buying a home in sacramento
Discounting an Already Discounted Price for a Home
The thing about selling Sacramento real estate is the landscape and climate continually changes from year to year, the market is never the same. The only thing that manages to hold true is the shape-shifting of the challenges. We Sacramento REALTORS always tackle challenges, it’s the name of the game, they just change form.
A few years ago, it was things like the REDC Happy Thanksgiving short sale, in which the negotiator demanded that the seller stop celebrating with his family and start digging into his file cabinet for documents. On Thanksgiving Day. Today, most sales are no longer short sales anymore in Sacramento. They are regular equity sales with traditional sellers. Not only that, but our market has shifted a bit more toward normalcy, even with limited inventory; it’s more balanced.
Buyers seem to present more challenges. It’s like they are tiptoeing around on little mice feet, afraid of their own shadow. They make offers and then vanish. They don’t respond to counter offers and sometimes their agents go with them into that dark hole somewhere. One agent I have emailed, texted, left voice mails, over and over and nothing. Maybe she is in the hospital?
I am also hearing that some buyer’s agents do not present comparable sales to buyer before advising them on writing an offer. They tell the buyer to name a price. So the buyer looks at the list price and then deducts the (inflated) cost of upgrades and improvements the buyer would like to make. The buyer doesn’t realize the price might be a discounted price and instead might try to discount it further. Not to mention, upgrades don’t really factor in.
I’ve heard buyers sob, I would have to pay $50,000 to install a swimming pool so you need to knock 50 grand off the price. I suspect their agent is dying to say, hey, psst, this home doesn’t come with a swimming pool; get over it. But they smile and suggest that the buyer instead tour homes with swimming pools buuuutttt the buyer wants THIS home AND a swimming pool. I don’t envy buyer’s agents. They know a discounted price doesn’t often work.
Some fixer homes, well, they’re not every buyer’s idea of a new home. Buyers generally want to buy a home in move-in condition. This means the homes that need a bit of work can take longer to sell because they don’t appeal to everybody. But just because the days on market are longer than the flipper homes doesn’t mean the price isn’t right. The price might be just right.
On the Fence About Buying a Home in Sacramento?
If you’re on the fence about buying a home in Sacramento, this blog is for you. How often have you said to yourself, I would like to do this other enormously fun and hugely rewarding thing, but I have to work or perform some other pure drudgery I don’t really want to do, so I’ll have to pass? Yeah, I’ll have to do the responsible thing. Make the adult choice. And then later you regret it? I once passed on a trip to London with my mother because I spent the money I would have used for the trip on fixing my car, a 1965 Mustang. I should have gone to London, even if it meant borrowing the money.
When faced with choices of do or don’t, this is where analyzing risk comes in. You’ve got to ponder what would happen if you did it anyway and whether you could live with the possible downside of those results. I’m not saying you should do something stupid like run out into the freeway at rush hour because the likelihood is you would get killed. But what if when faced with an unusual decision, you did something nice for yourself or someone else instead, something that was out of the ordinary for you?
People spend so much time trying to plan for the future. As though we have all the time in the world and nobody can take that time away from us when everything can change overnight with the snap of a finger. We’re so busy with our noses stuck in our cellphones that we don’t see the here and now. We can’t be here and now if we’re elsewhere. The future most likely will come regardless of our plans, but the here and now will be gone tomorrow.
Why not give yourself permission to enjoy something different or just be happy? There is innocence in happiness, and as we grow older sometimes we forget about that innocence, but it’s still there. We tell ourselves that we’ll be buying a home in Sacramento when we have secure jobs (ha, ha) and have socked away a big down payment, but that day might never come. Emergencies pop up, stuff happens, things change. Life gets in the way. Before you know it, you’re in your 40s and have never owned a home. You get into your 50s and your bucket list gets longer and longer.
If you want to take tomorrow off work and head for the beach, just go, follow your heart. If you’re thinking about buying a home in Sacramento, talk to a mortgage broker and find out what you need to do to clean up your credit report or apply for down payment assistance. Think how you’ll look back at your situation 5 years from now. Try a different perspective. For guidance, call a Sacramento real estate agent like Elizabeth Weintraub, 916.233.6759.
Buying a Sacramento Home Parked in Shadow Inventory
When inventory is low and the quality of available homes for sale in Sacramento is spotty, it might seem like there are no homes to buy, but that’s because nobody is looking at the shadow inventory. Shadow inventory can be defined as a lot of things — it can be homes that have been foreclosed upon and not yet on the market, or it can pertain to the pending sales, active release, short contingent and temporarily off the market listings, among other select status modifiers.
You might find gold in those listings.
I’ve noticed that some real estate agents are diligently digging through MLS to try to uncover shadow inventory for their buyers. Buyers can’t find these listings on their own, for the most part. Oh, they can find homes that closed escrow a few months ago on websites like Trulia and Zillow, but much of that stuff is dated. Even our own MLS, MetroList, hides the status of some listings down at the bottom on the right-hand side, so buyers get all excited and think homes are available to buy when they are actually under contract.
This is when it pays to get in touch the listing agent to find out whether the agent and her seller might welcome a backup offer. The thing about a backup offer is it guarantees the buyer that nobody else can step in to snatch the home should the existing pending sale blowup. If the existing buyer cancels, a backup offer, properly prepared, would put the second buyer into first position, effectively locking out the competition.
You might wonder how many pending sales blow up? It’s hard to pinpoint exactly but it’s not unusual for some listings to sell 3, 4 or 5 times before they close. Part of that problem is unscrupulous buyers writing more than one offer when they can’t afford to buy two homes. Part is due to tightened lending restrictions. Whatever the problem might be in an existing transaction, having a backup offer can give the seller peace of mind and it can also be a bonanza for a buyer who missed out on making an offer for that home.
If a buyer has not lifted contingencies and the transaction is still influx, it might be a good idea to check out a few pending sales to see if there is an opportunity lurking in the shadow inventory for you.
Types of Sacramento Mortgage Lenders Who Don’t Give a Crap
There are many reasons to use a local mortgage broker when buying a home in Sacramento, but there are sometimes more reasons to rely on a person who is paid on commission over a person who is paid a salary. Yeah. It makes sense. I’m not saying every salaried person hates their job, but enough do that they often develop lackadaisical attitudes. A person paid on commission cannot afford a “who gives a crap” attitude or she’ll end up standing in the soup lines.
It’s probably not even a conscious thing. These guys don’t go into the bank to work with a screw-you mentality, and they probably don’t actually plan to mess up a home buyer’s closing, but dollars to doughnuts they are not emotionally invested in anybody’s time to move. They’re not the guys sitting on packed boxes, twiddling thumbs and staring at their silent iPhones. They’re the people for whom the lunch hour is but minutes away and there’s a new place down the street they’ve been meaning to go to try the tacos. They punch out and go.
Meanwhile, calls go to voice mail or the lender’s voicemail box is full. Emails go unanswered. When the lenders do respond, it’s to say the file is still in underwriting, and they let it go at that, feeling they have fully explained the quandary about why the buyers can’t move into their new home over the weekend. Where did they put that appraisal? It was right there on their desktop a moment ago. Oh, look, here’s a YouTube video of a cat chasing chicken treats.
It’s not just banks that employ these types of people on their payroll, credit unions are guilty of this, too. The employees are just doing a job to the best of their ability. I think it’s the Peter Principle on display. Perhaps they’ve risen to their own level of incompetence.
Of course, there are commissioned individuals who develop poor work ethics, too. I’m not saying all people on commission are motivated, but if I would have to choose between a banking institution or a local mortgage broker, I’m going with the Sacramento mortgage broker whose personal reputation is on the line and whose track record speaks volumes. They all have access pretty much to the same bag o’ money. Why not pick one who gives a crap?
How to Lose Your Dream Home in Sacramento
There are times in this business when home buyers ignore the essence of time and wrongly believe that they have all the time in the world to decide whether they want to buy a particular home in Sacramento. The constant that is sure to happen, even if a home has been on the market for a year, is the minute one home buyer decides she might want to buy it, so does another. I can’t explain how or why it happens but it does.
It’s not a trick. It’s not a listing agent trying to get more money for her seller. Nothing up my sleeve, I swear.
Such was the situation with a home that closed escrow this month. I first started talking with the seller about this home a year ago. He is retired and volunteers on government issues in Washington, D.C. He had never seen the home, and it has always been a rental property for him.
I inspected the home in Sacramento and found the living conditions to be substandard. The carpeting required replacement, the walls and cabinets needed repair and paint. Bottom line, the only way he could sell that home for a decent price would be to get the tenant out and fix it up. His property management company wasted about half a year to remove the tenant. No idea what’s so hard about giving 60 days to move.
I sent a handyman over to fix up the home and get it ready for market. First buyer in escrow could not qualify for a loan, some little glitch at the last minute prevented him from closing. Back on the market. A few months later, another buyer made an inquiry and wrote an offer through their agent. Although I warned the buyer’s agent that the seller would want list price, the buyer had other ideas.
It took the buyer another week to write a series of counter offers and to eventually end up at the place where the buyer should have been in the beginning. We asked for list price and no concessions. Pretty simple. But the buyer wanted to negotiate. By the time we got to the third offer with the buyer, or maybe it was the fourth offer, I don’t recall, I had uploaded all of the paperwork to DocuSign for the seller.
At that very moment, a full price cash offer arrived for this home in Sacramento. Cash is not always king anymore, but a full-price cash offer does tend to rule.
So, the moral of this story is the seller elected to ignore the first buyer’s final offer, which met all of his demands, and accepted instead the full-price cash offer. Those buyers were so close to buying what they continued to insist was their dream home. They lost it. One minute they were celebrating that the seller was about to accept their offer, and the next they were crying. I felt empathy for them because they were a young family with another baby on the way, but I didn’t represent them. I represented the seller.