Email ElizabethYou Can’t Trust All Sacramento Appraisals
It’s not astonishing that people do not understand how a Sacramento appraiser appraises a home, and why not all appraisals are a guarantee of value. Unless you’re a person who is really wedded to this business, like, say, this Sacramento real estate agent. But most individuals don’t sell or buy enough homes in their lifetime to care much about the details. They also might think a bank appraisal is like receiving a certificate of gold, as though it’s redeemable somehow or an item of value to treasure.
I see the look in the eyes of my sellers when I explain that a home needs to appraise at the price a buyer is willing to pay in order to actually close escrow. The eyes glaze a bit and they hear: real estate agent talking — a phrase my husband likes to use to illustrate how carefully I listen to him as in husband talking, yada yada.
For example, if you’ve got two offers for a home, and one offer is cash at $400,000, and another offer involves minimum-down FHA financing at $400,000, a seller might elect to take the cash offer. Because there is no appraisal. Of course, the downside to that is the cash offer buyers typically possess little emotional investment, and once they snag their fish, they often try to haggle over other small things to even out stuff.
Now, some buyers might agree to bridge the difference if an appraisal comes in low. They might say they will pay, say, $10,000 in cash, meaning if the appraisal was $390,000, they would pay out of pocket the difference for the low appraisal. Some do, but not very many. That’s because people still believe the appraiser’s word is like the 10 Commandments. Others also might promise they’ll bridge the difference but then cancel under an inspection contingency, rendering that promise worthless.
An appraisal is just an opinion of value. It’s an educated and calculated guess. Ask 3 appraisers, and you’ll probably get 3 different answers. They might be close in value, but still not match.
Sometimes, the swing in value between two appraisals is tremendous. Had one of those recently in which the home initially appraised for 10% more than it sold for, which was pretty ridiculous in a seller’s market for long days on market, and the second appraisal was 2% less than it sold for, still ridiculous. An appraiser almost has to be trying to mess up the deal to do that.
I recall an appraiser a few years ago who appraised a home for .0001 less than the sales price. Just enough to make the buyer pay for a new appraisal. Who does things like that? Most appraisers in today’s market want to appraise at the sales price because they recognize that prices are increasing. They don’t want to be that cog in the wheel dragging down the market, and they want to fairly assess homes.
But until you get past that appraisal stage, you don’t really have a sale. So don’t be spending that check yet. It’s common in today’s real estate market, especially for an FHA transaction, for a lender to order a second appraisal. It says if a bank doesn’t trust its appraisal, why should you?
Humor in Dying and the Affidavit of Death
You never know who you will touch with your words when you write online, but you can bet it will probably be a person who is alive. An agent in my office yesterday asked how I can be “everywhere online,” and he asked if I spend a lot of time in front of the computer. Not really. I write a blog every day about what I do as a Sacramento real estate agent. I’ve written other articles online that stay there and continue to be read by people day after day and year after year. Like I reminded the agent in my office yesterday, I was sitting on top of a desk talking to him. I was not at my computer.
That’s the beauty of writing online. People will read articles long after they are written. I also write a homebuying newsletter that I send out every week to my subscriber base. I can’t tell you how many people subscribe to it because it’s confidential information that About.com won’t let me divulge, but let’s just say it’s a good thing I don’t have to maintain nor update that database of subscribers.
I often highlight a new article I’ve written in my newsletter. Most of the time, I never hear anything from anybody, but the article I wrote about an Affidavit of Death generated a lot of emails (positive, thank goodness). First, I must admit that it is a humor piece. It starts out pretty serious, and then it heads into a different direction, one that I hope tickles. It might take you a little while to figure out that it is one huge parody. Real estate agents in particular find it amusing. It was a real estate agent who initially asked me about an Affidavit of Death as a marketing tool and prompted the article.
I’ve had people ask if the agent who initially wrote to me had responded to this article, and yes, she did. She changed her mind after reading it, apparently. Another agent wrote yesterday to say she received my newsletter while she was in the hospital with her husband. He died a few hours later. Right when she was sitting there reading my Affidavit of Death article! . . . and laughing. She thanked me for it. I guess humor helps. See, it’s stuff like this that makes my day.
It also reminds me that no matter how bad a situation might seem, there is generally an upside to it somewhere.
Why Photos Matter for a Sacramento Home Listing
A client implied a while back that this Sacramento real estate agent has other sources of income primarily because I am a real estate broker. It occurred to me how little the public knows about the real estate profession. They talk to friends who feed them misinformation. Being a real estate broker means I am held to a higher standard of knowledge, which can result in a higher level of personal liability, actually. But it doesn’t equate to a higher commission check. I still work for Lyon Real Estate, which has its own broker.
Moreover, sometimes sellers think that we real estate agents have a magic wand for selling their home. That we are going to do something special, out-of-the-ordinary or spectacular like fly the Goodyear blimp over their home and drop ch-ch-ch-cherry bombs or give away a free BMW. They figure we know just what to say to make that buyer whip out the checkbook and write an earnest money deposit.
The truth is buyers do whatever the heck they want to do. And I’m seeing a lot of them pause and reflect before writing an offer, which is excellent news. Impulsive purchases can lead to buyer’s remorse and cold feet.
Last spring, I’d receive offers from buyers before I even noticed their agent had shown them the home. I try to check MLS every night to follow up on my listings. Now, I see offers coming in a few days after a showing. So, either buyers are looking at more homes before making an offer or they are taking their time to consider which home they want to buy.
When I put a home on the market, I like to tell myself that it’s my carefully crafted description of the home that is motivating a buyer to go see it. However, we all know it’s the photos. Because you can’t sell a home online. The only thing a listing agent is doing by putting a listing on the online is motivating a buyer to want to see that home. You can’t sell a home if you can’t get a buyer inside of it. Photos entice a buyer. Photos tell a story. Photos speak a 1000 words. Photos deliver a message. Photos matter for a Sacramento home listing.
When a seller lists with Elizabeth Weintraub, the seller also receives professional photography, shot with a Nikon and not a cellphone camera. I use PhotoShop to brighten and color correct. Sellers like my photos so much that they often ask me to make them a CD at closing, which I gladly do. I’d like to photograph your home, too! In fact, I’m off this morning to shoot a home in Elk Grove. Call me at 916 233 6759.
Sacramento Sellers Who Sell a Home Twice
Words a Sacramento home seller never wants to hear — and no, it’s not anything like we need to catch the Chihuahuas, but runs close — are: the buyer needs to cancel escrow. Especially at the last minute, when contingencies have been removed and everybody expects the loan to close. Part of the shock is the seller has already in her mind mentally closed escrow. She’s generally moved on and is just waiting for the check.
It’s jarring news to find out the buyer can’t close. It means a seller must sell a home twice. And why can’t the buyer close? Because the buyer can’t get the stinkin’ loan. The first thing sellers question when this happens is what about the preapproval letter? They believed the lender who said the buyer was qualified to buy a home, and I don’t blame sellers for feeling misled. Mortgage lenders don’t guarantee preapproval letters. But there’s more to it than that.
Sometimes, you don’t know that one of the parties has a lien filed against that person until the preliminary title report discloses a judgment. If there are two people buying the home, the lender generally removes one of those persons from title and proceeds with the remaining individual, providing the remaining individual has enough income to qualify.
Which reminds me, a teacher yesterday in Redding wrote and asked what piece of advice I would give first-time home buyers today. That piece of advice is: don’t buy a home for which you must rely on two incomes to meet the mortgage payment — because people split up, get divorced, become sick, die or lose jobs. Things don’t always stay the way they are.
That’s good advice for anybody to follow. But the really important thing I tell sellers is if the buyer does not qualify at the end and needs to cancel the escrow it could actually be a good thing! When I say this they look at me like I’m dense, this goofy, overly optimistic agent. However, it could mean that the seller will put her home back on the market and sell it for more money, perhaps even to a buyer with cash.
That’s exactly how it generally works out, too. It can be a good thing if the buyer cancels. And because I’ve closed over the years hundreds of short sales in Sacramento, this Sacramento real estate agent has unparalleled experience in selling a home twice.
Question Home Equity by Marilyn vos Savant
I grew up with the expression: Question Authority, but as the billboards around Sacramento seem to imply, today’s message is more along the lines of Question Everything. It’s not that people don’t always tell the truth; it’s much more complicated. In part, it’s whose perception of truth is the truth, and it’s also human error, among other things. The human error doesn’t always originate at the source. Let’s not even start talking about FOX News.
For example, when I enter a listing into MLS, I am not the person typing the data entry. An error could happen at that level. Ultimately, I am responsible for checking the contents of my listings; however, I also send the link for a new listing to my sellers so they can double check the information as well. You can never have too many eyes on a document to verify information.
However, I noticed this weekend an entry in the Ask Marilyn column by Marilyn vos Savant, whose claim to fame is a high IQ. It asked how co-owners of a home worth $200,000 with $10,000 in equity must divide the asset. Ms. vos Savant went into great depth explaining loan balances and various options available should an unpaid loan balance be higher or lower than market value, but she ignored the equity position entirely.
The fact is if a person has $10,000 in equity and a home is worth $200,000, that means the encumbrances are $190,000. It’s simple math. The equity is already computed and disclosed. The discussion should have been centered around how to divide the $10,000 of equity: $5,000 for you, $5,000 for me. If you want the house, you’ll give me $5,000. If I want it, I’ll you $5,000. If we plan to sell to a third party, we don’t have enough equity to pay a commission, so we’re hosed.
Which just goes to show that there are times you can’t even trust the words in front of your eyes. Something was missing in that column.
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