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Why Sacramento Real Estate Agents Get All the Good Deals
Agents get the good deals that home buyers pass up.
Do you know why so many of the good deals seem to go to real estate agents? I’ll tell you why. It’s not because agents are stealing all the good deals. It’s because they recognize a good deal when they spot it. When one is working in the real estate business day after day and year after year, I don’t care how unfocused you are, eventually some of it rubs off and sticks with you. So many of my long-term listings that other buyers and investors pass by because the properties need work, end up sold to a Sacramento Realtor. It’s sorta becoming par for the course. In fact, I’ve thought about buying a few myself but that would be a conflict of interest.
A few years back I had a short sale home in Carmichael to sell that was completely trashed. The seller just picked up his briefcase and walked out, leaving all of the furniture and his personal belongings. Same situation for a short sale home in Galt, now that I pause to reflect, and both sold about the same time. That home in Carmichael, though, nobody would buy, even though it was only $100,000 and the bank had approved the short sale. We were apart by $5,000 and the investor bit the dust. Finally, a real estate agent picked it up, fixed it up and flipped that home for about $300,000.
Investors and other buyers today seem to pause at the sales price and then offer less for no apparent reason. They act like they’re bartering for a trinket at a Tijuana flea market, saying things like I’ll give you $350,000 for a home listed at $395,000. It makes me want to retort: Tell you what, why don’t we raise the price to $450,000 and then you can offer $395,000? They don’t understand that it’s not make-me-an-offer season in Sacramento, and many homes are generally priced right where they should be. If list price and market value are synonymous, why would an investor get a break?
Homes that need work often linger on the market because they are not what most first-time home buyers want to purchase. Although many fixer upper prices are already reduced to reflect the work required, most home buyers desire turn-key, ready to move into, and they don’t want to tackle any work. If a home needs a roof, for example, they can’t seem to figure out that a roof might cost about $10,000, and they can finance that roof through an Energy Efficient Mortgage (which takes one day to install) and, when they are finished, they will own a home with a brand new roof, and the sales price is still a bargain.
I sold a home like that in Elk Grove to another real estate agent last year, and I’ll most likely do it again this year. That’s because agents see the value. They know the neighborhoods. They don’t automatically assume longer days on market means the price is too high because that’s not always true and they know it. But then they also work with first-time home buyers, so they understand the disconnect going on. Buyers don’t often spot the good deals but agents do.
Sacramento Mortgage Lenders Can’t Perform
Why can’t Sacramento mortgage lenders close escrow? Almost every single escrow nowadays has some loan delay that causes a Sacramento home buyer not to close. But just because everybody is doing it doesn’t make it right. Why can’t home buyers close escrow? Because their lenders can’t perform. If you’re looking for a mortgage lender to finance a home in Sacramento, I’d say an important question to ask is can they promise — can they guarantee — that you will be able to close escrow in this century? Get a timeframe and hold them accountable. This is the big white elephant in the room that everybody seems to be ignoring — lenders who can’t perform.
You know what happens when a mortgage lender can’t perform? They come knocking on the door, whimpering like a dog, holding their tails between their legs and begging: Please sir, will you extend our escrow? Sometimes that answer is NO. Especially in a seller’s market like the real estate market we have in Sacramento at the moment. Sellers get tired of waiting for buyers to close. It’s not just seller’s remorse. Sellers can and will cancel your escrow if you can’t close on time. Sellers might decide they’d rather wait until spring, when maybe prices will go up even further.
If you’re trying to close a Sacramento short sale, it’s even worse. It’s not just the seller who might refuse to extend, it’s also the seller’s short sale bank. Banks are refusing to provide a short sale extension. Those short sale approval letters contain an expiration date. If the bank will agree to extend, the bank might charge the buyer $100 or so a day for that extension. It’s a no-win situation for that first-time home buyer. It doesn’t matter what the contract says, that verbiage won’t save you. It matters how long the short sale bank will give a buyer to close, and that timeframe governs your transaction.
Perhaps a bigger question is why can’t mortgage lenders close escrow on time for today’s home buyers? What is the problem? It’s not like the banks are overwhelmed with business because there aren’t that many buyers in escrow. We have very low inventory — we have fewer than 1,600 homes for sale in Sacramento County. Interest rates are low, but they’ve been low for months and months. Yeah, loan restrictions have tightened, but we’ve been jumping through hoops for a long time. Nothing has changed overnight. I propose that banks are swamped because they refuse to hire enough people to get the job done. They’ve made so many cutbacks in personnel during the downturn that they’ve gotten used to thin payrolls. Cheapskates.
Perhaps there is some little old lady sitting in a dark room with a single light bulb dangling from the ceiling over her desk. This little old lady is working on your file. She looks at her watch. Stops working. Oh, my goodness, deary me, it’s time to go to Starbucks. She leaves. And she doesn’t come back for a few days, and nobody cares.
It’s no big secret why home sellers in Sacramento prefer a cash offer over a financed offer. The performance in underwriting is pathetic. Totally sucks. Big banks, little banks, makes no difference.
The solution: If you’ve got a choice in choosing a mortgage lender, stay local. Pick a person you can grab by the shirt collar and shake a little bit. And get that guarantee upfront that your file will be processed in a timely manner or you might not be buying a home in Sacramento.
