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Elizabeth Weintraub
Why List Price to Sales Price Ratios Are Useless Agent Comparisons
I get it that’s it’s super difficult for many people to hire a Sacramento real estate agent, but comparing list price to sales price ratios is meaningless. I also realize that it’s especially challenging to hire an agent if those same people don’t really understand the profession nor harbor much respect for agents. It’s tricky for some of us to operate in an environment where so many in the public openly despise real estate agents. I think our popularity lies somewhere between used-car salesman and funeral home directors. What a wonderful world.
The way I make it through decade after decade of selling real estate is not to pay a lot of attention to the negative opinions that some people form because they don’t apply to me. I know that I do an excellent job for my clients, and these people are happy with my performance. Sometimes, though, I run into potential clients who have not dealt with a real estate agent like myself, and they don’t understand how I do what I do, and they expect to understand it instead of appreciate it. The only way to really understand the real estate business is to put on my six-inch heels and amble down railroad tracks wearing headphones with your back to the oncoming train.
Although I have never been asked for my list price to sales price ratio, a potential seller asked me for it. I didn’t even know my number because it carries no value. It’s like a Select Comfort sleep number. Some people like 40 and others 100. I ran my production numbers for last year, and that number is 104.21%, including the good deals buyers got –which contained some under-market transactions in a seller’s market when most buyers paid over-market, if they were able to buy at all in last spring’s frenzy.
See, this is the problem with list price to sales price ratio. So many variables. You can have a short sale, for example, in which the market value is, say, $300,000, but the bank demands $310,000 at the 11th hour, holds the buyer hostage, and it ends up closing at $310,000. Does that make the listing agent a much better agent? Not really. Out of the agent’s control. Or, what about the sellers who insist their home is worth $500,000 and secretly hope a buyer will lowball. I take some of those listings because it’s not my place to choose the sales price. If that overpriced home finally sells at $450,000, does that make me a bad agent? Not really.
What about changing markets? Markets that shift from a seller’s market to a buyer’s market, which can happen in any given time period. That affects the list price to sales price ratio. On top of this, there are a dozen other scenarios that can affect these ratios, including who is to say an agent who routinely sells at 104% is not deliberately underpricing her listings? Hmmm? But probably the biggest factor is every agent has the ability to change the list price to match the final sales list price prior to closing, and then the ratio is 100%. I know some agents who do it just so they can say their ratio is 100%.
List price to sales price ratios mean very little, and then mean even less when an agent’s production is limited to say, 6 or 8 homes a year. The moral is don’t judge an agent on list price to sales price ratios. If an agent with a high ratio is telling you it’s meaningless, that in itself should speak volumes.
Will a Sacramento Seller Sell for Less than List Price?
Buyer’s agents in Sacramento continually hear the question from buyers which, they in turn, pass along to the Sacramento listing agent: Will the seller sell for less? It’s not always phrased in those exact terms, but that’s what everybody wants to know. And that’s the one thing they cannot know and will never know unless they write an offer. For starters, no listing agent worth her salt is about to disclose to anybody for any reason how much her sellers will take to sell that home.
You might wonder why not. Because the listing agent has a legal fiduciary duty to the seller of confidentiality. The list price is the sales price. Period. If the seller prefers a range of value, then the sales price will be listed as a range of value indicated by a big ol’ V that nobody understands so nobody does it. Second, the listing agent doesn’t know what her seller will do because the listing agent is not the seller. She doesn’t own the home, and she can’t make decisions for the seller.
Every so often, I receive an email from a buyer’s agent that lays out all of the reasons why that agent’s buyers are such spectacular human beings and why they deserve to get an incredible break on the sales price — primarily because they are looking at a home the buyers cannot afford to buy. In my mind, of course, I wonder how that is my problem and what that has to do with me, Al Franken? I mean, why doesn’t the agent show her buyers the types of homes that her buyers can afford to buy? Why is she showing her buyers homes that are too expensive for her buyers?
You know why she’s performing such an unproductive service maneuver? Because she doesn’t want to take a chance that her buyers will dump her and run off to some other real estate agent in Sacramento. She wants to make her buyers happy. She wants to do what her buyers ask of her, like any agent. But somewhere along the line, an agent needs to educate her buyers. Explain the market, how pending sales are moving, supply comparable sales and provide education. Buyers are not real estate agents. That’s why they hire an experienced real estate agent: to guide, assist and help them to buy a home.
When an agent sets aside her professional self-worth in a feeble attempt to keep unreasonable clients happy, she loses credibility with those clients, which in turn makes clients miserable. It’s not a win-win.
Further, when a buyer is pre-approved to buy a maximum amount, buyers should look at homes priced below that maximum amount. At homes they have a chance in hell of buying. Buyers should not ask their agents to show them homes that are listed higher than that price point unless those homes have lingered on the market and are stale, overpriced. You don’t ask to see a brand new listing and expect to a seller to accept a lowball and sell for less. It doesn’t work that way. Well, maybe it does on HGTV, but not in the real world of Sacramento real estate.
Rock and Roll Never Dies and The Music Doesn’t Fade Away
An older, and by older I mean over-60 Sacramento real estate agent gets far more respect from younger people nowadays than an aging rock-and-roll star. Thank goodness I am in the right profession. The motto far back as I can remember was you’re not getting older, you’re getting better. And wiser, hopefully. Nobody tells me that I am too old to sell real estate and lives. But there seems to be a backlash against entertainers who aren’t as spry as they used to be simply because they’re older. It’s enough to make an older person want to whack these little punks across the noggin with a cane.
Some reporter who probably used to have a hard-on for Bruce Springsteen complained that The Boss wasn’t performing like he did at the peak of his career which, according to that guy, was at age 26. LOL. When I read that editorial, I could only imagine the shrieking outrage from fans and even suspected that perhaps the reason for such drivel was to spark an uproar and bump up online hits for the Sacramento Bee. On the other hand, it’s a silly opinion of a person who probably secretly jacks off to Thunder Road. Everybody except that guy apparently is mad for a live Bruce Springsteen concert. Springsteen puts his all into every show. Pure adrenaline.
It’s a big thing now — for Baby Boomers especially, and we are targeted like no tomorrow — to attend concerts headlined by rockstars of our youth. It also provides retirement income to some whose managers ripped them off over the years. It’s not like reliving youth but some memories do return that were long ago buried, and that’s kind of sweet. The Happy Together Tour comes to mind. It’s also a yardstick to use so you can laugh at your goofy self as a teenager / college student and then understand how far you have come. (I don’t have yardsticks known as kids.)
What bothers me somewhat about these shows is how snooty I have become about concerts. It’s almost 50 years later. I still want front row seats. Only now, instead of camping out in front of the theater for hours beforehand or squeezing my way to the front by-hook-or-by-crook through throngs of stoned-out freaks, now I am willing to pay for that privilege. I am not standing in the hot sun (OMG, melanoma) or sleeping on the sidewalk (my aching back), no way, Jose. And, I expect a comfy chair. If I could enjoy concierge, valet and cocktail service, all the better. I wonder what my younger self would have said about this attitude?
Don’t answer that.
Listening Skills for Real Estate Agents Begin by Answering the Phone
When a potential client calls me, I try to listen very carefully before offering solutions. Most agents talk too much, I find. They don’t always listen. And listening is key to finding out what our clients want from us. Listening and asking questions. Often, a phone call will begin because a person is looking for information and believes there is one agenda at hand when what the client really wants is something else. I try to figure out how I can help.
Sometimes, I end up referring the client to a different real estate agent in another state because they live outside of California and need to buy or sell a piece of real estate that is outside of my Sacramento Valley jurisdiction. There are also times that a person might not have thought about selling a home in Sacramento until they have talked to me. That might be the best idea for them, and if it’s not they can count on me to say it. Because I don’t need that business right now today, and I’m happy to wait a few years if that’s what it takes and is best for the client. The key is what is best for the client.
I’m not going anywhere that I know about anytime soon. I will be here in Sacramento, answering my phone, taking care of real estate and talking with people. Conversing with people is what I do best, so that’s what I do. There are other people who call, real estate agents, for example, who begin the conversation by telling me they do not want to do what needs to be done for their buyer to buy a home. I wonder at that point why I am talking to the agent when the agent is stuck inside a square box and can’t seem to get out.
If I see my phone is ringing with another buyer or seller question, the best use of my time is to answer that call and listen to those buyers and sellers. I like to talk to real estate agents, but I am not their broker nor their manager. I can give them the information they seek about a home, but if they want to argue with me how they want to operate differently than other agents, I don’t have time for that. So it’s nothing personal when I say I have to go and take another call, because I do.
It’s generally a seller or a buyer calling on the other line who needs my help. They need me to listen to them, analyze their situation and offer solutions. Sometimes these conversations lead to a sale, and sometimes not. These phone discussions lead to enough sales, though, that I don’t have to worry about whether I am doing the right thing by listening, because I am.
Not every real estate agent has developed listening skills, I have noticed. Charles Chatham would rollover in his grave today.
Starter Homes and Move-up Homes for Sale in Elk Grove
The homes in my listing inventory for Sacramento that seem to generate the highest number of phone calls from buyers and buyer’s agents are homes in Elk Grove. It doesn’t seem to matter if they are starter homes for sale in Elk Grove or move-up homes. As a top listing agent in Elk Grove, I sell an unusually high number of homes in Elk Grove in the ZIP Codes 95624, 95757 and 95758. These homes are similar to the types of homes one might find the other direction from downtown in our Natomas communities or homes in West Sacramento in that they are newer construction, mostly stucco with tile roofs, and many young families gravitate toward these neighborhoods.
But then many of the homes for sale in Elk Grove are a hot commodity this spring. At the moment, we have 288 homes for sale in our 3 ZIPs in Elk Grove. MLS also shows 241 homes pending, with 191 sold within the last 30 days. You can do the math. There are not enough homes for sale in Elk Grove to meet demand.
If you are looking for homes for sale in Elk Grove, two exceptional homes recently became available, which you should take a look at if you’re in that market. Each fits a specific need. One is a starter home for a first-time home buyer or an investor and the second home is a luxury move-up home. Our first brand new listing is located at 7029 Verdure Way, Elk Grove, CA 95758. This is near Bruceville and Seasons. I keep wanting to call that street Four Seasons after the luxury resort. Or, as some people say it’s a reason to live in Sacramento because we have seasons here.
This is a 3-bedroom home with 3 baths and an open floor plan. The ceilings soar above the second floor, which makes it seem much bigger than its 1,410 square feet. Your entertainment area is the entire first floor, with open spaces between the living room and dining room and kitchen. Sliding doors lead to the back yard, with planting options available around the perimeter to make the yard your own. It’s affordable and competitively priced at $259,000. Ready for occupancy. Newer roof and HVAC, too.
The second home is located east of Highway 99, off Elk Grove Boulevard and Black Swan. If you’re looking for more bells and whistles and twice the square footage, this second home at $395,000 might be perfect for you. Boasting more than 2,800 square feet, it offers 5 bedrooms (two on the first floor, including a gigantic master suite) and three more bedrooms on the second floor. More interior square footage could be added by closing off the open space on the second floor, but most buyers will think it’s large enough just the way it was built. It’s beautiful, and it could be yours.
Come see 9468 Mainline Drive, Elk Grove, CA 95624 on Sunday when it is open from 2 PM to 4 PM. Both homes are offered for sale exclusively by Lyon Real Estate; for a private showing or more information, please call your Elk Grove agent, Elizabeth Weintraub, at 916.233.6759.
