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Is Your Sacramento Home Listing Under Priced?
You’ve got to love this crazy seller’s market in Sacramento right now, even if you’re not a Sacramento real estate agent who sells a lot of listings like me. It challenges an agent to be her best each and every single day. Sometimes, being your best involves biting your tongue a little bit, and other times it means providing lengthy explanations to your clients so they thoroughly understand the marketplace. In my experience, an informed seller is a happy seller.
A buyer’s agent in West Sacramento told one of my sellers yesterday that her buyer would have paid almost $150,000 over list price for her home that went into escrow last week. The agent claimed the home was deliberately under priced. First, the home was in pending status, so why the agent was over there talking to the seller is beyond me. Second, it violates the Code of Ethics to discuss pricing with a seller when that seller is represented by another agent. But those are minor irritations when looking at the big picture. The big picture is that statement is a big, fat lie. Oh, man, no wonder people are confused.
This seller’s home would not have sold for more than it sold. It was not under priced. Not in a seller’s market. It’s literally impossible to sell an under-priced home in a seller’s market for less than market value. That’s because no matter how much a seller wants and asks to get, the market will dictate. Buyers are not stupid. OK, maybe some of them are a little undereducated about comparable sales and market movement, but buyers will pay about what a home is worth. Especially when facing a multiple-offer situation.
If a home was worth a hundred thousand dollars more, don’t you think a buyer somewhere, anywhere, would have offered a whole lot more for that home? Yes, they would, because that’s how multiple offers work. When buyers discover a seller has received 5, 10, or 20 offers, buyers tend to put their best offer forward. Buyers who can’t think of any other way to make their offer more attractive to a seller will tend to offer a higher sales price.
Aside from of all that, homes need to appraise at the purchase price, what an appraiser calls “at value,” if the buyer is obtaining financing. It’s pretty darn difficult to pull an appraisal out of thin air these days. A home is worth the price at which others around it of similar square footage sell. There is no magical fairy about to tap her wand and dump hundreds of thousands of dollars on a seller’s doorstep just because a buyer’s agent wishes it.
This Elk Grove Agent Sold a Home $40K Over Comparable Sales
Rumor has it that this seller’s market in Sacramento started this spring, but from my perspective, it began last fall with the September market. We have two very strong markets in Sacramento: Spring and Fall. If you can’t make the spring market, sometimes it is better to wait until fall. Although, in this seller’s market, anytime seems to be a good time to go on the market because all the guidelines and rules and everything you know about real estate have been tossed out the window.
For example, we have been taught since day one to examine the comparable sales when pricing a home. But the comparable sales mean jack squat today, which is why appraisers are having such a tough time trying to appraise. Sales from 3 months ago are not relevant to the market today. It’s the pending sales and the active sales that are predicting which way the wind is gonna blow in this marketplace. That, and a little bit of fairy dust mixed in.
When a seller called me last winter to list her home in Elk Grove, she was concerned that it might not sell right away because it was so close to Christmas. She didn’t live in the home, so it wasn’t upsetting HER Christmas, so it made perfect sense to put it on the market. I looked at the comparable sales and with my then-innocent eyes said: “Oh, look, they substantiate a price of $240,000. Tops. The market movement will let us stick $20K on top and we should do it to see what happens!” The seller liked that strategy. $20K over the pendings was a little risky. We put her home on the market for $259,000.
I did my usual marketing. Promoting that home everywhere that is conceivable online. Shot impeccable photos. Networked the listing like crazy. Within a week, we received an offer that the seller accepted for $275,000! But a few days later, the buyers developed cold feet and canceled. Buyers are a little wobbily right now, I’m finding. This isn’t the first buyer to cancel on one of my sellers due to cold feet or due to writing multiple offers, which is unethical if not against the law.
You will hear agents say that the first offer is always the best. That’s another widely accepted real estate axiom that doesn’t necessarily apply to our present market. The following day, the day before Christmas, we received a second offer of $290,000. It involved financing. The buyers, upon hearing their offer was about to be accepted, changed it in haste to all-cash at $280,000. See what I mean about buyers being a bit unsteady? But $280,000 and all-cash was still better than the first financed offer of $275K.
This Elk Grove home closed in January at $280,000, all cash.
The seller told me when we closed that she was very happy she chose me as her Elk Grove Agent. Even though I don’t live in Elk Grove, I sell a lot of homes in Elk Grove, and I know the Elk Grove neighborhoods very well. Because I am a top producer in Elk Grove, I routinely pop up on those lists from outside referral companies. They look for agents who sell the most homes in any given area, so they have something of value to offer to their sellers.
Well, you can get something of value by calling me directly: Elizabeth Weintraub, 916 233 6759. You can trust that I’ll always give you the straight scoop and put your interests first.
Your Sacramento Home Might Be Worth More Than You Think
Talk about a home that might be worth more than you think. Although I sold a ton of short sales last year — more than 100 — I also sold a bunch of regular equity sales in Sacramento, too. This year, I am selling more equity sales, which is a good sign. It’s probably not so much that the homes are necessarily worth a lot more than they were last year as it is buyers are willing to pay more for them. You see, what a home is worth and what a buyer will pay are really two different things. A smart Sacramento real estate agent spots these opportunities and capitalizes on them.
Why, I just sold a home for $65,000 more than it would probably appraise for. This is just one example of a home that might be worth more than you think; I have plenty more. When I first talked to the sellers of this particular home, which we will leave unnamed, it was apparent they needed to do a short sale. I collected the usual paperwork, their tax returns, bank statements, payroll stubs and we worked on the hardship letter together. Tweaked it, refined it, cleaned it up a little bit until the hardship letter was perfect. They had the property management company send me the keys.
When they had initially called, they said they were undecided about either listing with me or perhaps listing with their property management company. Now, this property management had admitted it had little experience in real estate and none whatsoever in negotiating a short sale, but for some reason, perhaps loyalty, the sellers felt that they should consider listing with the property management company. I simply pointed out the error with that kind of thinking and showed them what life could be like if they listed with an experienced short sale agent. So, they chose me, and may I say they made a wise choice.
I figured the home was worth, maybe $130,000. I studied the comps within a 1/4 mile. The street was known as a busy street, so that suppressed the price a bit more as well. But when I got out to the house and looked at it, I could not believe that such a structure would be worth only $130,000. My gut said it didn’t seem right. I don’t care what the comps reflected; it wasn’t a true picture. We have a hot market, and a three bedroom, two bath, two story with all kinds of updates should not be selling for $130,000. Plus, the street was a lot quieter at that end of town. Why, an investor would pay a lot more than $130,000. In fact, an investor might pay, say, $195,000.
I looked at the payoff to the lender on the seller’s first mortgage. After paying all the costs of sale, including commission, plus late fees, several months of interest, the seller would net about $500. But it would mean no short sale. No ding on the credit from a short sale. The mortgage would be paid in full. I quickly called the seller and asked if they wanted to try it. I suspect they thought I was nuts, but they agreed and we listed the home at, say, $195,000.
It closed at $195,000. What a long shot that paid off.
This isn’t my only story like this in Sacramento. If you are wondering whether your home might be worth more than you think, and if you’d like to avoid a short sale, call me. Even if the sold comps don’t support your value, this Sacramento real estate agent might be able to sell it anyway without doing a short sale. Call Elizabeth Weintraub at 916.233.6759. Put almost 40 years of experience to work for you!
Pushing Up Values for Homes in Elk Grove
A few years ago seems so ancient when I recall how first-time home buyers back then were complaining to this Elk Grove agent that they were getting beat out by cash investors. Home buyers began to wonder if prices were moving up when prices were still pretty flat. I predicted then that the appreciation push would happen when cash buyers bid against other cash buyers. Because offers are dependent upon appraisals when there is financing involved, and the appraisers typically do not appraise a home for more based on pending sales. They look at the comparable sales. Without cash offers, the comparable sales generally won’t move upward. This is not 2005.
Sure enough, I see that happening in Elk Grove now. In fact, an agent in my office had pointed a finger at me and said one of my equity sales in Elk Grove was establishing a new record, and it was my fault. This real estate agent lives in that particular neighborhood in Elk Grove. She saw I had listed a home on a cul-de-sac that was absolutely gorgeous. This was one of those homes that when you walk into it, you automatically know that buyers will be clamoring for it. As an Elk Grove agent who sells a lot of homes in Elk Grove, I know it when I see it. This was one of those.
The sellers had purchased this home as a short sale several years ago. It had a open floor plan, was a single-story with granite counters in the kitchen. Trying to figure out the list price was difficult because although many homes had sold in that area, few were not a short sale and none matched this square footage. Based on the median sales price and adjusting for square footage, I figured it would comp about $235,000, maximum. If we got an appraisal. And given the way prices were moving in Elk Grove, coupled with the extreme desirability of this particular home, I figured we could easily shove that price another $10,000.
But I don’t choose the sales price. The seller chooses the sales price. Always. It’s their home. All I can really do is give the seller what they are paying me to give them, which is my professional opinion from almost 40 years in the business. It’s up to the seller to take this information, digest it, and decide upon a list price.
These sellers chose the list price of $245,000. I then positioned this home to receive multiple offers and began to market it. We received more than 30 offers. The highest offer was cash at $275,000. The sellers accepted the offer with a fast closing. A few days later, that buyer’s agent confessed that she had written several offers and her buyer now wanted to cancel the transaction. Her excuse for what can be considered unethical behavior was my seller had 30 offers and her buyer did not enjoy that luxury. If you’re nodding your head in agreement, you’re probably not a real estate agent and, if you are a real estate agent, that nodding head probably ought to be hung in shame.
We then chose the next 3 highest bidders in line, whom the seller would consider. The seller asked each of these buyers to make a highest and best offer. They bid against themselves, and we sold the home for $268,000 cash. It closed last month in 3 weeks. Almost 14% over market value. That’s the value of a full-service listing agent. You would think the real estate agent in my office would be happy that we’re pushing up the value of her home in that neighborhood. But this is how homes price can go up in Elk Grove. If you’re thinking about selling a home in Elk Grove, call this Elk Grove agent at 916.233.6759.
What is a Short Sale BPO?
Back in the olden days of real estate, before short sales in Sacramento, you almost never heard the term BPO if you weren’t working in the REO market. The REO market means “real estate owned” and it’s an acronym. Refers to bank-owned foreclosure homes. But BPO can also apply to a short sale.
The way it works is this: When a Wall Street bank worth billions wants to know how much a Sacramento home valued at multiple hundreds of thousands is actually worth, instead of hiring an appraiser — a person most likely with a college degree, who has specialized training, knowledge and the experience to conduct real estate appraisals and receives a fee of $400 to $500 for this service — this bank instead might hire a Sacramento real estate agent, a real estate agent who quite possibly could have dropped out of high school and never sold a lick of real estate a day in her life, and pay this agent fifty bucks to do a BPO.
This is the infinite wisdom of our banks that helped to get us into this miserable state of affairs in real estate to start with. What what are ya gonna do?
Now that we have short sales, banks use the same principle to determine value. They hire a real estate agent to do a BPO. This acronym stands for Broker Price Opinion. Whether the home is valued by an appraisal or by a BPO understand one thing: they are both a matter of opinion. Albeit the appraisal is a bit more complex and calculated, but it’s only as good as the comparable sales that are used, in the opinion of the appraiser.
You ever notice how two people can look at the same thing and see completely different things? One person might look out the door and say, “It’s raining.” Another person might see clouds on the horizon, the sun peeking through and say, “It’s a beautiful sunny day.”
Nonetheless, the bank will accept the short sale BPO and base its decision, in part, on whether to approve your short sale on this price. But it’s only good for 3 months. After 3 months have come and gone, that value vanishes and becomes questionable, so the bank will want to acquire a new short sale BPO. A really clever bank negotiator who never wants to close a file can continue to let BPOs expire and drag the file on and on and on into infinity and beyond, Buzz Lightyear.
