Email ElizabethWinter Months for Sacramento Real Estate Offer a Window
There’s a hard rain gonna fall, and I’m not talking about the drought in Sacramento but am instead focused on the real estate market coming up over our winter months. Some people are likely on the fence about whether this is a good time to sell and also buy a home. They wonder whether spring would be a better time, when there is typically more activity, more inventory and higher prices. There is one thing you probably haven’t stopped to consider: interest rates.
Interest rates will lead the real estate market next year in 2015.
When the Fed stopped buying bonds, that’s the long-awaited signal that interest rates will begin to rise. Rates have been artificially suppressed for years. They’ve been held down to stimulate the housing market and the economy but we’re just sitting on a ticking bomb. Sooner or later we have to lift our big fat butts off the rates. 2014 rates are already ahead of the average annualized percentages from 2013. And they will continue to go up.
People forget what a normal real estate market is like. They forget when 9% was considered a very attractive interest rate, or maybe they weren’t born yet. As a real estate agent, I have worked through real estate markets in the late 1970s when interest rates hovered at 18%. Interest rates have a huge affect on a home buyer’s purchasing power. Buyers are often too focused on sales prices when they should also pay attention to interest rates.
If a home seller waits until spring to sell her home and buy another, she might get a little bit more for her existing home, but that upleg, her new home, if she’s moving up, will also under those circumstances cost her more. There is no tradeoff there. Economists are predicting a slowing market for next year with appreciation edging toward 4% to 5%, if we’re lucky. If not, prices might remain stable.
But the one thing that is more likely to move than anything else is your interest rate. Consider this, every 1% increase in an interest rate will roughly lose a home buyer about $25,000 of purchasing power. A 1% bump means you may no longer qualify to buy that $300,000 home and must consider those in the $275K range. It’s not like the old days when you could wait for rates to fall and refinance at a lower rate. Those days are gone. Your window of opportunity is today.
Types of Sacramento Mortgage Lenders Who Don’t Give a Crap
There are many reasons to use a local mortgage broker when buying a home in Sacramento, but there are sometimes more reasons to rely on a person who is paid on commission over a person who is paid a salary. Yeah. It makes sense. I’m not saying every salaried person hates their job, but enough do that they often develop lackadaisical attitudes. A person paid on commission cannot afford a “who gives a crap” attitude or she’ll end up standing in the soup lines.
It’s probably not even a conscious thing. These guys don’t go into the bank to work with a screw-you mentality, and they probably don’t actually plan to mess up a home buyer’s closing, but dollars to doughnuts they are not emotionally invested in anybody’s time to move. They’re not the guys sitting on packed boxes, twiddling thumbs and staring at their silent iPhones. They’re the people for whom the lunch hour is but minutes away and there’s a new place down the street they’ve been meaning to go to try the tacos. They punch out and go.
Meanwhile, calls go to voice mail or the lender’s voicemail box is full. Emails go unanswered. When the lenders do respond, it’s to say the file is still in underwriting, and they let it go at that, feeling they have fully explained the quandary about why the buyers can’t move into their new home over the weekend. Where did they put that appraisal? It was right there on their desktop a moment ago. Oh, look, here’s a YouTube video of a cat chasing chicken treats.
It’s not just banks that employ these types of people on their payroll, credit unions are guilty of this, too. The employees are just doing a job to the best of their ability. I think it’s the Peter Principle on display. Perhaps they’ve risen to their own level of incompetence.
Of course, there are commissioned individuals who develop poor work ethics, too. I’m not saying all people on commission are motivated, but if I would have to choose between a banking institution or a local mortgage broker, I’m going with the Sacramento mortgage broker whose personal reputation is on the line and whose track record speaks volumes. They all have access pretty much to the same bag o’ money. Why not pick one who gives a crap?
Tale of a Short Sale in The Rivers of West Sacramento
Homes don’t come up for sale very often in The Rivers in West Sacramento, that subdivision known as the Lighthouse Marina (misspelled in many public records), which helps to produce high demand for these homes. It’s a very pretty gated community, featuring an assortment of maple trees and other landscaping approved by the HOA, The Rivers.
Thank goodness the U.S. Government isn’t in the habit of donating armed military tanks to HOAs because The Rivers would surely delight in owning one. Lord help you if you have a tree in your yard that is not approved by the HOA, or if you try to hold an estate sale, because it’s not allowed. They take their business of uniformity very seriously in this community, and it’s a comfort to those who live there, so I’m not knocking it.
I sold a home on Fountain Drive right on the levee last year which was one of several short sales. This particular home had been a model home and originally sold at roughly $1.5 million, IIRC. With the down market, it sold at $460,000.
It did not surprise me when I received another listing this summer in The Rivers that was slated to be a short sale. A beautiful home of almost 5,000 square feet located on a premium lot that was once a golf course and now a park. Tremendous views. When I first listed the home, the sellers of another home called to ask if they could buy it as a contingent sale. I offered to list their home, but they couldn’t act fast enough and another cash buyer swooped in to make an offer on my listing.
The sellers accepted that offer, and then we had to do battle with the buyer for another week just to pull a proof of funds. The buyer could not understand why the short sale bank refused to accept the offer without their proof of funds, and they continued to submit paperwork that did not conform — trying to make a round peg fit into a square hole, which does not work on a short sale. They dinged around in escrow for 2 months, long enough for us to get a confirmed price, which they refused to meet.
Back on the market again, and this time the first set of buyers who could not act fast enough came back into the picture. They had now hired a real estate agent, a neighbor, which was OK with me. I don’t care who buys the property, and I don’t need every listing in Sacramento. I’m not that kind of agent. They would not receive any “special treatment” whether they were my buyers with a second listing or another agent’s buyers, so it did not make any difference to this Sacramento real estate agent.
I know there are agents who don’t understand nor agree with that kind of philosophy. They would have jumped on this like hot fudge on a sundae. They would have grabbed that listing, grabbed these buyers as their own, and made a ton of money from it because that’s their focus. It’s not my focus. My focus is exceptional service with integrity. Sometimes, it means I miss a few bucks here and there, but so what.
About this time I did receive a call from another couple of buyers who were very insistent that I represent them in dual agency. I flat out refused these people. They hinted that they expected a discount on the price and they assumed that by working with me, I would gladly give it to them — that I would lower my ethical standards for a paycheck — which is insulting on so many levels. People like that don’t see it, though. They can’t see past their own greed.
It was a little risky with the contingent buyers, but it was a measured risk and I knew their agent would sell their home. By the time Wells Fargo insisted that we resubmit without the contingency, they sold their home and were approved to buy this short sale in The Rivers. We closed escrow without a hitch, and the sellers could not be more happy / relieved. The buyer’s agent was a sheer delight to work with as well. Many of the windows in that home were defective, and she worked with the manufacturer to get them replaced for free. Remember that if you are buying a home that is still under a builder warranty.
Which reminds me, I forgot to ask the sellers for a review. I’m confident they’ll give me 5 stars.
How Sacramento MetroList iBox Exchange Affects Home Sellers
The reason Sacramento real estate agents are getting hosed by MetroList is because . . . well, I’m not really sure of the explanation that MetroList gave me when it called to discuss my “hatchet job of MetroList.” There was much blabber about blubber: how large our MetroList is and how many lockboxes we have in our system, and how none of us will really know exactly what went on behind the scenes and never will know because it’s confidential and not for public knowledge.
It’s a secret organization we Sacramento real estate agents are required to belong to if we want to conduct business, and we’re not entitled to know what goes on. MetroList would like you to know, though, that the deal it got “beats all other deals in the long run.” Even though many other MLS systems in the country negotiated a 1-for-1 exchange. We are instead offered a 2-for-1 exchange and we should be grateful, sighs MetroList.
In case you don’t know, when an agent exchanges her 2 lockboxes for one lockbox, that lockbox is considered a leased asset. The way this information was initially presented was confusing, and it made it sound like the agent might be responsible for the lease payment, but actually it is MetroList that will pay on the lease. Through 2020. It claims that all other MLS’s are in the same boat on the SUPRA lockbox exchange program in that they are all leased lockboxes. The agents don’t own them when exchanged. The difference between those MLS’s and our MetroList, claims MetroList, is our MetroList told us we don’t own the lockboxes.
Was that disclosure by mistake or on purpose? It doesn’t matter. We can complain all we want, and march up and down in front of MetroList offices at 1164 National Drive carting picket signs that read: MetroList Lockbox Ripoff! 2-for-1 Unfair to Agents! Highway Robbery MetroList! and it won’t do anything except get you on television. And people say that Elizabeth is a bad influence.
The situation is we real estate agents are unhappy about it, we’re losing half of our lockbox inventory, and according to MetroList it’s better than it could have been, and when you think about it, it’s probably all SUPRA’s fault.
On the other hand, here are some tips for exchanging your lockboxes at the MetroList iBox exchange:
For starters, they are heavy. I own roughly 70 lockboxes. With a torn rotator cuff, I can’t carry them. But my team member Josh Amolsch is kind enough to offer his assistance and transportation. At first, I considered using my red Radio Flyer wagon, but then I came up with a better idea. Rolling luggage! Pack those suckers as tightly as possible and I might be able to fit them into several Victorinox dual caster rollers. Those things are built like steel. I have a feeling Building C is a long ways from the parking lot at Cal Expo.
Second, MetroList printed material says we should expect to wait 90 minutes to exchange 10 lockboxes. I suspect that’s because there is a separate lease agreement for each lockbox, but they don’t really say. But it does make me suspect that it could take all day to exchange my lockboxes, so I have swapped my appointment time with another agent, which means I can be at CalExpo early in the morning on another day. I guess I should pack lunches and drinks. I wonder, can you bring in bourbon into Cal Expo or do you have to buy it there?
Third, there will be two days my home sellers might have no lockboxes. Because I will need to divvy up the south part of the Sacramento Valley from the north to efficiently collect all of my lockboxes; but don’t fret, I will note MLS showing instructions. I probably own enough contractor’s boxes to install those on my active listings for showing in the interim. The best idea I’ve come up with so far is to label envelopes with each address, insert keys and seal the envelope for replacement storage until I get my new Supra iBoxes.
There is always the option during the MetroList iBox exchange to leave keys for pending listings in my office for pick up at closing, and I imagine many agents will select that alternative, which will be an inconvenience for many of us. But the way I look at it is we probably won’t have to go through this again until at least 2020 when the lease is paid off by MetroList. Then again, that didn’t stop me from upgrading to the iPhone 6. Just sayin’.
Update: In a surprising turn of events, MetroList just announced agents will not be required to exchange their lockboxes, and we can continue to use our existing lockboxes until the boxes, themselves, no longer work.
You can read more about the actual lockbox exchange itself at Cal Expo in this next blog, the Upside and Downside to the MetroList iBox Exchange at Cal Expo.
Selling a Home in Rio Linda When the Surprises Keep Coming
What does a Sacramento real estate agent do when her seller is traveling in Saudi Arabia without cellphone coverage? She doesn’t panic, for one thing. My motto is we can always find a way to take care of a potential problem, but I really had no idea how many challenges were about to present themselves when I accepted a listing in Rio Linda. It looked like a home in the midst of a rehab job. Nobody told me it had been vandalized.
I wrote last July about how I yelled at the poor contractor whose life mantra is Dude, I flaked. He had promised to finish the home by the time it went on the market for sale, but the only good thing I recall about that was I stopped him in the nick of time from tiling the entire home. At least 2 of the 3 bedrooms now have carpeting. I made several trips to Rio Linda to shoot photos, do my inspection, attach contractor’s lock boxes and what have you just to get into escrow. It never occurred to me that I needed to check to see if the faucets worked or the electrical functioned, because the contractor had lived there while he worked on the house.
In fact, I thought the utilities were turned on. Not only were the utilities not turned on, but they were locked by the utility companies, both gas and electricity. The water was shut off, too. Made it fairly difficult for the poor buyers to try to do a home inspection. Of course, this was a VA deal, so we had to order a pest report, and some of the work was not completed by the contractor like it should have been, such as the horrible condition in the master bath shower that looked like somebody had died and plastered their decaying body to the wall.
Once my trusty handymen were able to fill the water heater and ignite the pilot, turning on the water caused a pipe to burst in the attic. Or maybe it was perforated all along, hard to say. The magnificent part of all this was when a licensed electrician went out to the property to fix a few outlets and discovered all of the Romex has been cut and yanked out of the attic. The fun surprises never stopped. Every day, new fresh hell.
This was on top of the title being messed up because it turned out the person we thought was on title was not. Further, the seller who had signed my listing agreement was not really the seller, but those are minor and insignificant points in the overall scheme of things. The fact that I couldn’t talk to the seller or contact the seller because of spotty coverage in the Middle East wasn’t even a factor. Besides, I discovered Viber from a client who travels a lot in China. Great app, check it out if you need to call overseas. It uses WiFi so there’s no roaming or enormous fees.
The miraculous part is this home in Rio Linda closed escrow yesterday. These VA buyers got a home in terrific shape, all new wiring, a new shower, brand new appliances, a roof certification after repairs and they were able to buy the home without putting down any money. The buyer’s agent was also invaluable throughout this long process of repairs. I hope I never do another escrow like this, though.
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