Email ElizabethThe 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.
Why Do Sacramento Homes Come Back on the Market?
Just because you spot a home in the Sacramento MetroList MLS with a “back on market” status does not mean there was something wrong with the property; yet, that assumption is the first premise that some buyer’s agents and their buyers attach themselves to. The problem with many back-on-market listings is the buyers (or the buyer’s agents) did not understand what they were doing when they wrote the purchase offer. It’s like they embarked on a wild bender and woke up face down in puke. OMG, what did I do, they wonder, I bought a house.
I try to follow the rules of MLS, and unlike some agents, I actually read the MLS manual. MLS rules state we listing agents have 3 days to change the status in MLS from Active to Pending. However, there is also the real world, and the real world says if I’ve got buyer’s agents showing my pending listing for 3 days straight when I knew it was pending and did not inform them, my name in the real estate community would turn to mud. It’s unethical to purposely not change the status in MLS and to misrepresent what’s going on.
The problem that arises is we might be led to believe that the buyer is steadfast and then we discover, no, there is a problem with the buyer. Meanwhile, the listing is sitting in pending status. When we put back the listing on the market, now everybody wants to know why, what went wrong — when it was the messed-up buyer or agent that was the problem.
In one instance, we moved a perfectly beautiful home in Elk Grove from its fresh active status to pending when an Elk Grove buyer with a criminal record hoodwinked the seller into accepting an offer. The buyer’s agent was absolutely steadfast that the buyer could perform until it turned out that the buyer, oops, had no money, no car and no job. Yet this home went back on the market, and it’s not the same.
In another instance, the buyers, with the buyer’s agent’s permission, wrote multiple offers to buy a home and ended up in contract on two homes at the same time. The buyer’s agent did not immediately notify the listing agent. Meanwhile, status changed from active to pending in MLS. A few days went by before the buyers bothered to decided which home they wanted to buy (ultimately the answer was neither). That buyer’s agent learned a hard lesson, but still, the seller’s home ended up in back-on-market status.
Recently, a seller accepted a contingent offer, meaning the buyer had a home to sell, and the buyer asked for, let’s say, 7 days to sell her home. Her agent noted the home was on the market and should quickly sell. Before advising my seller to accept the contingency to sell a home from the buyer, this Sacramento real estate agent checked the accuracy of the listed price, and it seemed very reasonable. The seller accepted the offer. We changed the status in MLS to pending.
Then, the buyer’s agent did a double take when when we asked for the contingency release within the specified time period. Turns out she did not correctly write the Contingency of Purchase. She made a huge mistake. She had meant to ask for a much longer time period, consisting of a few months. I guess now I have to add to my repertoire of insulting questions to ask buyer’s agents: Does your buyer understand what she signed?
This Sacramento spring market seems so squirrelly. It’s bad enough that I have to personally call banking institutions to verify funds on deposit (because the loan officers and buyer’s agents don’t always give a hoot), and interrogate the buyer’s agents as to whether the buyer wrote two offers. I don’t mean to insult anybody. But this back-on the-market business is damaging to sellers, and I have to look out for my seller’s interests. I might also change my policy now to leaving the status modifier in ACTIVE for a few days, just to make sure everybody is on the same page. If buyer’s agents want to know whether we have any offers, they’ll just have to find out the old-fashioned way.
Why This Sacramento Agent Carries a Display Key
There are days in Sacramento real estate when it seems like one just can’t use enough technology or have enough electronic gizmos at one’s disposal. The gift of magic always come with a price, though. Sometimes digital wonders don’t work. They can go haywire. Or, something else malfunctions. Like the other day when gmail went down and thousands of gmail users went bonkers.
As a Sacramento real estate agent, I maintain a half dozen email accounts through various service providers and online sites, yet I take great precautions that no one will ever find my email address online. I utilize a variety of devices to access the Internet, and I have more than a few ways to get online, which means short of an asteroid hitting the Earth and wiping out all communications, I can always reach out and touch someone.
This is why I don’t subscribe to an eKey through my cellphone. I don’t like putting all of my eggs into one basket. If it doesn’t work, I’m hosed. Agents need either an eKey or display key to access a Supra lockbox, which contain keys for showing a home. An agent on another website wrote a cute blog yesterday about playing an online game and in order to earn extra points, had set his cellphone clock ahead by 24 hours. Then, he tried to show homes to a busload of passengers and his eKey would not work.
Hey, a person can drop his cellphone into the toilet or she can flip it out the car window. What happens if the cell tower is down or a Sacramento agent is showing a home in the foothills without cellphone coverage? There are must too many variables. For me, it’s much safer to just subscribe to a display key and forget about using my cellphone to access a lockbox. That way, if I experience a little hiccup, I can call the Supra toll-free number and an extremely patient person will explain how to straighten a paperclip, stick it into the hole in the back to reset the display key, and all is well with the world.
To have it not work once is too many times. Yeah, it might cost a little bit more, but this Sacramento agent prefers to be safe than sorry.
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