Email ElizabethSell the Seller Benefits When Buying a Home
When most Sacramento home buyers envision buying a home, they tend to view their first home as a place to live in-lieu-of an investment. This means they want the home to be in tip-top condition without any defects. They strongly care about the sales price only if nobody else does. If there are no other offers, in today’s fall market, they might offer less than list price in hopes of negotiation. Yet, if the house truly meets their needs, home buyers will pay what it takes.
I think about how this compares to some of the homes I’ve bought in my life. I came into real estate as a buyer’s agent for investors, and I started at a small Newport Beach real estate company, which I later bought. My training was untraditional but valuable. Today, I strongly believe that every agent should at least work a few years for a major broker before trotting off on their own, if that’s what they desire, because there is so much to miss by not having the proper training and absorbing social etiquette about the business. It’s only in retrospect that I see this about myself. I was lucky in my ignorance.
When this Sacramento real estate agent decided to buy her third house, I found out everything I could about the seller. I had been watching this particular home in the Sunday open house ads (before the Internet). It had a white picket fence — a Dutch Colonial. It was so darned cute, oozing curb appeal. The listing agent was informative and told me things she probably should not have such as the sellers had bought another home across town and moved out months ago. She told me where they moved, which was a very expensive part of town. People just blab if you ask the right questions.
The house had many problems. It was overpriced; featured a lovely gaping hole in the living room ceiling; the hardwood maple floors were in terrible condition and the wallpaper was atrocious.
I made an offer that the listing agent said would not get accepted. It was less than list price. My earnest money was $500 and there was no down payment. This was 25 years ago, when loans were assumable, and I offered to assume the existing financing. My offer meant that the seller had to take money out of a savings account to pay the commission and closing costs, because there was no money generated in the offer to pay these things.
The listing agent expressed doubt that the seller would take my offer and actually said that in all her years in the business, nobody writes an offer like that. That’s because she was in traditional real estate and not investment real estate. In my mind, I figured I would fix up the house and increase its value; make it my own. I can tackle just about any home improvement project by myself. DIY is not difficult.
To help the agent submit the offer, I drew up a list of benefits for the seller, explaining why the seller should take the offer. I laid out how much the seller has already spent over the past 6 months or so trying to sell the house. Mortgage payments had to be made even if the seller wasn’t living there. I compared that sum of money to the smaller amount the seller would need to pay to close escrow. I pointed out that banks might be reluctant to loan money on a home with a hole the size of a small car in the ceiling. And I ended it by documenting the release of liability from the loan that the seller would obtain when I formally assumed the loan.
The seller signed the offer. The agent practically fainted. This was very different from the way homes are sold today. But sellers still sell because it’s a benefit to themselves to do so. That part has not changed.
I think home buyers pass up some great opportunities in the Sacramento market by insisting on buying a move-in ready home. They can’t personalize the home or express themselves when it’s already done for them. And they pay more for updated homes, making them completely dependent on future appreciation and principal reduction to build equity. But I just go with the flow and help everybody achieve what they want. That’s my job.
Where Are the Home Buyers in Sacramento?
If you’re wondering where the Sacramento real estate market is moving right now, then this blog is for you. Because I list and sell a lot of homes in Sacramento, I can easily spot trends — if I’m paying attention and not hanging out with Myrl at The Dive Bar late at night. The trend now is buyers are in no big rush to buy, and inventory is lingering on the market. It doesn’t mean that a home won’t sell, it will just take a little bit longer and there might not be multiple offers.
I see some sellers are dismayed when they hear they might not receive multiple offers, but geez Louise, how many buyers does one seller need? A seller needs one committed and dedicated buyer who loves that seller’s home. It’s all about loving that home. It always has been. You just need to find that special person among home buyers in Sacramento.
A seller contacted me yesterday for an update on selling a home in Natomas. I had sent him a comparative market analysis last spring when the market was a frantic hotbed of activity. At that time, the home he wanted to sell could have listed for $225,000 and probably received multiple offers, which would have driven up the price a little bit. Today, that same home should be listed a little bit more conservatively, closer to $219,000, and he will most likely receive just one offer, and that offer might be for a little bit less.
This doesn’t mean prices are falling; it just means the strategy to sell is a little bit different. I suspect prices will stay fairly stable and probably rise again next spring, depending on where interest rates move. The thing about interest rates is movement doesn’t remove buyers from the marketplace as the economist at NAR predicts. A rise in interest rates simply lowers the purchasing power of the buyer. A half-point increase in an interest rate knocks down a buyer’s sales price by about $25,000. A full-point increase? $50,000 less. Home buyers in Sacramento should grab these historically low rates while they can!
I am including a chart below from Trendgraphix which shows the last 15 months of average sold sales prices by month versus the prices of homes for sale. You can see the average for sale price is higher than where the demand for homes lies. This doesn’t mean that sellers are asking higher prices and buyers are paying less, so don’t get confused about that. It means that the average sales price is higher than the average price most buyers can pay. There are more sales in the lower end. But look at that increase. That’s a 142% jump in our average sold price since summer of 2012, and it’s continuing to go up.
My conclusion is buyers can demand a little more and sellers will give it to them. Even in a market of limited inventory. Our inventory has almost doubled but it sits at 1.8 months. That is still incredibly low, and not a buyer’s market, unless we have no buyers. Where are the home buyers in Sacramento? I’ll tell you one agent shared with me this morning that her buyer has a list of 100 homes that the buyer wants to see. Who looks at 100 homes?
Gordon Lightfoot and The Dive Bar
The mermaid at The Dive Bar
The guy I felt sorry for last night was the poor valet dude at Ella Dining Room and Bar who, unknown to Myrl and me, had been waiting for an hour and a half for us to hightail our tipsy selves back to get our car. It was a miscommunication thing. I knew that we could leave the car with the valet at Ella while we scurried over to the Gordon Lightfoot concert at The Crest Theatre, because people do it all the time. Valet dude even asked us when the show ended, but we didn’t necessarily ask him when the restaurant closes.
We didn’t know we had a curfew. I’m telling you so if you go downtown Sacramento to dine at Ella and leave your car with the valet while you scamper off to some show at The Crest or some other mischief, that you make it a point to find out when you need to be back. Of course, Myrl and I, we could have walked back to my house, because the time distance on foot between my home in Land Park and the Crest Theatre is about 45 minutes. But somebody from Rocklin would probably have to hail a cab, and good luck with that in downtown Sacramento.
Myrl Jeffcoat and Elizabeth Weintraub at Macy’s
I decided yesterday not to take any appointments with my real estate clients for the rest of the afternoon because my friend, Myrl Jeffcoat, had agreed to a Chanel makeup session with me at Macy’s, dinner at Ella and then off to see Gordon Lightfoot. Myrl also sells real estate in Sacramento but that’s not what we talk about when we get together. An agent in my Lyon office talked us into the Chanel event, because I don’t care how old a woman gets, if she had fun with makeup as a teenager, it doesn’t really go out of style just because you’re an old goat. And I suppose that’s what keeps Chanel in business.
Myrl Jeffcoat at Ella Dining Room
After we finished our makeup, isn’t Myrl beautiful? we were immediately famished. Two Drunken Arnold Palmers we ordered at Ella, not really certain what was in the cocktail, but it was refreshing, and gingery. Yum. We don’t even play golf. Started off with a plate of succulent sea scallops, which melted in our mouths. Myrl chose the artichoke soup with bacon cream. How can you go wrong with bacon cream? You can’t. We finished with chilled lobster and dashed off to the show.
Gordon Lightfoot is older than dirt but he obviously enjoys putting on a show, and we felt honored to have snagged seats in the front. Nobody’s vocal chords seem to survive the aging process, so people who expected Gordon Lightfoot to sound like his old records might have been disappointed, but I was happy just to see him vertical. Not that I’ve ever seen him horizontal, mind you.
Gordon Lightfoot at The Crest Theatre
During the show, we chatted with guys in our row. When I asked Myrl if she had ever gone to a high school reunion, one of the guys perked up and said, “Yeah, but when I went to my 40th, there was nothing but old people there.” He stole my line. I had a strong urge to say, “You know, buddy, you’re no spring chicken yourself,” but I kept my lips zipped only because he couldn’t hear me. Then, later, while we were walking across the train tracks to the The Dive Bar, we realized those guys zipped backstage the minute the show was over. We could have been partying with the band, but no, we missed that opportunity! Darn, darn, darn.
Although, it’s hard to picture Gordon Lightfoot partying away, but if he did have an after-show get-together with all of his bandmates and buddies, well, we blew our big chance. What the hey. I am past 60, and Myrl is a grandmother, 9 years older than me. We giggled on over to The Dive Bar for a gin and tonic and to shoot photos of the mermaid. If you haven’t been to The Dive Bar, you’ve really got to go downtown Sacramento if for nothing else but to see the mermaid. The end of this story is we didn’t get arrested, we got our car back, and we made it home safely. The 3 ingredients for a great evening in downtown Sacramento!
48 Hours of Sacramento Real Estate
If selling massive numbers of homes in Sacramento was so danged easy, let me tell you, hundreds of real estate agents would be selling homes like there’s no tomorrow, and we all know, that for most agents, that’s not happening. It’s as though every single transaction lately has had a bunch of little snags that need to be poked with a toothpick and slipped back into place. And that’s assuming that buyers can even get into contract in the first place.
Part of the problem is people don’t read, they don’t listen to each other and everybody is in such a rush that they don’t take time to figure out how to make something work. You can’t get upset with them or irritated because people are who they are, and you can’t change them. You can only change your own view.
Way back in the old days, like 40 years ago when was a title searcher, just to keep the title officers giggling at First American Title, I would slip stick figure drawings of a guy hanging by a noose on an affidavit of death document. Things aren’t that different today now that I am a real estate agent and sell homes in Sacramento.
I’ll give you a few “real world” examples from the past few days. See, this is the thing about real life in real estate, it’s so real that a reality show could never be made about it. It’s so real that people might think this agent made up stuff just to be funny, but I don’t have to make stuff up because it’s the godawful truth.
- An agent sent me an offer and included a note saying she knew I had mentioned that my name needed to go on page 8; however, she had put another agent’s name in that spot and now there was no room for my name.
- I asked an agent if her buyer could afford a higher sales price if the short sale bank demanded it because the offer was low, and the agent said no, but the seller should help the American home buyer.
- When I asked a tenant if I could shoot photos of her home with furniture in place, she said sure, the movers were coming on Wednesday, so could I come over on Thursday.
- Sellers needed to transfer utilities in their name after the tenant moved to allow a final walkthrough for the buyer, and they agreed to do so as long as they could charge the buyer for it.
- First time homebuyers asked if they could buy a home with no money, no reserves, no way to borrow any money and the home needed to be a foreclosure because their sister bought 27 homes without any money.
It takes a special kind of personality to sell Sacramento real estate. If I let all of this get to me, I would not be doing a competent job nor taking care of my clients, and that’s not how I operate. Besides, it wouldn’t be a regular week in real estate without a little craziness.
Government Shutdown and Sacramento Real Estate
All over Sacramento, people are talking about the government shutdown, and how it will affect Sacramento real estate and selling homes in Sacramento. In fact, yesterday a reporter from KFBK called to ask for my opinion. You might wonder why would a reporter call a Sacramento real estate agent for her thoughts? A lot of media reach out to me because I write about home buying for About.com and consistently blog. Besides, often it’s better to go directly to the trenches to find out what’s going on over calling talking heads whose main missions are to increase net profits for their companies.
I was a little bit hesitant to give the reporter my views because controversy sells, and one never knows how her words will be spun. Television and radio personalities don’t always look for the same angles as print journalists. But I didn’t get where I am today by standing in the shadows. Even though I joked that the reporter will undoubtedly find some other schmuck whose opinion will be completely opposite, painting me like a moron, what the hey.
Then a client emailed last night to ask if selling her home would be a problem if the government shutdown. We haven’t yet put it on the market but will most likely do so in the next week or so. I hate to say this, because it sounds like I might not care about others who are affected by the government shutdown while I do care, but my life as a Sacramento real estate agent will be pretty much the same as it ever was, thank you, David Bryne.
People are yakking about FHA loans, but it’s the mortgage loan officers employed by banks and independent lending companies who are pushing that paperwork through. If you left it up to the government to process loans, we’d have a nightmare on our hands. The main problem with loans will be the 4506T submissions, but some mortgage lenders are already working on ways to close with just the form in file; you know how creative lenders can be.
It is possible, though, that a government shutdown might affect the attitudes of home buyers, who can become timid with the slightest uptick in rates; however, I imagine a significant interest rate hit will have a bigger affect on a home buyer than a government shutdown. Cash investors don’t care either way, and cash investors are still huge supporters of the Sacramento real estate market.
Yup, same as it ever was.
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