doing so is not in the best interest of the owner.

17. Eviction and Court Reimbursement Fee – A top quality firm will have low turnover rates and evictions but unfortunately there are times these services are required. During these circumstances the additional time and legal fees necessary to represent the owner are collected.

We hope that over the past three blogs that you are more familiar with the fees available to the management firms.

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Ways Property Management Companies Make Money – Continued!

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Houston Property Management

Continuing on our latest post regarding property management fees and services we now outline the first eight methods property management companies earn money.

  1. Monthly Management Fee – A property management company will remove a certain percentage of the monthly rent for their services. The amount can range anywhere from 6%-12% depending on the company and number of services they provide.
  2. Reserves – Cash reserves provide the management company the ability to perform repairs for the home owners.  The funds are kept in a separate trust fund from rent revenue. All interest goes directly to the property management company. The amount of the reserve is dependent upon the company and what the owner can negotiate.  Typical reserves range from $300-$400.
  3. New Tenant Leasing Fee – Each time the property is leased the owner will typically pay the property management company a certain percentage of one month’s rent. Some companies utilize a flat rate but the percentage calculation method is standard. Most companies charge 100% with half going to the Realtor that provides the tenant.  If the property management company finds the tenant then they keep the entire leasing fee.
  4. Advertising Fee – Most companies elect to absorb the advertising costs for finding and placing a tenant. Costs for photography, audio-visual images and external advertising in magazines however can all be passed to the owner.
  5. Renewal Fee – Renewals of current leases require time of the property management company.  Most companies charge a renewal fee ranging anywhere from 10%-20% of one month’s rent. As with the new tenant placing fee a flat fee can also be utilized.
  6. Extension Fee – Extension fees are similar to renewal fees and generally have the same fee structure but instead of a lease renewal the current lease is extended for a specified period.
  7. Service Fee – Anytime the property is repaired a separate fee beyond the repair cost can be applied to the owner. The amount may be a percentage of the overall repair cost, a flat fee, or some other calculation method.
  8. Interest – All funds earned from an interest-bearing account during the management of the property is kept by the property management company.
  9. Application Fee – A prospective tenant normally pays an application fee that covers the time and costs associated with reviewing the applicants background including job verification, credit worthiness, etc. The amount is set by the management company and can range from $25-$75.

Coming up over the next few we will outline the remaining list of items so check back often!

Posted in Houston, Investment Property, Property Management, Sugar Land | Leave a comment

How Do Property Management Companies Earn Money?

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When a home owner contacts our company regarding property management services the first question always asked is, “What is your management fee”?  The problem with this question is the singular use of the word fee. Property management companies do charge a monthly management fee but they also have several additional avenues in which to earn money.  More important than the management fee are all the charges related to the entire scope of services when managing a property. A property management company will be a curator for one of your biggest assets so making a decision primarily based on who charges the lowest monthly management fee is a major financial mistake.

Low monthly management fees may reflect either an acknowledgment that a company doesn’t provide top tier service, an attempt to gain business by undercutting the competition, or ability to charge additional excessive fees once a management contract signed. All three are significant problems for a home owner because an under-pricing monthly management fee indicates a firm is charging other fees or providing an inferior quality.

Below you will see a list of fees and services many of which allow property management companies the ability to earn money. Over the next few weeks we will write several blogs that explain these fees and services.

  1.     Month Management Fee
  2.     Reserves
  3.     New Tenant Leasing Fee
  4.     Advertising Fee
  5.     Renewal Fee
  6.     Extension Fee
  7.     Service Fee
  8.     Interest
  9.     Application Fee
  10.     Late Payment Fee
  11.     Returned Check Fee
  12.     Fee for Sale of Property
  13.     Sale Coordination Fee
  14.     Termination Fee
  15.     Referral Fee
  16.     Tenant Repair Deductible
  17.     Eviction and Court Reimbursement Fee

Fees can vary between firms and across markets but the entire list is available to management companies. Every home owner should perform their due diligence and confirm what fees are charged prior to signing any long term contract with a management company.  At CCLR and Holub Realty and Property Management, Inc. we advise asking for both tenant and owner references. Within Houston and the surrounding suburbs every property manager that is a licensed Realtor® and member of the Houston Association of Realtors has the ability through to obtain actual client reviews.  Home owners should be extremely picky when choosing a property management company since their home will be in the full care of another individual.

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Houston and Surrounding Suburbs Market Update

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The Houston market has continued to plow forward at an incredibly strong pace over the summer.  While certain communities like those outside Highway 99 have continued to struggle the average single family home has significantly increased in value.  The table below (provided by and involves actual MLS listings) shows that the average sales price is up 13.6% year-to-date through the month of July. The inventory levels have now at 3.4 months which is a level rarely seen in Houston. There are more buyers than sellers with many homes selling in less than 30 days.

The low inventory has increased the number of multiple offers driving up prices. Some agents have  begun to really test the market and push home values to levels that appraisers may challenge.

At CCLR we have noticed that increased mortgage rates is now beginning to slow the market but we don’t expect a halt in the growth. We don’t expect a 10%+ increase in sales value to continue however.
Home In Sugar Land

Posted in Appraisals, Economy, Home Loan Amounts, Home Values, Homes Values, Houston, Houston Single Family Homes Sales Data, Houston Statistics, Interest Rates | Leave a comment