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Elizabeth Weintraub
Sacramento Real Estate is Not About Crossing Bridges Twice
A client emailed to say he admires my optimism. As a Sacramento real estate agent, I am pretty much required to be optimistic because if I let every little thing get to me, I’d be a mad woman. Without optimism, I’d be crouching in a corner, knuckles dragging the ground, frizzy hair in my face, licking the asbestos and giggling to myself.
Not only am I an optimist, but I am a problem solver and am paid to anticipate problems before the happen. If a problem slips past me and blows up into a full-blown “situation,” I am responsible for deflating it, managing expectations and resolving issues. Happy endings, that’s what I strive for.
I want my real estate clients to be happy when we go into escrow, during escrow and when escrow closes. I want no doubt in their minds that I did my job to the fullest of my abilities, and that I performed a good, no . . . a GREAT job.
Selling a house is stressful for sellers. First, they worry nobody will buy it. Then they worry buyers won’t pay enough. After that, it’s whether the buyers will really qualify for their loan or if the lender will find some reason to deny it, whether the home will appraise at value, if the buyer’s home inspection will reveal some ugly truth that requires resolution or renegotiation. There are a million things to worry about. Or not.
When clients ask me what can go wrong, thinking they can prepare themselves, my answer is there is no reason to cross a bridge a twice. Especially when one may never cross that bridge at all. There is no reason to bring heartbreak or anxiety into a transaction if it doesn’t belong there.
How Sacramento Flipper Homes Are Changing the Market
On our way home from the Tower Theatre in Land Park yesterday, my husband and I stopped at the Target store on Broadway. I didn’t want to go in, but he made me. I don’t enjoy the Target shopping experience like he does and, besides, they moved everything around since I was last there back in the Stone Ages. We walked by the Mother’s Day card aisle. This was the middle of afternoon on Mother’s Day. It was crowded with people looking at Mother’s Day cards. I wanted to stop, thrust my hands to my hips and yell in a very loud voice: REALLY? You can’t get it together before Mother’s Day? You wait for the last possible moment?
I refrained because I know that other people are not always organized, we all lead busy lives with not enough time for the essentials, and I should not be judgmental. Or, maybe I felt that way because first-time home buyers in Sacramento are developing such high expectations that I want to strangle some of them. Buyers are pretty darned judgmental. Don’t get me wrong, Sacramento home buyers have a right to be judgmental, it’s their home, but some of those judgments are being manipulated.
I know this because 4 or 5 years ago, a buyer would walk into an older home in Land Park, East Sacramento or Curtis Park and ooh and ah over the architectural features and original detailing. Buyers loved to caress the stained wood doorways, tug on the tassel lights, admire the basket-weave tile in the baths. Now, they walk into the kitchen featuring an original washboard sink and blurt, “Whoa. This is not Elk Grove. Where are my granite counters?”
And you know where they get this idea? From the investor flippers. There are so many flipper homes in our marketplace right now, tearing the guts out of homes, stripping these historical legends down to the studs, and pouring in cheapass materials, installed by cheapass labor. Buyers don’t know if there are a swarm of termites in the kitchen walls, and they don’t care because they are loving those granite countertops.
If you are buying a flipper house, be careful. There are many flipper homes in Sacramento in 2013. Some of these homes were ruins that investors picked up for pennies at foreclosure auctions on the courthouse steps. These types of homes could have sat untouched and vacant for years. You don’t know if there is mold in those homes or if they were flooded, vandalized or smeared floor-to-ceiling with feces. I’ve sold some of them in that condition, and I know what they look like.
Throw on a coat of paint, refinish the hardwood, stick in the Ikea cabinetry, replace all of the appliances with low-end new and voila, you’ve got all these flipper homes ready for the market. Because first-time home buyers will buy the bells and whistles.
The flipper syndrome affects our Sacramento marketplace because the landscape of our marketplace is changing. If your home doesn’t have updates, it’s considered a fixer and first-time home buyers will pay a lot of less for it. We can thank the flippers for that attitude.
If you’re looking to buy or sell a home in Sacramento, call Elizabeth Weintraub at 916.233.6759.
Is Your Sacramento Home Listing Under Priced?
You’ve got to love this crazy seller’s market in Sacramento right now, even if you’re not a Sacramento real estate agent who sells a lot of listings like me. It challenges an agent to be her best each and every single day. Sometimes, being your best involves biting your tongue a little bit, and other times it means providing lengthy explanations to your clients so they thoroughly understand the marketplace. In my experience, an informed seller is a happy seller.
A buyer’s agent in West Sacramento told one of my sellers yesterday that her buyer would have paid almost $150,000 over list price for her home that went into escrow last week. The agent claimed the home was deliberately under priced. First, the home was in pending status, so why the agent was over there talking to the seller is beyond me. Second, it violates the Code of Ethics to discuss pricing with a seller when that seller is represented by another agent. But those are minor irritations when looking at the big picture. The big picture is that statement is a big, fat lie. Oh, man, no wonder people are confused.
This seller’s home would not have sold for more than it sold. It was not under priced. Not in a seller’s market. It’s literally impossible to sell an under-priced home in a seller’s market for less than market value. That’s because no matter how much a seller wants and asks to get, the market will dictate. Buyers are not stupid. OK, maybe some of them are a little undereducated about comparable sales and market movement, but buyers will pay about what a home is worth. Especially when facing a multiple-offer situation.
If a home was worth a hundred thousand dollars more, don’t you think a buyer somewhere, anywhere, would have offered a whole lot more for that home? Yes, they would, because that’s how multiple offers work. When buyers discover a seller has received 5, 10, or 20 offers, buyers tend to put their best offer forward. Buyers who can’t think of any other way to make their offer more attractive to a seller will tend to offer a higher sales price.
Aside from of all that, homes need to appraise at the purchase price, what an appraiser calls “at value,” if the buyer is obtaining financing. It’s pretty darn difficult to pull an appraisal out of thin air these days. A home is worth the price at which others around it of similar square footage sell. There is no magical fairy about to tap her wand and dump hundreds of thousands of dollars on a seller’s doorstep just because a buyer’s agent wishes it.
Do You Have to Tell a Sacramento Real Estate Agent She’s Not Hired?
This Sacramento real estate agent focuses on her own business. I don’t spend time worrying about my competitors in Sacramento (i.e. other real estate agents) because they’re gonna do whatever they’re gonna do, and whatever that may be doesn’t really concern me. So, sometimes, it’s a bit astonishing if a seller tells me that I have a won a competing situation in which I did not know I was actively competing. It’s not really any of my business if a seller is talking to other real estate agents before they hire me, just as long as the seller hires me. I usually don’t even ask.
When a seller calls to discuss selling her home or wants me to pop by for an estimate of value, I presume the seller is interested in selling her home. Hey, guess what? I’m in the business of selling homes. How lucky is that? I go over, help sellers figure out what price to list at, and then I list the home for sale, bring an offer, and I sell it. Last month I had a very upset agent call and ask why I listed a home she had worked on for half a year. Well, first, the seller didn’t tell me anything about that and, second, that’s what I do for a living. Maybe the seller thought it was OK to call a bunch of agents and pick the agent’s brains or that no agent would want to list the seller’s home, but that would mean the guy was insane.
If a seller calls this real estate agent and is planning to sell, it’s my job to do it. When one of my sellers from last week called to say she was ready for me to put her home on the market, she mentioned that she had specifically chosen me among several other agents in Sacramento County and Placer County. She wanted to know what she should say to the agents she did not hire. How should she break the news to them that she hired a different Sacramento real estate agent or should she break the news at all?
Yes, I believe so. I let her know that the professional way for an agent to respond when informed that the seller selected somebody else is for the agent to say, “Thank you for telling me; you have chosen a good agent.” Because that’s what I would say if the tables were reversed. Doesn’t mean I would be happy about it, but I’d accept it because what else can you do? Being in sales means sometimes you’re rejected. Sellers have all kinds of reasons why they choose an agent.
Should You Do a Loan Modification or a Sacramento Short Sale?
Many underwater sellers in Sacramento, by 2013, have most likely tried to do a loan modification or have successfully closed on a short sale. I suspect most of the extreme financial hardships have been resolved and the strategic short sales have been executed or denied by this late date, because many homes have been underwater in Sacramento since 2005-2006. That was the first wave. The next big decline happened in 2008.
Five to 9 years is a long time to struggle with an underwater home. Because of today’s marketplace in Sacramento, some of the borderline underwater homes are turning into equity sales. However, if your home value has fallen by 50% or more, I don’t see any hope for you. Can’t sugar coat this. You won’t regain that equity in my lifetime. There are basically 3 ways out and with few exceptions, only the short sale is the permanent solution.
You either do a HARP refinance (if your loan is Fannie Mae or Freddie Mac) a loan modification or a short sale. If you do a loan modification or a refinance (with the refinance really being a loan mod in disguise), the only thing that really makes sense is if the lender will reduce your principal balance, erase a good chunk of it. Because if not, you’re simply reaffirming a humongous debt that you’ll never ever repay unless you live in that house until you die. And even then, you’ll pay twice as much as you needed to pay. Most banks will NOT reduce a principal balance.
You might wonder why would banks give you a HARP refinance or a loan modification if it wasn’t a good deal for you? Because they don’t give a crap and they want to stop their own bleeding. Banks don’t really care about you. They care about their stockholders and whether the government will continue to sue them, and all sorts of others things, but not you.
You also can’t pursue a loan modification when you’re trying to do a short sale. I had an investor client start out to do an FHA short sale about 6 months ago. We were getting him preapproved for the ATP before going on the market. Mid-stream, ?he decided he wanted to do a full-blown loan modification, so we had to drop the short sale. Not only that, but he was advised not to do the loan modification because he did not live in the property, and FHA will not do a loan modification for a homeowner who does not reside in the home. I sent the homeowner the HUD guidelines, which clearly stated such, but he wanted a miracle and was hoping for something magical to happen. I understand that homeowners are confused and directionless at times.
His loan modification was denied, of course. But getting that denial did make it easier to get him the Approval to Participate in an FHA short sale. I am working with several other sellers who were granted loan modifications and are now waking up to the fact that they will never get out from being underwater. They will always owe all of that money! And some of them no longer can afford to pay the minimum or reduced payments under the loan modification.
The Rip Van Winkle loan modifiers in Sacramento are waking up. That loan modification is not a very good deal for you, is it?
If you’ve got a loan modification that is cause for concern and you want to dump that home so you can buy the same type of home again in two years and be done with this mess, call me. I can put an end to this suffering. I’ve been doing Sacramento short sales since 2006 and have closed hundreds. Last year, I sold $32 million. Call Elizabeth Weintraub at 916.233.6759.
