Every week, we ask a Houston real estate professional for their thoughts on the top three stories from the week before. This week, we spoke with Amber Carrillo, territory manager for Carrington Real Estate Services, and Jay Raman, branch manager for Carrington.
Houston Agent (HA): There are two reasons people buy real estate: for residential purposes or for investment. How is working with an investor different than working with a person who’s buying a home they plan to live in?
Jay Raman (JR): We deal with a lot of investors on our team, but when we’re dealing with a homeowner, I always tell my agents that you need to have a different mentality when approaching the process. A home is a place people are going to have kids, memories, where they’re going to feel safe, so there’s an emotional component to buying a home that you can’t quantify, which forces you to abandon some of the analytical tools and examples you might share with an investor.
Investment is obviously on the other side of the spectrum – you’re looking at risk, evaluating returns, things you can quantify. You can’t quantify people’s happiness.
Amber Carrillo (AC): With regular homebuyers, one of the things I take into consideration is their lifestyle – what do they like to do for fun, where do they work, do they have kids, where do they go to school? There are a lot of different factors that come into play that wouldn’t when the buyer is only looking for a positive return.
You need to take a similar approach with investors, but the questions should be different, as Jay suggested. Investors aren’t always looking for the same thing, particularly in regards to the length of their investment. Some buyers want a quick return, others want to keep their money in the property for a longer term investment, which forces you to look at and further evaluate market trends.
HA: How does Carrington satisfy the needs of both investors and residential buyers without stepping on its own toes (i.e. cash investors beating out financed buyers)?
AC: Because we carry such a large inventory of assets, generally at all time, and might have different offices working on different contracts, it’s difficult to discern who’s vying for which properties at what time. But, it’s important to point out, that cash offers aren’t always the winning bid. You’d be surprised at the decisions asset managers make when it comes to accepting offers. Sometimes a manager might be geared towards homeownership, so they’re willing to accept a higher financed offer above an all cash offer from an investor.
Sometimes a property comes to us and it’s been on the market for a long time without selling, so they’re just looking to get the best return on it possible, which means selling quickly.
Investors won’t always beat out a financed offer, but we do have tools, particular in the form of Carrington’s mortgage division, that offer unique financing options to help buyers who are having trouble getting approved for a mortgage, like in-house 203K loans. We have loan products that no one else out there has.
JR: The only thing I’d like to add, is that when I talk to my buyers and they’re faced with a cash offer, I tell them it’s a very fast moving market. I let them know that it’s not a situation where you can lowball an offer and slowly work your way up. Sellers are looking to sell, so sometimes it can be beneficial for financed buyers to make an offer closer to what they think the property is worth. A good offer upfront is a nice way to beat out investors who prefer to negotiate from the bottom up.
HA: What advice would you give to a new agent trying to break into the Houston market?
AC: We’ve been in Houston for about four years now, and we recently brought on Jay’s team to expand Carrington’s presence. What I can tell you about the Houston market is that when I first moved to Houston, I knew no one – no friends, no family. But because Houston is so diverse, I was able to jump right into the market, start making connections and received the Rookie of the Year award.
That’s the beauty of the Houston market, you can get right to work, and if you put in the time, you can still make a new for yourself in the local industry.
JR: Prior to joining Carrington, my business was a boutique brokerage. When we started in Houston, we focused on investors – we were a property management firm. Obviously, when a new agent comes into the industry, they’re grabbing at a lot of straws, trying to take on as much business as they can get. But one of the things they should consider is trying to build niche. Houston is a big market, and if you’re not shining in one particular aspect, it’s hard to stand out among the more established competition. A niche doesn’t have to follow you your whole career, but it is certainly a nice jumping off point.