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Elizabeth Weintraub
Home Buying and Selling at the Same Time in Sacramento
For the past 8 years, the market has been so depressed in Sacramento that it was fairly uncommon to find anyone buying and selling a home at the same time. That’s because many sellers were doing a short sale or had walked away from their homes due to the falling market, while other sellers didn’t have the equity they desired. It was actually the perfect time to sell a home and move up because the move-up price was so much lower back then but people feel uneasy during challenging times and tend to do nothing.
Now that we have a somewhat stabilized market and prices have increased over the past several years, in some areas as much as 40%, there is more movement. Much of it, surprisingly, is in downsizing. Sellers are taking their equity and moving it into a smaller home. But they still need have a plan for home buying and selling at the same time if they don’t want to move twice.
There are many ways to accomplish this task, but the most common way to buy a home contingent on selling an existing home is to use a Contingency of Purchase addendum to the purchase contract. Agents would be wise to thoroughly read and familiarize themselves with this particular document because it has changed, and I’m not kidding you, it is complicated. It is so complicated that recently Sacramento real estate agents argued over its contingency period because it appeared unclear.
The COP by default will allow the seller to keep her home on the market during the contingency period of 17 days. It gives the buyer 17 days to get her home into escrow. If during this time period of 17 days, the seller receives, say, a non-contingent offer, the seller is free to ask the existing buyer to remove the contingency to sell. If the buyer refuses, the seller can give the buyer 3 days and then cancel the buyer so the seller can accept the new offer. It’s a first right of refusal clause for a buyer.
Confused yet? It’s almost an art to engage in home buying and selling at the same time.
Of course, it’s easier for a buyer to first sell her home, put it into escrow, and then look for a home to buy, contingent on her home closing escrow. Or, a buyer can sell her home, close it and rent back for a while as she looks for a new home to buy. Or, a buyer can enter into a long escrow period, say 60 days, to give her plenty of time to buy another home.
However, with limited inventory on the market, the buyers with an existing home who will have the easiest time are those with cash in hand after closing or a loan preapproval letter and no home to sell (or a home she doesn’t need to sell to buy). Yet, it’s not impossible to project a successful outcome for home buying and selling at the same time. You just need to hire a real estate agent who knows how to do it for you. You can call Elizabeth Weintraub at 916.233.6759. I answer my phone.
Punxsutawny Phil Predicts 2014 Sacramento Real Estate
Punxsutawny Phil says this is the week in Sacramento real estate in which the rubber meets the road. When the market starts to hop like mad. Because finally, all of those winter vacations are pretty much over, the holidays are gone, the Super Bowl is finished — well, I heard it was finished in the first 12 seconds of the game, but I don’t follow football so I would not really know. But I do know almost everything there is to know about Sacramento real estate. Not ashamed to admit that.
2014 Winter Carnival in downtown St. Paul, MN
We can now freely hold open houses and not be freaking out over which football teams are playing, and whether visitors will come to the open house. The weather will begin to warm up a little bit, although we still desperately need rain, and I don’t care if it rains during an open house because people will still go out to look at homes in the rain. We are not wimps in Sacramento. We don’t cower in a little rain. Look at these photos of the Winter Carnival in St. Paul yesterday shot by my sister, Margie. It was 8 below zero.
2014 Winter Carnival Como Park, St, Paul, MN
On top of this, new listings are coming on the market. This Sacramento real estate agent has got about a dozen in the pipeline that I’m working on, and it’s these listings that will make up some of the March to May closed sales. You might think that May is a good time to go on the market, but actually May is a good time to close escrow. All of the activity for the next 3 months mostly originates in February. Think about that if you’re considering selling your home this spring. And be happy you don’t live in St. Paul, Minnesota where, dare I say once again just to remind you, it was 8 below zero yesterday.
Sure, we’ve got holidays this month but they’re not the type of holidays to interfere with real estate. I’ve got news for you: Punxsutawny Phil, the groundhog who saw his shadow yesterday, he wants you to buy a house. So do Presidents Lincoln and Washington and Obama. It’s the American thing to do, to own your own little piece of real estate, your own heavenly spot on earth.
Call Elizabeth Weintraub, your Sacramento real estate agent, at 916 233 6759. I answer my phone.
Photos: Margie Burgard, St. Paul Winter Carnival 2014
The One Thing a Seller Needs to Sell a Sacramento Home
The one thing sellers need to sell a home in Sacramento.
What does every home in Sacramento need to have to sell to a first-time home buyer who is obtaining financing? You might think the home needs a roof, and you would be right about that. Others might guess a floor and walls, and you’d be partially correct about that answer. Somebody else might suggest a kitchen, and while a home needs to have a sink and stove, it doesn’t need what you might call a full-blown kitchen or even a door to close off that kitchen area. The answer is every home needs a carbon monoxide detector.
Those carbon monoxide detectors have become the bane of our existence for a Sacramento real estate agent. I knew it when the law was passed that this would somehow trickle down to become the listing agent’s responsibility, even though it’s on the buyer’s behalf. Because although the law says homes are required to have a carbon monoxide detector, there are no carbon monoxide detector police about to crash that home and give the homeowner a ticket for not having a CO detector.
I imagine if the home burned down, and the insurance company could prove there was no carbon monoxide detector in the home, that the insurance company could find a way to reject a claim. But when a buyer pays cash and does not insist on a carbon monoxide detector, well, nobody will stop a seller from closing escrow without installing them.
The other question that comes up is how many carbon monoxide detectors are required in California for a home? Are they like smoke detectors and you need one in every bedroom? Nope. The law seems pretty clear that you need a carbon monoxide detector near the bedrooms. If you have a two-story house with a bedroom on the first floor, you need to install a carbon monoxide detector on each floor. If it is new construction, a carbon monoxide detector is required on every floor.
This might lead you to believe that if all of the bedrooms are upstairs you need only one carbon monoxide detector, as long as your home is not new construction. While, that might be the strict interpretation of the law, my experience shows that an appraiser will probably see this differently and most likely will require that the home have two carbon monoxide detectors. A third, if there’s a basement.
So, do yourself a favor. If you’re putting your home on the market in Sacramento, just make sure you have a carbon monoxide detector on every floor. The appraiser has the last word.
Here is handy fact sheet from C.A.R. about Carbon Monoxide Detectors in California. If you’re looking for more tips from this Sacramento real estate agent, feel free to call Elizabeth Weintraub at 916.233.6759.
Outbuildings and Old Garages Might Be in FHA Repair Requirements
A prime example of an FHA repair requirement
I’ve got a real pickle coming up soon with a new listing in Sacramento because it’s likely to sell to a buyer obtaining an FHA loan. Why is that a pickle, you might wonder? Well, back when cash investors were quickly snapping up every home that came on the market, real estate agents didn’t much worry about FHA repair requirements, but that’s not the case anymore. FHA loans are a big deal now because the investors have pretty much left the market.
The investors who remain won’t pay market value. They hit prices hard. I’ve yet to see an offer lately from an investor at or above the list price. They are all trying to grind. It makes you want to say whoa, thanks for driving up the prices, now stop trying to drive them down. Most sellers would rather sell a home to an owner occupant anyway. They don’t want to change the demographics of their neighborhood by moving in tenants. They want a first-time home buyer to purchase their home and love it as much as they did. Homes are very emotional vehicles.
Selling to a first-time home buyer means dealing with FHA (or VA) appraisers and being on the lookout for the types of items that could cause FHA repair requirements noted on the appraisal as a condition to fund the loan. Sure, FHA has guidelines for its repair requirements, but it’s also largely left to the appraiser, and not every appraiser shares the same opinion nor interpretation of the guidelines. An item one appraiser will note, another might miss or overlook or just not care about. It can be the luck of the draw.
The time to discover whether a repair is called out is not a few days before closing, though. It’s much better to be proactive and take care of this stuff beforehand. One item I am seeing pop up more often on repair requirements is an old outbuilding. That old storage shed or garage in the back yard that nobody uses and is rotting in the sun? Huge problem today. It most likely needs to be demolished and removed.
While meeting with sellers in Sacramento yesterday, I walked the property line with them. They had talked with several other agents and discussed whether the fences needed repair as a few boards were old. Turns out the other real estate agents were so busy staring at the fences that not one had pointed out the dilapidated garage. This big white elephant sitting in front of their faces. This is a structure that several decades ago was accessed by a long driveway, which no longer exists. The driveway does not exist because the lot was split. Today, the new garage is attached to the home.
This means not only is there no access to this old garage, but a person can’t so much as squeeze a small bulldozer into the yard, There is no way to get into the back yard, even by removing a fence. And the building has to go. Hello sledgehammer and wheelbarrow. Yet, another reason why working with an experienced Sacramento real estate agent is a huge benefit to a sellers.
Do You Need a Lawyer for a Sacramento Short Sale?
You may not need a lawyer in Sacramento to short sale a single family home.
Because of the liability that can befall a Sacramento real estate agent who does not tell a client to get legal advice when the client asks legal questions, every smart real estate agent will advise a client, especially a short sale client, to get legal advice — even if the client doesn’t really need a lawyer. Knowing this, a client might ask whether legal advice is necessary and, again, that is a tricky situation because we’re damned if we tell them no and we’re damned if we tell them yes. Besides, we’re not lawyers.
If a seller who is contemplating a short sale hires a lawyer, that seller will most likely pay the lawyer somewhere between $3,000 and $6,000. Out of pocket. Once — out of all the $65 million in short sales that I have negotiated over the past 8 years — I can recall only one time in which a negotiator agreed to pay a small portion of the lawyer’s fees. So, while a lawyer might tell a seller that they will ask to be paid from the proceeds of sale, it doesn’t really happen very often and, when it does, that payment is probably not in full.
If a seller who is contemplating a short sale hires a Sacramento short sale agent to handle the short sale, the commissions paid to the agent are paid from the proceeds of sale. There is no arguing with the negotiator about paying the agents because the commissions and all of the ordinary closing costs are paid from the proceeds of sale. Nothing out of pocket for the seller to pay, not to mention, a bank cannot under CA Civil Code 580e force a seller contribution; it’s against the law. A seller who hires a competent short sale agent basically gets the short sale completed for free.
Every so often, I might run across a situation in which the seller could use a lawyer’s assistance. It’s not to get a release of liability because you don’t need a lawyer for that. It’s not to avoid a deficiency judgment, because you don’t need a lawyer for that, as long as you’re doing a short sale. It’s not to advise whether the seller should do a short sale because short sales trump foreclosures. Short sales win hands down.
When I first started to do short sales, often I would refer the difficult cases to a lawyer, but I have discovered that I can handle them with ease (not to mention, laws favor the sellers now), so why not save the seller some money? Today, I might advise that a seller should hire a lawyer if the bank continually rejects the short sale for one reason and one reason only: because banks typically don’t want to mess with lawyers. Agents? Pfff.
I closed a short sale this week that I’ve been working on for almost 18 months, which is an unusually long period of time. We had received 3 or 4 rejections. I suggested that the seller hire a lawyer during the last go-around, but the seller said she could not afford it, and besides, she had “faith” in me. OK, I don’t give up — I have a ton of perseverance, and I am analytical. She begged me to re-submit one more time. I repackaged the short sale and resubmitted, and was accepted! Maybe short sale sellers don’t need a lawyer? Maybe sellers need only a top notch short sale agent who stays up to date on all of the changes in short sales?
Many lawyers hand over the package to paralegals or assistants and they don’t personally negotiate the file anyway. They also might not know much about real estate or have extensive experience in real estate. I’ve talked with lawyers who did not know how to fill out a HUD for Bank of America. The bell curve applies to just about any profession. You’ll find bankruptcy lawyers who offer to negotiate short sales because it’s another avenue of revenue for them. When short sales go away, they will go back to bankruptcy cases. Some will suggest bankruptcy alongside a short sale, which doesn’t make a lot of sense to me. You can’t do both simultaneously.
But people are afraid when it comes time to do a short sale and they don’t know where to turn. They think they need a lawyer to do a short sale. They are worried about consequences and liability and taxes when laws mostly remove those concerns. Will a lawyer tell a potential client that they don’t need a lawyer to do a short sale? If you ask a real estate agent if this is a good time to go on the market, what would an agent say? Same deal. Except most people in California do not need a lawyer to do a short sale.
