Email ElizabethWhy Did That Sacramento Home Sell for Less?
The question arose at my midtown office this week about whether all offers are presented to the seller when it seems a Sacramento home sells for less. The reason the caller questioned whether it happened is because the final sales price was so much less than the caller’s purchase offer. This buyer could not fathom any other reason why a home would sell for less than the price this buyer offered for it; therefore, this buyer concluded that there must be have been monkey business going on. It’s amusing that when a buyer doesn’t understand, the accusing finger is automatically lobbed toward the Sacramento real estate agent. It’s also sad because it tells you what some buyers really think about us but are afraid to voice.
First, all offers are always presented to the seller. I don’t know how other listing agents handle their processing, but I immediately forward offers when I receive them, and I imagine other agents follow suit. Offers are logged in my records 3 different ways to mitigate mistakes. Whether the seller reads, acknowledges or accepts which offer in which order is up to the seller. I don’t care if you write an offer on a roll of toilet paper and deliver that roll to my office, that roll of toilet paper will end up in the seller’s hands. You can offer $1.00 and write it with a bloody finger, and that offer goes to the seller. Not that I’m giving anybody any suggestions, mind you. Just making a point.
But I get asked the sell-for-less question so often that I thought it’s probably a good idea to explain some of the reasons how it can happen that an offer for more money is not accepted in favor of an offer for less. There are legitimate, behind-the-scenes reasons:
- The seller has taken a personal shine to the buyer, regardless of price.
- The offer was originally for more but the appraisal came in less.
- The offer was originally higher but the buyer negotiated a price reduction based on yada-yada.
- The home was vandalized and the seller adjusted the sales price to allow for the damage.
- The higher offer was written incorrectly and was missing pertinent documents.
- The previous offer was pending rescission and that original buyer elected to move forward.
You will notice that nowhere in those reasons is a line item that says the listing agent did not send your purchase offer to the seller. More often than not, it is the last reason, especially in a short sale situation, that is the actual reason why the home sold for less. Whenever I am faced with a buyer whose agent tells me is planning to cancel, I will put that home back on the market, with a pending rescission modifier.
I’ve had several of those lately. One last year comes to mind quite clearly because that particular buyer had been in escrow on a short sale in Elk Grove for almost a year. Why so long? It was a Bank of America HAFA, that’s why. When the buyer’s agent told me the buyer wanted to cancel, I put the home on the market at the pre-approved HAFA price, which was about $20,000 higher than the price the buyer had offered and the bank had accepted. I immediately received a handful of full-price and all-cash offers. I gave the buyer one more chance not to cancel. I explained that if the buyer wanted to cancel, he was a fool. Because a bunch of other buyers were waiting in the wings to step right into his shoes and pay $20,000 more.
That buyer saw the light and closed escrow. Sometimes, a listing agent has to show them the light. If often happens this way. Happened that way last week, too, on several transactions. Buyers tend to want what others want. A home can sit in escrow for weeks without any offers as an active listing before it turns into a pending sale, but as soon as “pending rescission” is added to the modifier, the offers roll in like crazy. If there is an existing offer pending on a listing, priority goes to that buyer. Another buyer could offer a bazillion dollars and a Lear jet, and the seller couldn’t sell to that buyer.
If you want to know why your offer wasn’t accepted for a home that may sell for less than your offer, ask your agent.
Should a Sacramento Home Buyer Cancel Escrow?
A home buyer called yesterday to ask if she could cancel her escrow, dump her buyer’s agent and become a client with the Elizabeth Weintraub Team. She was very unhappy with her present real estate agent’s performance, but I suspect that unhappiness was due more to miscommunication than inability or inexperience or monkey business. And, like many first-time home buyers in Sacramento, her escrow was a short sale. See, unless you’re a listing agent who sells hundreds of short sales — and there aren’t very many of us in Sacramento — an agent probably won’t have the answer to every single piece of drama that can pop up in a short sale. No answers = client confusion.
This buyer was concerned because HSBC had twice increased the sales price. Is this normal, you might wonder? Yes, it is. There are many reasons for a price increase during short sale negotiations. There could be several BPOs. The servicer might establish a market value that is different from the price point determined by the investor. Not to mention, prices are inching upwards in Sacramento. I closed a Roseville short sale last week that had 3 price increases during processing, and the last adjustment exceeded 10%. A short sale condo in Rancho Cordova was bumped more than 20% when a buyer balked and walked and a new buyer stepped in.
Her suspicions were aroused because the price increases were not presented to her in a formal manner — via a worksheet or letter from the bank. Instead, the listing agent had called the buyer’s agent to provide the verbal communication. The buyer felt this procedure was unprofessional. Yet, that is the procedure for most short sales. I don’t blame a buyer for being wary. I wouldn’t like it if I was simply informed that I needed to pay $10,000 more without proof from the bank nor an appraisal to justify, but that’s how short sales work.
The thing is if a buyer doesn’t want to pay it, another buyer will pay it. That’s what the bank is banking on. And the bank doesn’t care. You might think the bank cares that the home needs paint, new carpeting, the roof leaks, but I’m telling ya, the bank doesn’t give a crap.
In this particular instance, the buyer disclosed she was FHA and applying for the CHDAP program. Holy toledo, the only thing more problematic than that would be a VA buyer and, even then, it would be a tight race. In fact, a VA buyer might have an edge over a CHDAP. The basic way to close a CHDAP in a short sale is to get a short sale extension. A short sale extension is not always possible.
My advice to this buyer — after telling her I can’t give her advice because she’s in contract and under agency with another agent? My solicited advice was to stay in escrow. For heaven’s sakes, don’t cancel. She does not realize how lucky she is to be in escrow and be buying a home in Sacramento. For every buyer who wants to buy an entry-level home in Sacramento, there are 9 more who won’t be able to buy. They will get beat time and time again by cash investors or conventional buyers. Buyers would give up their eye teeth to trade places.
Welcome to our Sacramento housing market in the spring of 2013. If you’re in escrow, stay put and don’t whine.
The Highest Offer is Not Always the Best Offer
Just because a buyer offers a much higher sales price than anybody else doesn’t necessarily mean a seller should sell her home in Sacramento to that buyer. In fact, a much higher sales price can be viewed as suspicious during a multiple-offer presentation. You’ve got to ask yourself if that particular buyer is smarter, brighter, and more ambitious than everybody else or is that particular buyer holding something back? Most buyers are pretty much the same, so if a purchase offer stands apart from all of the others, the wise way to approach that kind of situation is with caution and ask questions.
My sister asked me a question yesterday to which I had no answer. She wanted to know when Canadian geese had turned into Canada geese. Don’t know. I guess I figured that I’d just been saying it wrong all of these years. I grew up in Minnesota around a lot of Canada geese. At the time, I actually thought they flew down from Canada and hung around in our parks during the day crapping everywhere and went home at night. I know golfers made jokes about using their bodies as golf clubs. I suspect people don’t think that’s so funny today.
Just like the Canada writer who writes about Canada whom I met at a convention in San Francisco. She looked like she wanted to poke out my eyes with her two fingers when I asked how it felt to write about a country nobody in the U.S. cares about or even much thinks about. See, Stephen Colbert can say that sort of stuff and get away with it. Evidently, I can’t make the same jokes. Canada is a great country and let’s not forget it sheltered those Americans in our Best Picture winner for the Oscars: Argo. I was equally pleased to see that Life of Pi picked up so many awards, as that’s a movie that really touches your heart and spins the mind. I left that movie theater with these words ringing in my head: bananas don’t float.
What that really means is the people who were analyzing the story from Pi figured out there was something wrong with his story because bananas don’t float. He talked about floating bananas in his story. That’s what I look for in a multiple-offer situation. What is wrong with that higher offer, I ask?
Sometimes, as the listing agent, I will call the buyer’s agent to discuss it. I might say that the seller is thinking about accepting their buyer’s offer, but we want some kind of assurance that the buyer won’t try to renegotiate after offer acceptance. Because you know, buyers will offer a higher price just to get into contract and they figure a few weeks in, when everybody is set to close, that’s a good time to suddenly discover a defect, or your suit was at the cleaners, an earthquake is coming, and they want to lower the price. They think they are smart. I think they are snakes in the grass.
See, the thing is though, a buyer’s agent will tell me what they think I want to hear. If they are setting up their buyer to renegotiate, they might make promises to my face that they have no intention of keeping. Sure enough, I had 2 of those situations last month. But they both eventually closed because this Sacramento real estate agent kicked them closed. And please realize, I have nothing but respect for Canada. But don’t get me started on that song by Warren Zevon about the hockey players from Canada.
Need a Land Park or East Sacramento Agent? Hire a Specialist!
In this day and age, you really need a specialist, especially when it comes to selling homes in the Land Park area or East Sacramento neighborhoods. These homes are not your grandmother’s home in Elk Grove or Lincoln. These central city neighborhoods are long established and the homes are as different from each other as New Orleans is from New York City. If you need a Land Park or East Sacramento agent, I am your specialist!
In fact, it’s kind of hard to do anything without a specialist on your side. Like last Friday when I pulled into my driveway in Land Park, I noticed check engine oil illuminated on my dashboard. It had actually been lit up for several days, and I kept hoping that it was just a freaky thing that would eventually stop. The worst that would happen, I figured, is my car would stop running, and I’d abandon it at the curb and grab a cab, eventually calling for a tow truck, but that was unlikely. The way they make these warning features, you’ve generally got a bit of time before all hell breaks loose.
But I’m also a person who gets crap done. I take charge. I don’t sit around in the dark weeping helplessly because my lights won’t go on. Nope, I flip the breaker switch, grab a screwdriver, take apart my light switch and replace it. At least those things haven’t changed much over the years. Unlike a car. I opened my front trunk and looked for the engine. It wasn’t there. No friggin’ engine. I’m not really sure where my engine is located, but I suspect it’s in the middle somewhere, somewhere I can’t get to. I found the windshield washing fluid and the brake fluid, but no oil.
At this point, my husband ventured out. We opened the back trunk and dug through my piles of lockboxes and sold sign riders. Hmmm. What is this? My husband turned a cap and hot pink fluid sizzled out, which he quickly recapped. Well, that wasn’t the oil. Good thing I had had the foresight to have handed him a rag beforehand. I finally resorted to reading the owner’s manual. Yes, when all else fails. Read the manual. Turns out a person can check her oil by turning the key in the ignition, letting the engine idle and pushing a lever near the dash.
I had too much oil, that was the problem, and I just had the oil changed in Midtown. But I also had taken it to the dealer after that for warranty work, and some well meaning yo-yo must have topped off the oil, which is the wrong thing to do for a high performance vehicle like this. The mechanic was probably unsupervised.
You’d think the dealer is a specialist but the dealer’s job is to sell cars. The service department is auxiliary. Even the manufacturer won’t let the dealer perform warranty work without specific permission. My maintenance specialist is located in Midtown, and he removed a quart of oil for me.
If you need a real estate agent to buy or sell homes in Land Park or East Sacramento, call Elizabeth Weintraub. I live in Land Park, and my office is located at the edge of Midtown where it meets homes in East Sacramento. I know these neighborhoods. I know other areas in Sacramento, too. If you’d like to talk, please feel free to call 916.233.6759 or email me. I just might work in your neighborhood. I sold more than 150 homes last year, exceeding $32 million. You can trust that I know what I’m doing.
Please Don’t Pack the Carbon Monoxide Detector
The topic of what stays and what goes with the house seems to be a never-ending story. Having that what is a fixture talk with my clients is part of my real estate practice, but sometimes I feel like I should be handing out cards with tips on them because people don’t always remember my advice. I could create my own board game out of selling a home in Sacramento, now that I stop to think about it. Kind of like Monopoly with a get-of-jail-free card, I’d hand out a get-a-free-carbon-monoxide-detector card.
Except you know what home sellers do? They go to The Home Depot and buy a carbon monoxide detector, almost put out their eyes ripping open the stupid plastic packaging, stick the thing into the wall and, when they move, they take it with them. Before the appraiser shows up. I can’t tell you how many times that has happened, and I have to remind sellers not to swipe the carbon monoxide detector when they move, yet they forget.
Then, I get the call from the buyer’s agent demanding to know why there is no carbon monoxide detector in that house. Why didn’t I tell the seller about a carbon monoxide detector? California law requires every home must have a carbon monoxide detector, and appraisers will walk out the door, leaving the appraisal unfinished, if there is no carbon monoxide detector. The seller doesn’t recall taking it because it probably wasn’t the seller who packed it. It was a kid or the movers or somebody else. That’s why we need a sticker to go on the front of the carbon monoxide detector that says DON’T REMOVE.
Something similar to the tags that are attached to the underside of chairs that people always leave hanging down like cat toys. I mean, people don’t remove those things, why do they take the carbon monoxide detectors? Probably because they’re sticking out in the wall and in the way of moving a mattress down the hallway. Next thing you know, the carbon monoxide detector is in the box along with all of the lightbulbs. Please, leave the lightbulbs, people. I know they aren’t cheap anymore, but the value of a used lightbulb is not what you think it is.
Like those plantation shutters some sellers of short sales want to take with them. They’re not likely to fit another window. They are also fixtures and should stay with the home. If you had to sell those planation shutters on the open market, you’ll never get anywhere near what you paid for them. They are not valuable objects. If you remove them from a window, you leave holes in the window frames or the wall. But if you absolutely can’t sleep another night unless you are allowed to take the plantation shutters with you when you move, then remove them before you put the home on the market. You can strip remove just about anything from the house if you do it before you put the home on the market.
Once a buyer spies a fixture that is attached, it is a fixture that conveys with the home. Ask your Sacramento real estate agent what stays and what goes with the home. We’re happy to explain fixtures. But, please, leave the carbon monoxide detector behind. Even though a carbon monoxide detector does not fit the description of a fixture because it can be easily unplugged and removed, it needs to stay.
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