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Why Buyers Should Talk to their Sacramento Neighbors
If you think your neighbors don’t matter when you buy a home in Sacramento — or anywhere for that matter — think again. I could not imagine a smart person buying a home in a neighborhood without talking to the neighbors and, perhaps, even asking the neighbors what they think about each other. Some people love to gossip.
My parents didn’t do that when I was growing up. They bought a home and did not talk to the neighbors in 1955 in a brand new subdivision called Heritage Homes, located in the Village of Circle Pines, an isolated area at the time about 15 minutes outside of Minneapolis. Our neighbors, the Palmquists — I vividly recall those horrid people and their hoard of little brats to this day — were absolutely unbearable. Apart from letting their lawn die, throwing trash all over the yard — such an eyesore — and their screaming, yelling and drunken brawls at all hours of the night, the kids were hoodlums who would steal toys in bright daylight right out of our yard. One of the Palmquist kids stuck a water hose into my bedroom window and turned it on full blast.
To try to put a stop to this kind of behavior, I stuffed one of the little Palmquist girls into my red wagon and pulled her out into the field across the street. A field that was converted into an ice rink in the winter but in the summer was blanketed with stickers. After a stern lecture and warning, I removed her shoes, dumped her in the field and left.
Fortunately, the neighbors on my street of homes in Land Park are wonderful. We stop when we see each other outside and talk. It’s a quiet street with very little traffic, only a block long. It’s rare for anybody who doesn’t live here to walk down our street or drive by. It’s like an oasis. There were a couple of neighbors whom some people didn’t much care for and they moved away.
Neighborhoods can change. We’ve been lucky throughout the ups and downs of the Sacramento real estate market that we’ve had only one short sale on our street. Imagine the economic make-up of areas where everybody paid half a million or more for their homes and those very homes are now worth $200,000 or so. That’s assuming, of course, that those individuals who overpaid could afford it at the time they bought.
One of my clients, a seller who had owned a home in an upscale community of million-dollar homes, recently closed escrow. Homes in that neighborhood are now selling around $400,000. He held a liquidation sale the last few days of his occupancy, and some of his neighbors who served on the board of his HOA showed up and tried to stop him from having the sale. They even sent security guards over to his house to stop the sale. They videotaped his wife screaming at their rude behavior, such a mild mannered and sweet woman otherwise. This is what neighbors can do.
You’re not just buying a home; you’re buying a neighborhood. Talk to the neighbors before buying a home.
The Waiting Period for Multiple Offers in Sacramento
How many purchase offers does it take to sell a home in Sacramento these days? Maybe a better way to put it is how many days should a seller wait to accept an offer after receiving the first purchase offer?
An agent in San Jose called Thursday afternoon about a listing in Elk Grove that went on the market on Monday. I informed her the home was pending. Wha? She was shocked. She stuttered, “Bu bu bu but, it was ONLY three days — THREE days!!” What can I say? Indeed, some agents have been sleeping under a rock. Another agent called to say her clients had finally looked at the home Wednesday night and went home to sleep on it. When they woke up Thursday morning, they decided they would like to make an offer. Except now the home is pending. How is this my fault, I want to know?
If a person is seriously searching for a home to buy, that person receives listings directly from MLS through their Sacramento real estate agent, and they study those listings every single day. Buyers can opt to receive listings more often than once a day as well. Then, when they find a home, they need to be Johnny-on-the-Spot, run over, inspect and write.
The problem with most purchase offers is the offer itself is good for only 72 hours. So, if a seller receives an offer on Monday, to keep the offer alive, a seller needs to respond by Thursday, typically by 5 PM. Although, few homebuyers want to wait 3 whole days for an answer. It makes them antsy and agitated. I mean, what if it was you? Would you want to wait 3 days for an answer?
Usually the first day or two, offers come in from buyers who have not viewed the home. Many of these types of buyers are investors, with the bulk hailing from the Bay area. These people are hopeful that if they are the first offer, they will get the home, and that’s not really how it works. If the buyers haven’t seen the home, their offer does not hold as much validity as the offers that arrive on Day #3 and Day #4. After a while, all of the offers are about the same. There will most likely be a lot of cash offers.
Is it worth your time to write an offer on Day 4 when the seller has multiple offers? Depends. What do you have to offer that hasn’t already been offered? It should probably be cash or at least over 20% down conventional, in this market. Because the seller doesn’t really need 50 offers. The seller needs the offer that is the best and the offer that will work for the seller.
Are You Wasting Your Time to Write a Purchase Offer?
Even with the temperature in Sacramento hitting 108 yesterday, people were still outside, running around and looking at homes to buy. What’s a little dry heat to us in Sacramento? Doesn’t slow a Sacramento resident down one little bit. The heat also matches the temperature of the real estate market; it’s so hot your fingers sizzle when wet.
I received phone calls, emails and text messages all day from other real estate agents and from buyers. When I explained that in case they had been living under a rock, or maybe in Stockton, our real estate market is producing multiple offers for highly desirable homes, some of them were displeased. Not every home on the market is popular. Those owners of unpopular homes are unlikely to receive multiple offers. If your home is special, though, or you have a home in Natomas or Elk Grove, look out, because you will get multiple offers.
The displeasure seemed to manifest from the possibility of multiple offers. I don’t believe that buyers should feel threatened by the fact that other buyers want what they want. It means they’ve chosen a desirable home to buy, and that home will be desirable when it comes time to sell. They shouldn’t really worry about what other buyers are doing; if they want the home, just put their best offer out there. Just write a purchase offer. Don’t try to be cute or to negotiate, if you want the home, go get it. If you play around and take chances, a buyer could lose the home.
One sentence, though, continued to pop up during my conversations with these people. It didn’t seem to matter if they were a real estate agent or a home buyer, they both said the same thing:
“I don’t want to waste my time writing an offer.”
First, as a real estate agent, we are never wasting our time writing an offer. That’s our business; it’s what we do for a living. Writing offers and getting them accepted is how we get paid. Sometimes, offers are rejected. It’s a fact of life. Why, a Sacramento real estate agent can end up with a rejected offer even if it’s the only offer the seller received. Moreover, since about 90% of the agents in Sacramento sell only 4 to 6 houses a year, just how precious is that agent’s time in the first place?
Second, as a buyer, you’ll never buy the house if you don’t write a purchase offer. Saying you don’t want to waste your time writing an offer is like asking for a guarantee. Since when do you get a guarantee in real estate? OK, I know some listing agents who will give you that guarantee, but I refuse to throw my seller under the bus. And that’s what you’re asking me to do when you come to me because I am the listing agent and say you don’t want to waste your time writing an offer through one of my team members. Who do you think I am? Tony Soprano?
If you seriously believe you’re wasting your time by writing an offer to buy a home in Sacramento, then you’re probably wasting your time talking to this Sacramento real estate agent. And if your time is wasted, what does it say about how you feel about mine?
Buying and Selling a Sacramento Home at the Same Time
If this were a different type of real estate market in Sacramento right now, my advice would be completely different about buying a selling at the same time. The following advice applies only because this is a seller’s market in Sacramento. Sellers who want to move up or move down in a buyer’s market would have an easier time of it. What your agent might not tell you is trying to buy and sell a home in a seller’s market is almost impossible.
It doesn’t mean you can’t do engage in buying and selling simultaneously; however, it could be very difficult. The reason is we have very little inventory in our Sacramento metropolitan area. People try to equate this particular market of Spring 2013 to the Spring 2006 market, and they are not the same. Back then, in 2006, we had a lot of homes for sale.
This is what the numbers looked like in March of 2006 for all Sacramento counties combined:
- Active Listings (Homes for Sale): 6,488
- Pending Listings (Homes in Escrow): 1,479
- Sold Listings (Closed Home Sales): 1,425
Here are the numbers for March of 2013 for all Sacramento counties combined:
- Active Listings (Homes for Sale): 1,378
- Pending Listings (Homes in Escrow): 1,371
- Sold Listings (Closed Home Sales): 1,835
What is particular startling about these two comparisons is the fact that despite the fact that active listing inventory dropped by 78.8% — meaning we have 5,110 fewer homes on the market in 2013 than we did at this same time in 2006 — we sold 30% more. Moreover, national average interest rates were at 6.47% in March of 2006. Today, interest rates are unbelievable low. Yesterday, the rate offered by a major local mortgage broker was 3.5%. This is huge, and these facts are what is driving the market.
It’s why it’s to be buying and selling at the same time. As a seller, you are in the driver’s seat. As such, for some sellers, the only way to buy and sell at the same time is to sell and rent back for a few months. Because if you could ever in your lifetime make that kind of demand of a buyer for your home, now is the time to do it. Or, sell and move into temporary quarters. Or, sell and delay the closing for a few months. Because you really need to have the cash in hand to make an offer to buy.
Put on your other hat, your buyer’s hat. Now, you are probably one of 20 offers for the same house. Your offer is contingent on selling your home. It doesn’t matter if your home is already in escrow, it is still contingent. It is contingent until that puppy closes. And most sellers do not want to take a contingent offer, not when they see investors and home buyers waving cash in their faces or buying their home without a contingency on selling a home. Having a contingency to sell in your offer makes you unattractive to many sellers.
Having said that, I will say I have done it. But I do warn my sellers that if they want to buy a home and sell a home at the same time, they will have a much easier time of it if they have the cash and financial means to buy without selling. Or else, wait until their home is sold to buy another home. It doesn’t mean I won’t try to do both sales concurrently for them, but the odds are against that happening.
If you want to buy or sell a home in Sacramento and need a good Sacramento real estate agent, please call Elizabeth Weintraub at 916.233.6759. Put almost 40 years of experience to work for you.
Getting Married on Valentine’s Day
Candidates to be first-time homebuyers in Sacramento got married yesterday every 7 minutes. That’s more than 68 couples saying I do in an 8-hour period. Getting married on Valentine’s Day is kind of like being born on Christmas. You know, for the rest of your life, you’ll get fewer presents than you ordinarily would receive if the celebrations were clearly separate. But it is a way for some people to remember their anniversary. One guy actually admitted to the Sacramento Bee that getting married on Valentine’s Day now means the whole world will help him to remember the date because, as though this is an excuse, because he’s a guy.
It’s economical to get married at the County clerk’s office in Sacramento. A marriage license costs only $83. A couple could save that $5,000 to $50,000 they could plan to spend on a wedding and use it as a down payment to buy their first home. I say this as a person who got married during dim sum while our witnesses graciously picked up the lunch tab. I’m often amazed at the amount of money spent on full-blown affairs to get married, especially since this once-in-a-lifetime experience has a tendency to repeat itself, twice or more.
It’s not like you’ll ever get that money back if one of you decides I don’t down the road. Not like you’ll probably fare if you buy a home in Sacramento. At least buying a home nowadays is building equity. So, my advice is skip the big wedding and save your money to buy a home. If it doesn’t work out, sell the home, take the money and be happy about something else. Don’t try to buy each other out. I see far too many spouses who later refinance to come up with the money to pay off an ex, and then they run into trouble and can’t pay the mortgage. Refinanced loans are hard money in California. Just sayin’.
But a belated Happy Valentine’s Day, and Best Wishes to all those who got married yesterday. Getting married on Valentine’s Day is pretty romantic but you just lost yourself an extra gift on that day, you know. Just sayin’ . . .
