Email ElizabethSacramento Housing Bust Led to the Collapse of the Stairway to Heaven
I once committed what some people consider to be a sacrilegious act. This unforgivable thing happened in 1976. I was living in a cramped apartment across the street from the ocean on Balboa Boulevard in Newport Beach, California. Many Friday nights were party nights. You younger kids might not believe this, but people used to gather at each other’s abodes, play records on a turntable and talk face-to-face, to each other, pre-cell and pre-computer era.
One Friday night were all sitting around, chatting, doing whatever we used to do with incense and whatnot, and listening to Stairway to Heaven, by Led Zeppelin. I asked my roommate to change the record. She refused. And that’s when it happened. You know how sometimes you just can’t stand to hear that song one more time? Maybe it’s a song that reminds you of a bad relationship, or an awful time when you were in high school or maybe it just doesn’t stand up to the arduous task of still being enjoyable after playing it over and over and over like, oh, I dunno, like the grating Honey by Bobby Goldsboro, for example.
Robert Plant, I can’t listen to you anymore. Just can’t do it. I went over to the record player, snatched the record off, opened my front door, walked out into the street and spun the album like a Frisbee into the center divide of Balboa Boulevard. Friends mouths agape. That was all I could take of Stairway to Heaven. There are people today who still do not forgive me for that act of treason. There are some who are very upset that I had the nerve this morning to compare Led Zeppelin to Bobby Goldsboro.
The Sacramento Bee has an interesting story this morning about 36 years of boom and bust in Sacramento, beginning in 1976. I was in the real estate business in 1976, working as an escrow officer. You could do no wrong in real estate back then. Why, you could buy a perfectly nice home in Orange County for $80,000, finance it with a second straight-note of no payments, hold on to it for 3 years and pocket ten grand, even after paying off 3 years of compounded interest.
The piece talks about peaks and valleys of the Sacramento real estate market over 36 years to present. It says the most recent boom ran from 1997 to 2006, and that’s about right. What I didn’t realize was after adjusting for inflation, that increase amounted to 135% — as compared to about 50% for the rest of the country. But after all is said done, Sacramento housing prices increased just 33%, or about 1 percent each year from 1976 to 2012.
It also made me think of Led Zeppelin. The Bee reporter Sangree quoted a source as saying “people thought housing was the stairway to heaven,” talking about that last boom. It’s true, they did. Everybody thought prices would never crash. I guess the question is will history repeat itself? Sure. But it’s not likely in my lifetime. Moreover, do I regret smashing a Led Zeppelin album in the street? Nope.
Photo: Shutterstock
How a Home Buyer Can Kiss Her Earnest Money Deposit Goodbye
We had a banner day in Sacramento short sales on Monday. While last week was one of those rare oddities in which it seemed that every time I turned around I was stepping into a big ol’ pile of stinky dog poop, this week is definitely back on track. I am back to a relatively smooth running real estate business with little bumps in the road along the way but no major potholes. I received 4 short sale approval letters yesterday and 2 extensions.
One approval was for a pool home in Carmichael. Another was for a Bank of America Cooperative short sale in Sacramento; there was an approval for a short sale in Galt, and an all new approval for a popular Carmichael short sale. I received a much needed short sale extension for a short sale that could not close in Rosemont and another in Sacramento, both of which were caused by excessive (buyer) lender delays.
Receiving short sale approval letters is a good thing. Finding out a buyer is canceling a short sale is not a good thing. It’s doubly NOT a good thing when the buyer cancels after short sale approval. I hate it when that happens. Especially if my sellers have moved out and now have to move back.
As a Sacramento real estate agent, I take precautions on behalf of sellers. It’s my job. For example, I routinely ask the buyer to sign a contingency release by the termination date for contingencies. Many listing agents don’t demand a contingency release from buyers because they don’t want to rock the boat or they don’t think of it. What a contingency release does, providing all of the contingencies are released, is put the buyer’s earnest money deposit at risk. It basically says if the buyer later elects to cancel, the earnest money deposit belongs to the seller.
Of course, if the buyer wants to contest the release, the money is not automatically released. Escrow requires mutual consent. In that case, the seller can take the buyer to small claims court and fight for the deposit there. Either way, once contingencies are released, the seller is generally entitled to the earnest money deposit.
Now, a $1,000 deposit makes a very small dent in the expenses a seller might incur when a buyer selectively cancels. If I was a seller who had to go to small claims court to demand a deposit that I believed to be rightfully mine, I might also ask for other damages that either meet the limit for liquidated damages in the purchase contract (3% of the purchase price) or small claims court monetary limits. The California small claims court dollar-limit maximum was raised this year to $10,000.
Guess I’ll polish the back of my high heels and trudge on stepping over dog poop. I’ve got another short sale in Lincoln to sell for a second time.
A Tip for Getting the Edge When Buying Homes in Sacramento
In this Sacramento real estate market, it doesn’t matter how many offers the seller has received. Yet, agents continue to call and ask that question. Why doesn’t it matter? Because any well priced home will be sold within hours if not within days of hitting the market. If a listing agent doesn’t have an offer when the buyer’s agent calls, you can bet an offer is on its way. Maybe 10 or 20 offers are in the works. It just doesn’t matter.
What does matter is how strong is your purchase offer? How well written is your offer? Have you included any special conditions to make your offer stand out among other offers?
I have empathy for buyer’s agents in this market. It’s very tough. A buyer’s agent is but one of many pigeons in the park scrambling for tossed bread crumbs. Sacramento is a seller’s market. Limited inventory. Want to know how many homes are available for sale in the entire county of Sacramento today? I just ran an MLS search and the answer is 1,831 homes. Of those, only 407 are short sales. To put this into perspective for you, in August of 2007, the number of our available homes for sale in Sacramento County was 10,521. Five years ago we had almost 6 times the inventory! Buying homes in Sacramento is very difficult today.
This is a huge drop in the number of homes for sale in Sacramento County. It’s gigantic. It’s like King Kong and Jessica Lange.
It must be even tougher to be a buyer’s agent who doesn’t want to tick off a buyer when the buyer insists on offering less than list price. It’s amusing to receive a low offer accompanied by a note telling us how much the buyer loves the home. They adore this home so much that they want to negotiate on the price. I don’t know where some buyers get the idea that making their offer even less attractive gives them a fighting chance or that a seller would be willing to issue a counter offer. When a seller has received a dozen offers — some cash and above list — the seller tosses lowball offers in the circular bin.
It’s difficult to get your head around the fact that a less-than-list price offer could be considered a lowball in today’s market. For all the home buyers buying homes in Sacramento, do yourself a favor and hire a buyer’s agent who will present the true picture and guide you in the right direction. Otherwise, you may as well go to the park and feed the birds.
This is the Reason to Be a Top Listing Agent in Sacramento
A fellow real estate agent in Sacramento once told me that she prefers to work with first-time home buyers because they are more grateful than sellers. She said they were totally thrilled to be handed the keys at closing, more so than those who are handing over the keys. They didn’t complain. They didn’t nag her about why isn’t their home selling. I guess she moved up a notch or two in their eyes. And that approach works for her.
I’m very much the opposite. I love working with home sellers. I am a top listing agent in Sacramento. It shows in my production and I’ve been a top listing agent in Sacramento for a long time. I love selling homes. Including homes for sellers of a short sale. I know that sellers who need to do a short sale have limited options in Sacramento. There are not very many of us short sale specialists or Certified HAFA Specialists in the area. There are hundreds, maybe thousands who have taken classes, but few agents who actually close a lot of short sales. The more short sales an agent closes, the more an agent learns about the fine nuances of a short sale. I’ve closed enough to be the #1 short sale agent over 7 counties since 2006. Today I am a top listing agent in Sacramento for all homes.
I enjoy preparing the home for sale. Setting the stage. Helping the homeowner select the correct price. Shooting photographs and tweaking in Photoshop. Receiving purchase offers, reading between the lines. Analyzing comparable sales. Negotiating with the banks. Managing the selling process. All that’s involved in home selling these days.
Making a difference in somebody’s life is the key, though. Home sellers who have equity are happy when we close, especially when I sell the home for thousands more than they would probably get otherwise. Money makes everybody happy. If somebody tells you that money can’t buy happiness, that’s a broke person speaking. There is nothing inherently evil in money. It’s the love of money that corrupts people. Not money itself.
I picked up my mail from the office on Tuesday. I don’t go into the office more than once a week. In my mail was a card from Elk Grove sellers whose home I sold as a short sale sometime last year. They said they had been meaning to write me a note for a long time. They thanked me for doing my job, for my “wisdom, advice, expertise and encouragement.” They ended the note by saying: “Thank you for helping us get a fresh start.”
On my team members’ desk was a bottle of French champagne, an orchid plant and a card from another short sale seller. She thanked us for the sale of her home. I felt it was only fair that my team member, Barbara Dow, receive the orchids, especially since she had been watering it, and our assistant, Shaundra Bradley, I knew would enjoy the champagne. They work as hard as I do. Maybe even harder. I kept the card.
And that’s the reason I am a top Sacramento listing agent. It’s more than the sale of a house.
Photo: Elizabeth Weintraub
Sacramento is in a Real Estate Drought with Active Short Contingent Sales
An agent called Sunday afternoon to complain that a seller told him it was OK to show a home. This is a short sale in Carmichael. It is listed in MLS as an active short contingent. My seller recently moved, and the buyer’s agent has been watering the lawn in the back because there is no automatic sprinkler. (Water is rationed this time of year in Sacramento as we’re in our dry season with hot weather.)
Far as I’m concerned, watering a lawn is going above and beyond the call of duty for this buyer’s agent. That’s a job for the seller, and it’s the seller’s responsibility to maintain the lawn during escrow. Even if the seller vacates the property, it doesn’t mean the seller is no longer responsible for the home. But this buyer’s agent offered to do it, and the seller accepted. I suspect the agent didn’t want to take a chance on her buyers’ dissatisfaction with the condition at closing. That’s a really smart real estate agent.
Here, I was in the middle of kicking back in my air-conditioned home reading Tina Fey’s Bossypants yesterday when my cell rang. I made the mistake of answering it. The caller was a buyer’s agent, and he was pretty irate. He demanded to know whether this particular short sale in Carmichael was available. Well, it’s listed as “active short contingent” in MLS, which means the seller has accepted an offer. I explained that to the agent, adding that we recently received approval from the first lender and are waiting for approval from the second.
He screamed at me: Why did the seller tell me he had moved out and it was OK to show it? I don’t know why this guy didn’t call the listing agent first. That’s what I would have done in his shoes. But agents don’t always do what I would do. I didn’t know what to say to him because as a practice I don’t show Active Short Contingent listings to prospective buyers. It’s generally pointless. But every real estate agent is different. So, I said the only thing I could think of that moment, which was, “I guess the seller thought it was OK for you to show his home.” How do I know what the seller thought? I imagine that the seller was as astonished as I that an agent would want to show an active short contingent home.
Was it the heat? It was almost 100 yesterday in Sacramento. The agent slammed down the phone. Then a few minutes later, the buyer’s agent (who was over at the home watering the lawn) called. She said this particular agent left all the doors open, the windows open and had stormed up to her as she was putting away the garden hose to berate her in front of his client. Turns out this buyer’s agent is from San Francisco. Different MLS, different systems. Still, the agent is required to know the meaning of ASC.
Unfortunately, it’s about to get more complicated in Sacramento with short sales, too. Our MetroList, which is the MLS for our four-county area, is changing the status for short sales with offers. These listings will no longer automatically be placed into Active Short Contingent status come July 31. We will now implement a new status called Pending Short Lender Approval (PSLA). This status change will mean an offer has been accepted by the seller and the seller no longer desires showings.
If a seller is willing to accept a backup offer, then the status can revert to Active Short Contingent. Agents who put a listing into Active Short Contingent status when the seller is no longer willing to show nor receive backups offers will be fined $200 or $250 per day, I guess they haven’t yet worked this part out.
Will this solve the problem we are experiencing in Sacramento? Well, it will if agents read MLS. But, seriously guys, how likely is that?
On the other hand, this upcoming MLS change will remove from inventory on certain online websites all the active short contingent listings. We will drop to less than 30 days of inventory. It will present a true picture of how little real estate is for sale in Sacramento. The Sacramento real estate market is in jeopardy until we bump up that inventory. As a Sacramento real estate agent, I’m doing my part. Watch for new listings this week on my website.
Photo: Elizabeth Weintraub
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