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Do Sacramento Buyer’s Agents Push Up Home Values?
Here is a new dig about real estate agents that I haven’t heard before. A potential seller of a home in Land Park called to talk about her overpriced home and how it got that way. During the conversation about how and why she paid too much for it — which I’ll get to another day in another blog — she mentioned that she was trying to buy a home in East Bay. When I mentioned I have a close friend who works in her targeted city and she might want to contact that agent to see homes, the caller threw out this crazy idea.
What I believe she was saying is that she doesn’t trust real estate agents, which is too bad. Because there are many excellent real estate agents in the business, and not every agent should be painted with the same tainted brush due to a few bad apples. This home buyer was reluctant to work with a Sacramento buyer’s agent who is a neighborhood specialist, i.e. an agent who works and lives in the neighborhood. Her feeling was the agent would try to drive up prices in the neighborhood by making her pay more for a home.
In other words, she believed the agent would not in good faith negotiate on her behalf in order to make the agent’s own home worth more. What? First, I told her, understand that agents are highly unlikely to try to push her to pay more to increase an agent’s own home value because they’re just not that diabolical. Second, comparable sales are good for only 3 months and unless a person is selling her home within that 3-month period, that sale won’t matter one little bit. A home that sold last year has no bearing on home values this year. Not to mention, one home sale does not increase the value in any given neighborhood.
What buyer’s agents want first and foremost is to make their buyers happy. They want satisfied buyers, buyers who are thrilled with the purchase of their new home and with the agent’s performance. Also, because they are home buyers who someday will be a seller, and the agent wants to eventually list the home as well. Agents want clients for life.
Buyer’s agents who are REALTORS have a fiduciary to the buyer and must hold that buyer’s interests above their own. Not only that, but Sacramento buyer’s agents want to get paid. They want to close the transaction but not at all costs. They are more focused on bringing together a buyer and seller on price than on manipulation of said price. A Sacramento buyer’s agent will do everything in her power to represent the buyer to her fullest and best abilities. Moreover, that neighborhood specialist will probably know more about the neighborhood than an out-of-area agent, which would be to her advantage!
A client called a few days ago to ask if I remembered her. I recognized her voice immediately. I also have Caller ID (ha, ha). She bought a bank-owned home in College Greens 5 years ago, and today it is worth considerably more than she paid for it. Location is everything, I reminded her. She bought in an excellent neighborhood and on a highly desirable street. She was just calling to say thanks for the holiday card. It was delightful to chat with her.
That’s the kind of happy buyer I want. It’s the kind of happy buyer just about every Sacramento real estate agent is after.
Not Every Sacramento Home Buyer is a Buyer
Every Sacramento home buyer should enjoy the luxury — and it is a luxury — of working with a buyer’s agent who will check out the property records before writing a purchase offer for that buyer. A Sacramento buyer’s agent at the very least should examine basic details but so many do not. When a buyer wants to write an offer, a lot of agents will just write it without giving much thought to the possible consequences for a buyer. I suppose they might think it’s not their job or maybe they don’t know how.
An agent has many sources at her or his disposal to find this data. At minimum, even if an agent doesn’t run the comparable sales for the Sacramento home buyer — which for my team members would be inexcusable — the agent should check to see who owns the property. Is it one person? Is it a trust? Does the owner’s address match the property address or are the owners living out of state? A quick call to the listing agent would confirm whether two people are on title or if one of them is deceased. You know, just stuff that makes the entire transaction run smoother and gives the buyer enough information to make an intelligent decision.
A potential Sacramento home buyer called yesterday about wanting to buy a home along the river that is a short sale. He asked if moi, his newly found Sacramento real estate agent, would be willing to write a purchase offer for him. As an experienced short sale agent, the first thing I did was look at the tax rolls. I see that this is an investment property for the seller. The second thing I notice is his second loan is a gigantic refinance for many thousands of dollars, and the lender is National City.
National City is now owned by PNC. This makes it a PNC short sale. A second loan held by PNC, especially a hard-money loan that carries recourse in California, is a difficult short sale to negotiate. That’s because PNC knows it can go after the seller personally and try to collect the full amount of the loan should the home go to foreclosure. When the security for that second loan is wiped out, because it’s a cash-out refinance, that lender, you can bet, will pursue it.
If the seller is not willing to negotiate with PNC upfront in this type of short sale, well, the odds are it will not get approved as a short sale. If PNC approved the short sale, by law it must release the seller from liability, but it is not required to approve a short sale.
Not only that, but there is a trustee’s sale pending shortly. It is very possible that a seller who waits until the last possible minute to put a home on the market as a short sale prior to a pending trustee’s sale is not a seller who is willing to negotiate upfront, but you never know. Weird things happen in real estate every day.
Armed with this information, the buyer chose to move forward and write an offer because he decided that he had little to lose. He was prepared to be disappointed. I asked a team member on the Elizabeth Weintraub Team to prepare an offer for him. My team member explained that we need a preapproval letter to accompany the offer because the way to postpone a trustee’s sale is to submit a purchase offer. The bank will not allow submission of a purchase offer without a preapproval letter. An offer without a preapproval letter is not an offer. It is an incomplete offer and considered insufficient to postpone a trustee’s auction.
The buyer could not produce a preapproval letter. He was irritated about my team member’s insistence on it, too. You see, he had sold his own home as a short sale a few months back.
The buyer said fine, he’d find another Sacramento real estate agent to write his purchase offer. That was actually a very good idea on his part, but a wasted effort.
