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Elizabeth Weintraub
Must a Sacramento Seller Accept a Full-Price Offer?
A Sacramento real estate agent can bring her seller a full-price offer, but she can’t make the seller sign it. Not if the seller flat-out refuses. You might wonder what kind of seller would turn down a full-price offer, and the answer would probably astonish you. All kinds of sellers would do this. Smart sellers, ignorant sellers, wealthy sellers, dirt-poor sellers, sellers who live in the country and sellers who live in the city — it doesn’t seem to matter.
What I suspect is bringing on this baffling phenomenon is the rising market in Sacramento. Sellers hear all about multiple offers and they mistakenly believe that it is permissible to demand a higher price when the seller receives an offer. I now make it a practice to have this discussion with my sellers before we go on the market. I explain that if we receive a full-price offer and no other offers, then the seller needs to accept the full-price offer. You would think that an agent would not need to explain how real estate works, but she does:
- Johnny offers a product for sale at X dollars.
- Susie offers to pay X dollars for the product.
- Johnny gives Susie the product in exchange for X dollars.
Johnny can’t say, no wait, now that you have decided to buy my product, I want to charge you more for it.
Sellers don’t live and breathe real estate the way a Sacramento real estate agent does. Because it’s not their job. They are doctors and lawyers and business executives.
Probably the worst example that has happened to me lately was a seller who owned a home under the freeway. Not only was the home located under a freeway, but it was next to a commercial franchise business. Not only was the home under the freeway, next to a commercial franchise business, but it was on a busy street, and not one busy street but pretty much the intersection of 3 extremely busy streets with a lot of traffic. I wondered to myself, what would be a worst location? Graveyard? Next to a school? Across from a church? Nope, probably a worst location would be next to a garbage dump or maybe a toxic waste site.
Location, location, location. The number one rule so many forget.
But I don’t judge the properties I sell. Some sell quickly and some will require that one special buyer, and I do a pretty good job at finding that one special buyer. Some homes don’t appeal to the masses but only to a select few. The reason a person would buy a home in the above type of location is if the home was the least expensive home in the neighborhood. Finding that sweet spot in the pricing can be challenging as well, but not impossible.
When I brought a Sacramento seller a full-price offer and the seller uttered the dumbfounding words: “I’m not signing that,” I was blown away. It was the third time in a few weeks that has happened. This was an offer that would release the seller from a bad investment that he should have never made in the first place. The offer paid off his back taxes, delinquent utilities, many years of unpaid interest, all of his loans, the commission, all costs of sale, plus it put a nice chunk of change into his pocket. Moreover, it was an offer for a little bit more than his list price. The buyer was willing to purchase the stripped and vandalized property in its present condition. Where are the smelling salts when you feel faint?
Sellers don’t understand that they cannot issue a counter offer for more money. A seller cannot put a home on the market, get an offer at the price advertised, and then decide they want more money because that could be called false advertising. It could be considered against the law to advertise a property under false pretenses.
Say, I am a grocer. I stick a big sign in my window that advertises 5 pounds of apples for $1.00. You walk into the store, spot a 5-pound bag of apples, bring it to the cash register and hand the clerk $1.00. The grocer can’t pop out of the back room and demand that you pay $2.00 for that bag of apples. You might feel like you were a victim of bait and switch, wouldn’t you? Same thing.
The Highest Per-Square-Foot Home Sold in North Highlands
Holy toledo, I just closed the highest per-square-foot cost home in North Highlands over the past 6 months! This is a typical 1957 tract home, about 1,100 square feet, located in a quiet neighborhood of similar homes, in which the highest priced home sold at $140 per square foot. This home closed at $177. You think we didn’t struggle with the appraisal? You betcha we struggled.
When the appraiser called to make an appointment, I mentioned that if she needed additional comps, she could feel free to call me. That’s polite code for if the home won’t appraise, let me know and I will help. See, I think it’s very insulting for a Sacramento real estate agent to throw comparable sales at an appraiser. It’s telling the appraiser that the appraiser doesn’t know how to do her job. It sends an demeaning message, but agents don’t stop to think about how an appraiser interprets their “assistance.”
Some agents will meet appraisers at the property and hand the appraiser a list of comps. I imagine the appraiser throws them away in disgust. It’s like saying, “Hello, welcome to my neighborhood, you dumb cluck.” I didn’t tell the appraiser that I knew more than she did. I didn’t suggest that she couldn’t perform her job. I didn’t even say if she had a problem that I would help. Because I knew when she ran the comparable sales, she would not be able to justify the sales price.
Sure enough, she sent an email asking if I would send her additional comparable sales. I know the parameters for an appraisal. I know what’s acceptable, which is not exactly the parameters a Sacramento real estate agent might use. I found 3 comparable sales that supported the per-square-foot house with similar sized homes and condition, formatted those comps into a 3-up comparison and sent them.
The home appraised at value. We closed escrow on Wednesday. Sellers who initially thought their home might be underwater are now dancing for joy in their new home in Arizona!
If You’re Tired of Your Sacramento Agent
It seems like lately I’ve been contacted by sellers and friends of sellers who want to cancel their existing listings and list with me. For whatever reasons, they are unhappy or they feel like they are not getting the service they expected. Sometimes, this is the fault of the listing agent and sometimes it is not. I won’t know until I actually talk with the sellers and hear the story. However, there are always two sides to a story.
Like yesterday, a seller contacted me to say she wanted to buy a home in East Sacramento. Apparently, she is selling a home in Natomas and has decided that she and her husband should try to buy a short sale in East Sacramento, a home priced around $300,000 to $400,000 that would actually be worth $500,000 to $600,000. Yes, I know what you are thinking right now, dear reader. You are thinking that I should have hung up the phone or not corresponded with this particular person, but President Obama says we should be nice to people who have mental deficiencies. That a mental disease is not a reason to shun people or pick on them or discriminate against them.
I wanted to make sure I heard this person correctly and to double check if she had indeed put her home on the market in Natomas. So I queried as to whether she was asking me to list her home in Natomas and buy a new home East Sacramento. She replied that her home was already listed by an agent but her agent was too busy to help her buy a home in East Sacramento.
That didn’t make sense. Agents are rarely “too busy” to help a client. It’s what we do for a living. We sell real estate. Even if an agent was otherwise occupied, perhaps taking a vacation, for example, an agent would refer the client to another agent who had time. There must be something else going on. So, I asked the person to give me her agent’s name and phone number.
That was the last I heard from her.
Generally, I will call other agents before accepting a listing. Just to hear the other side of the story and to assure the agent that I am not in the business of soliciting other agent’s clients. That’s not how I do business. I don’t swipe somebody else’s clients. Most of the time what I discover is there is a lack of communication. Sometimes, the relationship terminated due to agent ineptness or carelessness or inexperience. But rarely is it malicious as people sometimes suspect.
If I spot a listing that is on the market for a few days and then canceled, generally, that’s not a listing I want to take. It’s a clear signal there is something wrong, and let’s just say it’s not the agent.
When You Think the Location in Sacramento Doesn’t Matter
The seller who made an appointment with me to assess her home and its value canceled last week. She called to say another agent had persuaded her son to list with that agent so she did not need to speak to me. She further elaborated that the agent had greater exposure. Hmm . . . what was the comparison? After all, in 2012, I ranked as the #2 agent at the #1 company in Sacramento. It’s difficult to put a real estate phrase into Google without finding my name. But then I dropped the matter. I did not want to list a house that was slammed up against the freeway all that badly. Not as badly, apparently, as the agent who pushed for the listing and came up with whatever was said.
Nope, I will give it to my sellers straight. I don’t need to fabricate numbers or paint a rosier picture of myself than what exists. You get what you see with this Sacramento real estate agent.
As real estate agents, we can’t always choose which properties we sign on to sell. Well, sure, we sign the listing agreement, and we don’t have to do that. We could turn down the listing, and some agents will turn down certain types of listings. Sometimes, agents won’t take listings under a certain dollar value or in a certain neighborhood, but I don’t discriminate. I will list and sell just about anything that is located anywhere. It’s all real estate. Some sales are just more challenging than others. Sure, I love that beautifully staged home in Granite Bay, but I’ll also list that water-logged, varmint-infested roach motel. I’m flexible — like a round peg in a square hole.
Just this morning, I explained to a seller that he shouldn’t get upset with me because I was not the agent who sold him the house, which is located in about the worst location possible in Sacramento. The only worst kind of location, would be next to garbage dump. Location is everything in real estate.
People forget. They get caught up in the excitement of buying a home and they don’t stop to think about location. The next time location pops into their head is when they are trying to sell. That’s when they realize the home they bought is not in a desirable location. Homes in desirable locations quickly sell. Homes in not so desirable locations take longer to sell and sell for much less than others around them.
The time to think about location is when you buy that home.
Giving a Sacramento Short Sale Guarantee
We have buyers right now who want us to guarantee that their Sacramento short sale will close. They have short sale approval from the lender, they are paying cash, they have completed all of their investigations. The only people who would most likely prevent this transaction from closing is themselves, yet they would like us to guarantee their performance.
These are the types of buyers who early on might insist upon an authorization letter so they can talk to the bank. That’s not gonna happen. They are cautious every step of the way. Well, I might want to talk to the Pope, too, but it ain’t gonna happen.
What we have here are buyers who want to remove all risk from a transaction. There is no way to remove all risk. One can minimize risk and manage risk, but not prevent it entirely.
There are no guarantees in real estate and even fewer in a Sacramento short sale. Only odds. The likelihood is this Sacramento short sale will close without a hitch, and hopefully the buyers won’t do anything to screw it up. But I’ve seen it all as a Sacramento short sale agent and nothing really would surprise me anymore.
