Email Elizabeth
Elizabeth Weintraub
The Advantages of Owner Occupant Buyers vs Investors
The pendulum has finally swung in favor of owner occupant buyers vs investors in Sacramento. For years, first-time home buyers played second fiddle to investors. Losing out on offer after offer during multiple-offer situations. Investors often presented short closing time periods with cash or hard-money offers, and buyers struggled mightily to compete. When sellers considered, for example, a first-time home buyer using FHA financing and down payment assistance, they said no way, Jose.
It’s not that FHA loans are bad, but they do require certain repairs, no peeling paint, might have to clear a pest report. Not to mention, with down payment assistance, the qualifying is so restrictive that sometimes buyers who have been told they can buy find out they cannot. Not every lender qualifies buyers by closely scrutinizing finances. In fact, some just run the file through desktop underwriting and call it a day.
However, the good news in our new Sacramento real estate market — and make no mistake, this is a new market — is owner occupants rule. When it comes to choosing between an owner occupant buyer vs investors, sellers will often select the buyers who will move in.
For several reasons. First, an owner occupant, a person who will live in the property, often develops an emotional attachment to the home. When buyers are emotionally involved, they tend to overlook smaller defects and will forgive imperfections; whereas investors are typically more analytical. Second, an owner occupant is not trying to make the property “pencil” i.e. provide a specific rate of return on cash invested, like investors. And third, not every occupant feels they must underpay, so lowball offers are not as prevalent.
This attitude is especially apparent in probates and successor trustee sales. In these types of transactions, often there is a sense of loss for the person who died. Heirs want to do pono (right) by the deceased. When presented with owner occupant buyers vs investors, they will often take the buyer who has developed feelings for the home and will carry on an affection for the property. As compared to an investor who will strip it, flip it or turn it into a rental.
In fact, I just closed a sale like that yesterday. A client who moved to Abu Dhabi asked me to sell his father’s home in North Highlands. It didn’t take me long to figure out he needed a probate lawyer because he was the executor, so I referred him to a probate lawyer. This delayed listing the home for 4 months, but it also gave the seller time to clean it out.
First go-around we received four offers ranging from $150K to $180K from investors. We listed at $195,000. This meant I had to endure long conversations with well meaning buyer’s agents who tried in vain to persuade me that the home was priced too high for them. Well, my job is to maximize seller profit potential; it is not to appease guys who want a deal. We accepted a full-price offer from an owner occupant and got all the way to closing before the buyer canceled. Cold feet, I suspect.
No Sacramento Realtor likes selling a home twice and getting paid once, but it happens.
Second go-around we received another four offers. These ranged from $159K to $180K, with an FHA buyer at $190K who changed his mind, and then, YES, another buyer who offered $200K. Guess which was the owner occupant? The guy who offered $200K. We had a couple of small delays but we closed escrow yesterday at $200K.
The seller grew up in this home. The only home he ever knew as a child because his parents never moved. You can bet he is thrilled that another buyer will raise a family in his childhood home. 4275 Sloan Dr, North Highlands, CA 95660 closed escrow at $200,000 on October 30, 2018.
Should You Buy a Mini Split System in Sacramento?
Working primarily with sellers, I had not heard much about whether buyers should buy a mini split system in Sacramento. Why would I? Probably because most of the homes that I sell in Sacramento have central air conditioning systems already installed. Understandably, it is super difficult to be comfortable during our hot Sacramento summers without air conditioning.
I know, I know, back in caveman days we didn’t have AC when I was growing up. We danced through the sprinklers fully clothed or went to the lake to go swimming. Only rich people and Dayton’s department store on 7th and Nicollet could afford the luxury of central air.
But today, we have alternatives to central air: the mini-split system, also called ductless AC.
Staying cool was a major concern 16 years ago when I moved from Minneapolis to Sacramento. We turned on our AC in Minneapolis for 2 weeks out of any given summer. Having to turn on AC in the morning and use electricity all day until 6 or 7 PM to cool the house sounded really foreign to me. I interviewed a bunch of people, asking what number they set the temperature at and how much it costs. Concerned it would be $500 a month.
Of course, now I’m used to it. We pretty much leave our thermostat set at 78. But I can see how home buyers purchasing a home without central AC might worry about summer heat in Sacramento, because triple digit heat is common. Not to mention, every so often I sell an older bungalow or Victorian without AC. Whether buyers should buy a mini split system in Sacramento depends on the size of the home and how much a buyer wants to spend, among other factors.
Although I haven’t verified it, I’ve heard you can get a mini split system installed in Sacramento for about $4,500, parts and labor. However, I can tell you that it works well because we just installed a mini split system, a 36,000 btu Daikin, at our house in Hawaii. It’s a small house with vaults and an open floor plan. I was a bit worried that the third bedroom would not cool off, but it’s OK.
If you’re wondering if there are good reasons to buy a mini split system in Sacramento, I can tell you first hand the answer is yes. We placed our unit on the wall by the TV. The vents oscillate to direct air or it can blow directly. It is quiet, whisper quiet. There is a super-power button to instantly cool if you walk into a hot house. You can set it to work on auto or various speeds. And it is more efficient, uses less electricity.
We replaced 3 ECM motors over the past 18 months. In fact, I’ve been without AC in Hawaii for the past two weeks. I found out why after my horrible day, a time when life throws curveballs all in one day, one after another. Our previous AC guy gave us back our money. Because he knew the ductwork was screwed up. It’s like the installers got drunk, pitched the unit into the attic and threw duckwork at it. No elbows. No sharp turns. No cohesive setup.
Our choices were tear out a wall, remove all the ductwork and buy a new AC system or buy a mini split system. The Daikin mini split system also comes with a 12-year warranty. It seems slightly better than the Fugitsu and Mitsubishi. Look at that footprint of the compressor in the yard. The old compressor was twice as tall and three times as wide. This system reminds me of an old desktop computer. Now, the unit is not visible over the fence or from the street.
When I think back to my trip to Vanuatu, I realize I had mini split systems in the house I rented there. You can buy dual systems and put smaller units on the walls in closed rooms for homes without an open floor plan. That way you run the unit only in the rooms you use. But it’s a far cry from the days of window AC units. Those things rattle, shake, are noisy and run up an electric bill.
A mini split system is more like central AC except cheaper, more dependable, more efficient and quieter. What’s not to like?
Establishing Priorities from a Top Sacramento Listing Agent
Establishing priorities comes very easy to this top Sacramento listing agent. For example, after 44 years in the real estate business, I know what is important. People who rely on you. Younger agents are often all over the board on this but not me. Just like Lyon Real Estate values its agents and makes agents its #1 priority, I identify with that approach and have established my own priorities. Lyon has always been good to me (except that one time a long time ago). Everybody makes mistakes.
But I am not a drama queen.
If a loose cannon gets bent out of shape, Lyon will smooth it over because they take care of their agents. I know without a doubt that the managing broker of my office always has my back. No matter what. They know me, my personality, my quirks, as I’ve been working at the Sacramento midtown office of Lyon for 15 years now. That’s a long time not to jump ship, fly the nest. Because Lyon is a good brokerage. #1 in Sacramento. I am also its #2 agent, out of 17 offices and almost 1,000 agents.
Establishing priorities for me means I never ask my team members to do something I would not do myself for them. I screen many of our buyers, too, and will jump into any transaction if I am needed. Barbara Dow and Josh Amolsch are not just team members to me. Or only marvelous exclusive buyer’s agents, which they are. They are also my dear friends and I love them to pieces. Moving heaven and earth for either is not too much to ask.
All three of us have a method of operation identical to each other. Establishing priorities for us means one thing. Our clients come first. They always come first. Like yesterday, I caught a community theatre performance of The Addams Family the Musical. What a hoot. But a client texted and wanted to discuss a potential buyer. I shared all the information I had during intermission.
Sure, I could have gone to the concession stand and picked up a bottle of ice cold water, but no I sat thirsty in my seat (because I am demented) and texted with all of the parties involved. Primarily the seller. My sellers know everything. I keep no secrets. Because I only work with sellers I care about and, sure, some are more challenging but that does not make anyone any less deserving of stellar service. I care about each and every client.
Some of this is probably because my own immediate family, outside of my husband (also an orphan), has shriveled. My brother died a year ago, my parents are gone, and I have only a sister and niece, whom I rarely see. An aunt in New York who doesn’t write. My other sister has faded into non-existence, blended into a lonely wall in her house where she sits all alone.
In a way, the sellers I work with become my family. My team members are also family. I dunno, do you think that is weird?
When You Have to Report a Real Estate Agent
Trust me, nobody really wants to report a real estate agent. But sometimes the violations are so flagrant one must. We all make mistakes, honest mistakes. We’re only human. But what about the agents who deliberately set out to deceive and then claim they made a mistake? Or worse, refuse to rectify it? I wonder if I should report them. On the one hand, I pretty much leave other agents alone and don’t turn them in, even when I spot blatant, unethical behavior. I’m not the ethics police.
Although, there was that agent who published a map of “bad neighborhoods” in Sacramento. On top of that, he gave the areas racist nicknames and thought he was clever. That was beyond an ability to ignore so Fair Housing heard about that. I subscribe to the theory that you don’t want to be part of the problem. That agent? He moved his operation to Arizona and is still selling.
Whether to report a real estate agent for a violation is one thing, but another aspect is whether one should one talk about it in public. If it’s information the public should probably know, I say, yes, even if it tends to taint the profession. Other agents may disagree. Agents as a group try to protect each other so nobody discovers what idiots some are.
So, I’m just gonna tell you what happened. Without naming the website, I tried to update a new listing but the site told me the home had been claimed. Not surprising; it was listed before. I clicked on the details and noticed the home was listed for sale by an agent other than the previous listing agent. But it had the old listing number attached to it.
I called the seller to find out if she had any knowledge of this agent. Nope. The seller called the agent. Immediately, the agent dove into bait-and-switch mode. The seller made it clear that it was her home she was calling about and she was not a buyer. The agent mumbled something about this being a very confusing situation and promised to remove it.
A few days went by, and the listing was still published under that agent’s name. Hmmm. I wondered how many other Sacramento listings were swiped and misrepresented. Usually, people who would do unethical things do other unethical things. That agent had a couple of pages worth of listings. I ran the first 5 addresses in MLS. Not one listing belonged to that agent.
I finally notified the staff at that website, and several people responded. It’s difficult to regulate, they say. Well, how about you make the poster check a box that says, “If this listing doesn’t belong to me, I authorize you to charge my credit card a $1,000.” I heard giggles. At least the website removed the listing.
Why should the public care? Because the Internet is unregulated. It’s difficult to trust some of what you read. You should not rely on information found on questionable or unknown websites. If you’re searching in Google for “how to make dog biscuits,” you might not want to follow the recipe published by survivalists-who-eat-dogs dot com.
Nobody wants to report a real estate agent. It’s a big hassle and half the time the authorities do nothing because they do not understand the finer nuances. I recall a time an out-of-area agent wanted to co-list a home with me, and I did not want to co-list with that agent. That agent gave me his marketing plan that included cutting out buyer’s agents so he could double-end all of his transactions. That was his schtick. Unethical. Against MLS regulations, too.
The California Department of Real Estate did not care. This is what we face. Ambivalence.
How to Tell if You’re Not Ready to Buy a House
While few agents are in the business of talking people out of buying a house, some buyers are not ready to buy a house. Oh, a buyer might think she is ready but down deep she is not. For starters, if you do not have a preapproval letter, you might not be ready to buy a house. This is assuming, of course, you are obtaining financing and not paying cash. Or, perhaps your benefactor is buying the house on your behalf, in which case, no preapproval required.
Another way to tell that you are not ready to buy a house is if you find major flaws in every house you look at with your agent. Enough serious drawbacks to know that none of the houses you viewed for the past couple of weeks fit what you desire. In that event, you should reassess with your agent your priorities. Are you looking for a unicorn house? That could be a sign that you need to design and build your own house.
Few houses are perfect, except, of course, the home you build yourself. Most buyers make concessions because they know they will not find everything on their list. If you want to buy a house with a view, for example, you might need to give up another requirement to get that view. Or be willing to make upgrades to outfit the house the way you want it.
Some buyers cannot find anything to buy in their price range or they harbor unrealistic expectations about what they can get for their money. They might spot a short sale, for example, that is severely underpriced because the listing agent is an idiot. Then, they take that particular listing and fixate on it, hoping to find another priced the same way. Which they won’t because that listing is not a “real” listing.
Another way to know a buyer is not ready to buy a house is the cold feet syndrome. Especially after going into contract to buy a house. Some buyers develop cold feet within a few days. Other buyers can make it all the way to loan docs before they freak out. If you have misgivings or an inner voice pulling you in another direction, you might not be ready to buy a house.
Just last month I encountered an odd situation. I sold a bungalow near downtown Sacramento to four different sets of buyers. Each went into contract and each group canceled without provocation. That poor seller. I felt a lot of empathy for him. Because there was no explanation. Other than the fact we can’t pick our buyers, that’s the buyer’s agent’s job, and somehow every single one of those buyer’s agents also failed.
Most committed home buyers who are ready are very excited. They are jazzed and ready to go. It is not unusual to fall in love with house after house and have a hard time deciding between a handful of homes because they are all so gorgeous. So many of those homes fit the bill of wants and needs. There is anticipation that the next house will be “the one.” Buyers who are ready can’t stop talking about their purchase.
If you feel so-so about it and are not consumed by a passionate driving force to settle down in your own house, you might not be ready to buy a house. That’s OK, too. Your Realtor is your advocate.
