Email ElizabethHow a 21-Year-Old Can Buy a Home
My 21-year-old niece should be buying a home but instead she is spending an entire month’s take-home-pay to acquire a Sphynx kitten. I didn’t know what my sister had sent me when I first laid eyes on the photograph. She had sent a photo to my cellphone without any explanation, just asking what I thought. I said it looked horrid, like a Gollum
creature. That’s when she sprang the news that it was my niece’s new kitten and not some kind of joke.
When I asked my sister why my niece was still living with her instead of buying her own home, the answer was my niece doesn’t make enough money. Well, she does make enough money, she just doesn’t have two years on the job yet. She dropped out of college to take a job at a franchise shoe store in Minnesota selling shoes. Why? Because she likes shoes. Well, I like ice cream but you won’t see me handing out ice cream cones at Vic’s. Sometimes, I wonder if we are cut from the same cloth.
With a salary of $30,000 a year, my niece would easily qualify financially to buy a home. There are small homes in stable neighborhoods available for $100,000. With $3,500 down, my niece’s monthly payment at 4% interest, including taxes, insurance and private mortgage insurance would run about $625. That’s a 25% front-end ratio and very doable. It is cheaper for her to buy a home than to rent.
The neighborhood my sister lives in is near Lake Nokomis in Minneapolis. Homes are less expensive in this area of the city because planes fly very close overhead. You can almost see what passengers are drinking onboard. But it’s only a couple times a day, small price to pay for affordable lake living.
And let’s face it, you just can’t live with your mother forever, can you? Although, my sister says it’s like Grey Gardens at her house, and I believe it.
Photo: Laura’s new kitten, M. Burgard
Photo: Gollum, Photobucket
Stay Away From the Sacramento Short Sale Crooks
The problem that arises sometimes when taking over a listing — especially a botched short sale listing — is gaining the seller’s trust. Some sellers have been scammed so much, they don’t know where to turn nor whom to trust, and that’s pathetic. There are so many crooks in the short sale business. The crooks aren’t just the real estate agents, although there seems to be more of them than you’d probably suspect. The crooks are also the short sale negotiators, known as third-party negotiators hired by the agent, many of whom are not even licensed to legally do the job, on top of the buyers riding around in the back pockets of some of these agents.
The alarming thing is if you ask these people why they are crooks, they will tell you they are not crooks. And they will believe it. That’s how they get to be crooks because they believe their own lies.
It’s no wonder the short sale banks are cautious and careful, expecting every piece of documentation to be perfect. Seeing what I’ve seen in the short sale business, if I were the CEO of a short sale bank, I’d be scared crapless to approve some of the short sales because you just never know. Buyers are in cahoots with agents who are in cahoots with the negotiators, and they’re all in bed together. The person who doesn’t see any of this is the poor sellers. And why would they? What do they have to compare anything to? They have probably never done a short sale before and will never do a short sale again.
The best advice that I can give to a seller is if something seems too good to be true, check it out. Verify it. Talk to a person of authority and get advice. The buyers should not have a pre-existing relationship with the listing agent. The buyers should not be trying to simultaneously sell the property when they are buying the property. There should be no monkey business going on. The home should be priced at market value, not way below market value and sold to the lowest bidder. Deposits should be released to escrow.
Ask your Sacramento short sale agent to give you references. Prospective sellers are free to check out my Weintraub reviews online — real letters from real sellers. Find out how many short sales your proposed agent closes per year. Last year, for example, I sold more than 100 short sales. Does your short sale agent measure up? Probably not, but then there aren’t very many individual agents in Sacramento who sell as many short sales as I do. If the agent has closed 15 to 20 short sales, that’s a good number, though. Maybe you should hire that agent. Everybody and their grandmother is claiming to be a short sale expert today. Make them prove it.
Your agent should collect documents from you upfront. A hardship letter is a must for just about every kind of short sale, with a few exceptions. Tax returns, bank statements, payroll stubs, financials, all of these documents should be in your agent’s possession. If your agent does not negotiate the short sale, consider hiring a different short sale agent — an agent who does her own negotiation. Don’t let your future fall into the hands of a third-party vendor who doesn’t know you nor your situation. That’s a recipe for failure.
And listen to your gut instincts. If your gut tells you something is wrong, it probably is wrong. Very wrong.
Are You Wasting Your Time to Write a Purchase Offer?
Even with the temperature in Sacramento hitting 108 yesterday, people were still outside, running around and looking at homes to buy. What’s a little dry heat to us in Sacramento? Doesn’t slow a Sacramento resident down one little bit. The heat also matches the temperature of the real estate market; it’s so hot your fingers sizzle when wet.
I received phone calls, emails and text messages all day from other real estate agents and from buyers. When I explained that in case they had been living under a rock, or maybe in Stockton, our real estate market is producing multiple offers for highly desirable homes, some of them were displeased. Not every home on the market is popular. Those owners of unpopular homes are unlikely to receive multiple offers. If your home is special, though, or you have a home in Natomas or Elk Grove, look out, because you will get multiple offers.
The displeasure seemed to manifest from the possibility of multiple offers. I don’t believe that buyers should feel threatened by the fact that other buyers want what they want. It means they’ve chosen a desirable home to buy, and that home will be desirable when it comes time to sell. They shouldn’t really worry about what other buyers are doing; if they want the home, just put their best offer out there. Just write a purchase offer. Don’t try to be cute or to negotiate, if you want the home, go get it. If you play around and take chances, a buyer could lose the home.
One sentence, though, continued to pop up during my conversations with these people. It didn’t seem to matter if they were a real estate agent or a home buyer, they both said the same thing:
“I don’t want to waste my time writing an offer.”
First, as a real estate agent, we are never wasting our time writing an offer. That’s our business; it’s what we do for a living. Writing offers and getting them accepted is how we get paid. Sometimes, offers are rejected. It’s a fact of life. Why, a Sacramento real estate agent can end up with a rejected offer even if it’s the only offer the seller received. Moreover, since about 90% of the agents in Sacramento sell only 4 to 6 houses a year, just how precious is that agent’s time in the first place?
Second, as a buyer, you’ll never buy the house if you don’t write a purchase offer. Saying you don’t want to waste your time writing an offer is like asking for a guarantee. Since when do you get a guarantee in real estate? OK, I know some listing agents who will give you that guarantee, but I refuse to throw my seller under the bus. And that’s what you’re asking me to do when you come to me because I am the listing agent and say you don’t want to waste your time writing an offer through one of my team members. Who do you think I am? Tony Soprano?
If you seriously believe you’re wasting your time by writing an offer to buy a home in Sacramento, then you’re probably wasting your time talking to this Sacramento real estate agent. And if your time is wasted, what does it say about how you feel about mine?
Must a Sacramento Seller Accept a Full-Price Offer?
A Sacramento real estate agent can bring her seller a full-price offer, but she can’t make the seller sign it. Not if the seller flat-out refuses. You might wonder what kind of seller would turn down a full-price offer, and the answer would probably astonish you. All kinds of sellers would do this. Smart sellers, ignorant sellers, wealthy sellers, dirt-poor sellers, sellers who live in the country and sellers who live in the city — it doesn’t seem to matter.
What I suspect is bringing on this baffling phenomenon is the rising market in Sacramento. Sellers hear all about multiple offers and they mistakenly believe that it is permissible to demand a higher price when the seller receives an offer. I now make it a practice to have this discussion with my sellers before we go on the market. I explain that if we receive a full-price offer and no other offers, then the seller needs to accept the full-price offer. You would think that an agent would not need to explain how real estate works, but she does:
- Johnny offers a product for sale at X dollars.
- Susie offers to pay X dollars for the product.
- Johnny gives Susie the product in exchange for X dollars.
Johnny can’t say, no wait, now that you have decided to buy my product, I want to charge you more for it.
Sellers don’t live and breathe real estate the way a Sacramento real estate agent does. Because it’s not their job. They are doctors and lawyers and business executives.
Probably the worst example that has happened to me lately was a seller who owned a home under the freeway. Not only was the home located under a freeway, but it was next to a commercial franchise business. Not only was the home under the freeway, next to a commercial franchise business, but it was on a busy street, and not one busy street but pretty much the intersection of 3 extremely busy streets with a lot of traffic. I wondered to myself, what would be a worst location? Graveyard? Next to a school? Across from a church? Nope, probably a worst location would be next to a garbage dump or maybe a toxic waste site.
Location, location, location. The number one rule so many forget.
But I don’t judge the properties I sell. Some sell quickly and some will require that one special buyer, and I do a pretty good job at finding that one special buyer. Some homes don’t appeal to the masses but only to a select few. The reason a person would buy a home in the above type of location is if the home was the least expensive home in the neighborhood. Finding that sweet spot in the pricing can be challenging as well, but not impossible.
When I brought a Sacramento seller a full-price offer and the seller uttered the dumbfounding words: “I’m not signing that,” I was blown away. It was the third time in a few weeks that has happened. This was an offer that would release the seller from a bad investment that he should have never made in the first place. The offer paid off his back taxes, delinquent utilities, many years of unpaid interest, all of his loans, the commission, all costs of sale, plus it put a nice chunk of change into his pocket. Moreover, it was an offer for a little bit more than his list price. The buyer was willing to purchase the stripped and vandalized property in its present condition. Where are the smelling salts when you feel faint?
Sellers don’t understand that they cannot issue a counter offer for more money. A seller cannot put a home on the market, get an offer at the price advertised, and then decide they want more money because that could be called false advertising. It could be considered against the law to advertise a property under false pretenses.
Say, I am a grocer. I stick a big sign in my window that advertises 5 pounds of apples for $1.00. You walk into the store, spot a 5-pound bag of apples, bring it to the cash register and hand the clerk $1.00. The grocer can’t pop out of the back room and demand that you pay $2.00 for that bag of apples. You might feel like you were a victim of bait and switch, wouldn’t you? Same thing.
The Highest Per-Square-Foot Home Sold in North Highlands
Holy toledo, I just closed the highest per-square-foot cost home in North Highlands over the past 6 months! This is a typical 1957 tract home, about 1,100 square feet, located in a quiet neighborhood of similar homes, in which the highest priced home sold at $140 per square foot. This home closed at $177. You think we didn’t struggle with the appraisal? You betcha we struggled.
When the appraiser called to make an appointment, I mentioned that if she needed additional comps, she could feel free to call me. That’s polite code for if the home won’t appraise, let me know and I will help. See, I think it’s very insulting for a Sacramento real estate agent to throw comparable sales at an appraiser. It’s telling the appraiser that the appraiser doesn’t know how to do her job. It sends an demeaning message, but agents don’t stop to think about how an appraiser interprets their “assistance.”
Some agents will meet appraisers at the property and hand the appraiser a list of comps. I imagine the appraiser throws them away in disgust. It’s like saying, “Hello, welcome to my neighborhood, you dumb cluck.” I didn’t tell the appraiser that I knew more than she did. I didn’t suggest that she couldn’t perform her job. I didn’t even say if she had a problem that I would help. Because I knew when she ran the comparable sales, she would not be able to justify the sales price.
Sure enough, she sent an email asking if I would send her additional comparable sales. I know the parameters for an appraisal. I know what’s acceptable, which is not exactly the parameters a Sacramento real estate agent might use. I found 3 comparable sales that supported the per-square-foot house with similar sized homes and condition, formatted those comps into a 3-up comparison and sent them.
The home appraised at value. We closed escrow on Wednesday. Sellers who initially thought their home might be underwater are now dancing for joy in their new home in Arizona!
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