Email ElizabethWhy It’s a Bad Idea to Be a For Sale By Owner — FSBO — in Sacramento
Although I have done it myself in the past — back when I was young and foolish with not nearly as many wrinkles as I have today — I still don’t advise it. I’m not saying this because I am a Sacramento real estate agent. I’m promoting this because I’ve been in the business long enough to know how many small things that can mushroom into big things can go wrong in a real estate transaction and, for that reason alone, you need a real estate agent. It’s just not a good idea to try to sell your home yourself as a FSBO (for sale by owner).
A seller in the Elk Grove area called me yesterday. He asked if I recalled our meeting in my midtown office 3 weeks ago. He had been interviewing Elk Grove agents to sell his home in the Elk Grove area. I sell a lot of homes in Elk Grove and Laguna, primarily because that’s where many homes are for sale and these neighborhoods are in high demand right now.
I did remember meeting him. In fact, before our meeting, I had emailed him a CMA for his home. We spent a good hour at my office going over the plat map, the county records, discussing how he needed to bring some technical aspects up-to-date, pouring over the comparable sales, explaining how to adjust the comps by adding / subtracting for improvements and variations. I also gave him a range of price in which I felt his home would sell, but cautioned that it may sell for more than our asking price in this seller’s market. It’s hard to predict exactly what a desperate buyer might do.
The reason that he called was to tell me out of all the agents he interviewed, he felt I was best suited for him and the most professional. However, and yes, there was that little BUT in his voice, he has decided to sell to his tenant and he is selling the home himself as a for sale by owner. I had done such a great job presenting what I would do and how I would do it, that I made it look too easy. This guy somehow believes he could do it himself.
He probably can sell it himself, but will it close at the sales price? Did he get the highest sales price he could possibly get in this market? Was his home exposed to the largest pool of buyers to get him the highest price? What will he do if the underwriter throws out the buyer’s loan at the 11th hour? How will he handle technical title issues that affect his land? What comparable sales will he give to the appraiser to assist the appraiser in determining value should the present comps fail to support him? How will he handle the home inspection? Will he fill out the disclosures correctly, and does he have a list of every disclosure the seller needs to provide?
He thinks he will walk out of this transaction with a big chunk of change. Money that he would like me to help him to invest in fixers. Although, he has no experience buying fixers to flip, and there are very few opportunities in Sacramento at the moment. He doesn’t strike me as a flipper. But he also didn’t strike me as a person who would try to sell his home by himself. The main reason to try to do that is to try to save commission, but in his case, he is probably losing more money than the commission would have cost him.
He asked me about the FIRPTA. How should he fill it out?
Really? He’ s got to ask himself that question, not a person who does not represent him. If he wants to be his own real estate agent and represent himself, he’s got to pull himself up by his bootstraps and get with the program.
A Sacramento Lockbox Experience Shed Light on a Bad Agent
When I first moved to Sacramento in 2002, I did not yet belong to MLS. I had not yet reactivated my real estate license because it involved passing the California real estate exam again. The real estate laws in California changed over the past 12 years or so since I had left the state, so it took me a few months to choose an office, take the exam and become an official Sacramento real estate agent who has access to MLS as a member of MetroList.
As a member of MetroList, I also get to buy my own Sacramento lockboxes and secure them to homes that I list, so other agents can gain access if the sellers aren’t home. Lockboxes come in handy for appraisers and after the sellers move out, when the buyers conduct a final walkthrough. It’s very difficult to get into a Sacramento lockbox if you don’t have an display key. The good thing about the infrared communication device on the lockbox is it sends the agent’s information to a website. I check this website every night before I turn off my computer to join my husband for dinner.
The website tells me the name of the agent who used the lockbox, the time and the day, the agent’s telephone number, the agent’s email address and the name of the agent’s broker. It’s also a useful list in case somebody left the lights on by mistake, I can track down the last person to show and ask them to be more prudent in the future. I also email all buyer’s agents who showed my listings that day to ask for feedback and thank them for showing.
When I bought my home in Sacramento, the previous listing agent left the lockbox on the railing and I couldn’t get it off. He never came back to pick it up. I don’t know if it was because he did not want to run into me again or if he simply forgot. I would be mortified if I forgot to pick up a lockbox. Not only that, but lockboxes cost around $100, and I own about $8,000 worth of lockboxes. To get a lockbox off, I had to resort to a reciprocating saw. It took me a good 20 minutes of teeth rattling to saw through the shackle.
It’s much easier to use a display key to open the lockbox. I could have called my own agent to come over and use her display key, but she had done such a lousy job during my escrow. I did not want to ever speak to her again. I vowed I would never do what she did to my own clients. She felt that my husband was her client and forgot all about me. She did not return my phone calls or emails. She never answered her cellphone when I called. We almost did not close escrow because she messed up so badly. As I sawed through the shackle on that lockbox, I thought about her, and how grateful I am that I will never be like her.
In addition to my heros and heroines, whom I admire and aspire to mirror, the bad ones also teach me the paths to avoid, what not to do.
How Much Commission Does a Sacramento Real Estate Agent Charge?
How much is your commission? That’s not what I want to hear when I answer my phone. There is no, Hello, Elizabeth, how are you? None of that pleasantry. Not even an introduction, My name is David Stupido and I want to sell my house. Nope, some of these potential sellers act like they are calling Target to inquire about the price of milk in aisle 3. Except they would be more polite if they were calling Target.
You know who is to blame for this attitude? Not the public. The guilty culprits are real estate agents and our trade associations, including the newly formed Bureau of Real Estate in California. Everybody is so busy bending over backwards trying to protect the consumer by informing the consumer that commissions are negotiable, that it’s become too big of a deal. We have turned commissions into the center focus. When it is the sole identifier as to why a seller would pick an agent, we have a problem, Houston.
What is says about the real estate profession is that all agents are identical. We’re all the same. There is no difference among real estate agents.
All of which is completely untrue.
What a seller really needs to know is what will her real estate agent do for her? How will she market her home? What factors will she use to determine price? How can she be assured she will get the highest price she deserves to receive? How long has the agent been in business — does the agent have recommendations / reviews from satisfied clients?
A really good agent doesn’t cost a thing. A really good Sacramento real estate agent does such a superior job you would pay her more than the commission she charges. A difference of a point or two in commission doesn’t mean a thing when you’re taken to the cleaners by an agent who does a poor job. Don’t be penny wise and pound foolish. If you want a discount agent, don’t call a full-service agent and expect full service. Even Target won’t give you a discount on milk.
Three Sellers Approved for Three Sacramento Short Sales
You know that expression: when it rains, it pours? Often, these little bits of wisdom extracted from life and handed down over the years from generation to generation are based in some kind of truth. Yesterday was one of those days. This Sacramento real estate agent received short sale approval letters on three different short sales in the Sacramento Valley.
As usual, something was wrong with each file. Things are rarely perfect in the business of Sacramento short sales. Agents who expect perfection are those you find hunched over hugging their knees in the corner, rocking back and forth and singing to themselves.
In one file, the lender reduced our commission. This file is a HAFA short sale. Our listing agreement was signed way before the short sale approval agreement arrived. The bank told me that its investor only pays a reduced amount, and that they’ve always handled their HAFA short sales in that manner. They’ve always done it because no other short sale agent challenged the bank — that’s how they get away with it. If they don’t authorize the rightful commission, the Treasury Department won’t pay them; we’ll see how they like that.
The bank can ignore the MHA handbook and the CAR explanation of HAFA rules, but they can’t ignore Laurie Maggiano, the Director of Policy for the U.S. Treasury. They coughed up the commission.
In another file, we need a final court document to close. We’ve been trying to get this court document since October. The case was settled two years ago. The sellers’ lawyer keeps saying it’s coming and she will get it, but it’s not coming and she doesn’t have it. The clerks at the court are taking their sweet time, too. Now that we have the approval letter, the clock is ticking. We might have to call the court every single day until we get the letter. Persistence is my middle name. Hey, I close more Sacramento short sales than any agent I know.
And in the third, Bank of America took so long to get us the HELOC short sale approval letter that we’ve had one short sale approval letter and one extension already from Seterus. Usually, Bank of America is pretty fast. Especially since they use Equator. I am busy today trying to figure out what took them so long with this particular file so we never repeat it again. Seterus refused to issue a third letter until we received the approval from Bank of America, and who can blame them? Not me.
Overall, yesterday was a great day. Three short sale approval letters in one day, and 3 more files headed for closing. Three more Sacramento short sales are over. More happy, happy sellers and buyers!
Pricing a Home in Sacramento Ahead of the Curve
Pricing a home in Sacramento ahead of the curve is the strategy a few select Sacramento real estate agents are offering to today’s sellers. It means pricing a home where you think the market is heading and not where the market is now. This strategy doesn’t work so well if the home is difficult to sell or is unique. It works well in areas of high demand where buyers are lined up the minute a home goes on the market — in places like Natomas, Elk Grove and Lincoln.
In Elk Grove today, you can pretty much walk the line of buyers with an order pad and pen, asking each what they will pay for this home in Elk Grove advertised at $185,000. Guy first in line might say $200,000. Tear off a ticket and write $200,000 on it. Woman behind him will smirk and promise she’ll pay $220,000. Tear off a ticket and write $225,000 on it. Couple behind both of them will trump those offers and, my goodness, they’ll pay $250,000. And so it goes. Throw your pad and pen in the air. Nobody has any regard as to whether the home will appraise when push comes to shove. They’re just thinking about their mortgage payment.
Why? Because every $10,000 increment at 3.5% interest equates to an additional $45 per month. If the home would appraise, a buyer could increase an offer by $50,000 and pay only an additional $225, less than, say, an HOA fee. Buyers don’t know how real estate works. They don’t understand that an appraiser will need to find solid comparable sales to justify a price that is $50,000 higher than any other home near it. And if they do understand, they are hoping that when the appraisal comes in less, the seller will lower her price.
A price ahead of the curve might be $225,000. Because in 30 to 45 days, there might be comparable sales at that price. Of course, you won’t get a ton of buyers. You probably won’t get multiple offers. None of that excitement. But you might get 2 offers, and one of those will be an offer you can take. All you need is that one offer from one committed and qualified buyer at a price that will close escrow. If you need more information on pricing a home in Sacramento, call Elizabeth Weintraub at 916.233.6759.
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