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Why Are So Many Homes Vacant & is it Good or Bad?

I was at the Women's Council of REALTORS® luncheon today, and I heard a very interesting statistic from the guest speaker. He said that, on average, 45% of the 11,505 listings currently on the market in Austin, TX are vacant.

Why are they vacant?

Two months ago, this number was 52%.

For the most part, "people" are saying they can't afford to buy a new home without selling their current home first, but is that actuality? Are people really waiting to sell their current homes before buying? If they are, why are there so many homes vacant?

Then, the question was how many of these homes were new construction. Ok, so the numbers go down from there. However, new construction makes up approximately 20% of the listings in the MLS. That means, you still have approximately 25% of homes vacant.

Why does this matter? It gives the buyer leverage!!

If a buyer walks into a vacant home, the first thing they think is that the seller is desperate. Many sellers will say that they're not desperate. Another thing people say is that the home owner must be paying two mortgages. That's not necessarily true either.

Even though the seller isn't desperate and doesn't have to pay a mortgage payment on that vacant home, isn't he incurring costs month after month it sits there? He's paying taxes, insurance, utilities, upkeep, etc...

So, in essence, the seller is paying on two different homes, if not three or four homes.

It boils down to the buyer's agent putting those expenses in perspective for a buyer and showing the buyer how long it's been on the market, vacant, and how much longer it could continue to sit on the market, and then the buyer can write an offer accordingly... probably lower than a home that is occupied.

I'm not saying sellers need to live in their home until it sells, but make sure you're not giving off "desperate" vibes if you're going to buy a new home first. You could always stage the property with people or furniture. That's what I did, so perspective buyers have no idea that the people living there don't actually own the home.

**Are You Packed Yet?**

Donna Harris, REALTOR®
RE/MAX Austin Skyline
www.DonnaHomes.com
Donna@DonnaHomes.com

Austin, TX and the surrounding areas of Lakeway, Bee Cave, Westlake Hills, Cedar Park, Round Rock, Spicewood, Circle-C, Steiner Ranch, and everywhere in between... Whether you're buying or selling, I'll be with you through the entire process.

Posted by Donna Harris, REALTOR® & ASP - Hill Country Austin Lakeway Homes on 05/21/2009 03:15 PM

Comments (18)

Vacant Homes in the Home Selling Channel

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Originally posted at: Austin TX Real Estate - Hill Country Austin Lakeway Homes for Sale: Why Are So Many Homes Vacant & is it Good or Bad?

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18 Comments on Why Are So Many Homes Vacant & is it Good or Bad?

MAY

Some of course have been relocated. I think many more are now in the renting class.

A lot of those vacant homes may be lender owned foreclosures. It is very easy to show vacant homes so you need to get out there and sell more than your share to reduce the inventory!

Follow me on Twitter: http://twitter.com/roykelley

Hi Donna-Staging sounds like a good idea when the owners have moved out. Gives it a more homey look. <SMILE>

Donna - I don't know what our vacancy rate is but in some areas is't pretty high, adn they are not just the REOs. Any buyers usually ask if the peole have moved, etc as a way to find out what their leverage may be.

The other thngs for sellers to be aware of with regard to vacant homes is that this can become a big problemn for their homeowner's insurance policies - some lapse if the home is vacant more than 30 days - and you don't want to have a problem, only to find out later you are not covered when making a claim.

Jeff

Michael, Even with relocation, that means the house is vacant. And many companies only help pay relo expenses for up to 1 year of the move, so many people are still buying a new home before selling the first.

Roy, I agree, but in my market, that's not a very large percentage.

Sharon, Yep!

Jeff, Yes, people need to watch their policies to make sure they're still on the house. Many mortgage companies will put forced insurance so the house is never without coverage, but that only works on houses with a mortgage.

I love empty houses! No appointment needed. No family pictures on the wall. No junk scattered everywhere. I can't say that I wish they were all vacant because you've brought up valid worrisome points but I still love them.

Donna,

Very interesting statistic.

I wonder how many agents are advising their seller if the home is vacant they need a vacancy rider for their home owners insurance?

Donna, staging can give the illusion there is now two or more payments for sure. But many are simply vacant cause the people had to move on to their new life, relocation, divorce, downsizing, etc.

Donna - You are so right! I really love showing vacant houses...listing them however, leads to this exact perception!

Hi Donna... every time I show buyers a vacant property the first words out of their mouth when we walk in the door is "Are you sure that this one isn't a foreclosure property?" Even when I have told them that it is not before we go in.

Barbara, I work with a lot of buyers who can't picture their things in vacant homes and prefers the feel of an occupied home, so though it's convenient to show them, many buyers don't like them, psychologically.

Richard, We found out that a vacany rider was more expensive so we put people in the house.

Gary, Very true.

Jeanna, I don't like listing them because, "I was at the house today and agents left the lights on AGAIN!" and things like that.

Steve, You must be showing vacant homes that are trashed for them to think that!! LOL

Good perspective. Never really thought about those little extras that cost money. Thanks.

Empty houses are the best homes to show. Gives the buyer more time to really look and focus. Our market doesn't have as many new homes right now.

MAY

Hi Donna, It was nice meeting you at the WCR meeting. I like this post. When you are a buyers agent on a home I think you really do need to take everything into account. Each house, seller and situation are usually different though. A buyers agent should take a close look at all of the facts by checking the history of a home, doing a comparative market analysis, and taking a step back to look at the whole picture. The seller's agent may have had the seller adjust the price because of different factors. You may find out the the seller has the house on the market at the right price. You could also offend the seller with an offer too low on a home that is price right making the negotiations difficult for everyone. I currently have a listing that is pending with a full price contract and another listing that just received a full price offer. I have a buyer under contract on home that will gain 30% in equity at closing. He offered $5000 over the asking price because it actually had 4 other offers on the table. I believe all of this is a indication of a recent change in the market. If agents haven't noticed the current buying frenzy, I wonder what they're doing? I love it when agents find their buyers a great deal, however I love it just as much when the agent finds the buyer the right home the buyer wants for the right price, even if that turns out to be a full price deal. I have seen agents loose a deal for their buyer because the negotiations started too low, on homes their clients really wanted, and then didn't quite make it to a good compromise. I believe we will see a lot more contracts for the full price in the very near future. Again, I enjoyed talking to you today. Have a great weekend!

Angelia, Many people don't think of the extras, but they all add up to several hundred dollars, if not thousands of dollars.

Kay, Some people like a "clean slate" when looking, while others like to know where someone else put their furniture to help them realize where their own furniture would go.

Neal, Great finally meeting you in person too. And yes, offering something too low can definitely offend the seller, which is why it's always good to run the full comps, and possibly attach them to the offer so the seller knows why you're coming in at a price you're coming in at. Congrats on all the contracts.

Donna, Yes a buyer's agent should always run full comps on every home that the buyer is interested in putting an offer in on. In the past I have received comps from buyer's agents on homes my sellers have had listed. Most of the time, I usually correct the CMA for the seller by completing a new one (if I haven't recently completed one for the seller), show the seller both CMAs and send both of them back to the buyer's agent many times with a counter offer, and sometimes with a rejection. If the seller's agent is doing the right thing the house will sell at or close to the asking price.

MAY

I think that buyers respond to furniture in a home. Even if they hate the furniture or room layouts, when viewing properties, they don't want to have to imagine the whoel thing - they want to see what someone else did with the space. I know InSight Home Staging and several others in Austin will loan you a few rooms of nice furniture for a monthly fee.

Neal, Exactly!

Tom, There's even a company in town that will put people in the home for free of charge to the seller to have them stage it. The company is paid by the tenants paying rent.

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