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Paying More Than List Price to Buy a Home in Sacramento
When I was a kid and allowed into a grocery store with my parents, I used to beg them to let me play the fishing game. This was a contraption set up by the entrance in Applebaum’s, close to the mechanical horse, a machine with four walls of glass, filled with little toys. A fishing line with grabby-like tongs dangled over the toys, and for a nickel, you could try to grab one. Some were worth more than others. Generally, I failed, but it was fun to play because if I won, I got a toy that cost more than a nickel. The focus was on the hope of winning and not on how many nickels I lost.
Does paying more than list price to buy a home in Sacramento get your goat? Welcome to the club. I completely understand how that can bug you. To some people, it’s a totally foreign concept, and they might believe they are paying more than they have to to buy a home in Sacramento, yet I can assure they most likely are not. Because it probably comes down to a home buyer either offers over list price or a home buyer might not buy a home at all. If you think that’s discouraging, wait until I tell you that even if you offer more than list price, you probably still won’t get the home.
Why? Because the list price you offered most likely won’t be high enough or the competing buyer is utilizing better financing methods or cash. If often comes down to the numbers.
I recall a long time ago thumbing my nose at a property because the agent suggested I pay more than the seller was asking for the home. I thought she was nuts. I could not fathom forking out another $5,000 — even if it was rolled into the loan and the difference in my monthly payment was fifty bucks. As a result, I didn’t get the home. This is how most buyers learn that painful lesson. This practice still goes on in seller’s markets, and it will continue in your children’s children’s children’s seller’s markets.
Although all home buyers are ultimately responsible for choosing their own offer prices, a Sacramento real estate agent can guide and advise you. Listen to your real estate agent. If you don’t like or trust your real estate agent, hire a different agent, but don’t try to buy a home in Sacramento without a competent advocate by your side.
If You Can’t Buy a Home in Sacramento
How do you keep pushing on when the Sacramento real estate market is beating you down? I don’t know how some buyer’s agents are surviving out there in this desert of no inventory. One such veteran agent in Sacramento told me today that he is thinking about leaving the business. This is a dreadful market because there are buyers who will never buy a home in Sacramento in this market, especially if they are looking in Natomas or Elk Grove. It’s positively disheartening for many. At an open house in Elk Grove on Saturday we had more than 100 buyers come through. So far, we have almost 30 offers. Only one buyer will win.
Because I list so many homes in Sacramento, I see a wide variety of offers come across my desk. They range from lowball offers to asking price to 20% over market value. I can tell from those offers that we basically have two types of agents in Sacramento right now:
- The type of agents who talk to each other.
- The type of agents who work in a vacuum.
I also realize that a buyer’s agent can lead a buyer to water but she can’t force the buyer to drink. I’m not so sure that buyers truly understand what is going on. This climate makes me a bit concerned that buyers might blame their agents for their failure to buy a home in Sacramento when it’s the market and not necessarily the agent’s fault.
Years from now we might look back at this like the 1930s Dust Bowl. At least during that horrible episode in our country’s history it was pretty clear what was happening because you couldn’t see two feet in front of you. In Sacramento, everything looks normal. For Sale signs are in the yards. Agents are accompanying buyers to show homes. People are smiling. But it’s a nervous smile, and underneath they are depressed and worried and anxious. We need inventory in Sacramento.
Well, here’s my solution, because you know I have a solution, right? I’m not the kind of Sacramento real estate agent to paint this dismal picture and not offer you a solution. I’ve been in the business for almost 40 years, and that’s long enough to learn a thing or two. The first tip is if you’re gonna give up, then go home and crawl under the sheets and stay there because there is no room in this market for whiners.
The second tip is turn over the unturned stones. There are homes in Sacramento that are not getting showings. Not because there’s anything wrong with them. It’s because they are either overpriced homes, in need of repair, or on the market for too long. There is nothing wrong with a home that needs a little bit of work. All you need to do is adjust your attitude toward hiring a contractor or doing some work yourself. Often the prices of these homes can be adjusted a bit to compensate for the work needed. Align yourself to the fact that if you want to buy a home you need to look at all of the homes that are available and not just the cherries.
You want to know where the ants go, right? You follow the ant trail. At the end of it, you will find ants. It’s too simple of a principle for many people.
There are homes for sale in Sacramento that buyers and agents are ignoring. There is no competition for these homes. No multiple offers. No stabbing each other in the back and clawing your way over dead bodies to get to the top. These homes are sitting quietly, waiting to be discovered. Go out there and discover them. Find a way to write an offer and make it work. If you need help and want to buy a home in Sacramento, you can call the Elizabeth Weintraub Team. 916.233.6759. We’re putting buyers into homes.
The CalHFA Short Sale and CalHFA Financing
We are fortunate in Sacramento to have a wealth of information at our fingertips by our sheer location as the state of California’s capital. There are also a lot of really excellent real estate agents in Sacramento whom this agent over the last 10 years has had the distinct pleasure of working with, as well as your usual run-of-the-mill whack jobs. We won’t talk about the latter because they don’t deserve chatter, except to acknowledge the occasional irritant will pop up in this business and it’s best to just step over them and get on with the business of buying and selling homes in Sacramento. Keep a positive attitude, that’s my motto!
One of the highlights of lending in Sacramento is the California Housing and Finance Agency, aka CalHFA. They assist first-time home buyers buy a home by securing a small second loan to the home. For a brief time last week CalHFA had pulled all funding and threw the homebuying market into a further panic. But then something happened and suddenly I received a notice that the funding was restored. Not that it will help buyers in most markets because those buyers are finding they are getting clobbered by the cash and conventional buyers.
There is another problem some homeowners in Sacramento are facing with CalHFA, though. The problem that arises is when a seller needs to do a short sale and discovers that CalHFA loan that they forget about. Those CalHFA loans need to be paid or a small portion needs to be paid in order for the short sale to be approved. With CalHFA being a government agency, it involves red tape and the agency is backlogged. It cannot possibly deal with the number of short sales it is trying to approve within a reasonable time frame.
You basically have two choices nowadays with a CalHFA short sale. You either wait the 90 or so days for CalHFA to respond to your request for a short sale — at which point the first lender might close the file on you — or you pay it off. Last winter, I closed a CalHFA short sale in Natomas under unusual circumstances.
I told the buyer it would be at least a 90-day wait for CalHFA. The second loan was pretty small, less than $10,000. The way prices are moving in Sacramento, 90 days could mean the home would sell for another $10,000. It might be smarter just to offer to pay off the second, providing the first lender will allow it, and close. That’s exactly what the buyer did. Paid off CalHFA. Makes you wonder if the delay for this processing is meant to induce payoffs, but I doubt CalHFA is that together. I don’t give a government agency that much intelligence.
But on another CalHFA short sale, we’ve been waiting since the first week in November for short sale approval from CalHFA. Since yesterday marked the 90-day point that is allowed before escalation, I asked CalHFA to escalate. The first is Bank of America, which said it will not extend past the end of February. Low and behold a miracle happened. I heard goldfinches singing in the yard. The sun came out from behind the clouds. My cats stopped puking. Was that the first robin of spring hopping about?
The negotiator at CalHFA picked up the file and asked for a few documents. Be still, my heart. I’ll get right on that. I like to take care of requests immediately. So do most of my short sale sellers. The seller emailed the documents the negotiator asked for, I put together the reports needed and sent her the package. Within an hour, the short sale was approved. In one day! CalHFA approved it, and we’re closing in 2 weeks. This is the fastest turnaround ever. And naysayers believe a positive attitude doesn’t pay off. Spittooey.
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.
Two Short Sales in the City of Davis
There are two short sales for sale in Davis, California. One of those short sales is mine, listed by Lyon Real Estate, and the other is listed by a competitor. At the moment, we have 69 homes for sale in Davis, according to MLS. My Davis short sale is listed at $339,000. The second short sale is listed more than $100,000 higher. Both of these short sales are located in the same area — MLS features 5 separate areas in Davis. But the second short sale has a pool, and it’s in better condition.
My listing needs a little fixing up, but hey, what do you want for that price? There are only 4 homes for sale for less in all of Davis, and those homes are smaller. We’ve had a few showings for this short sale because it’s got a lot of other things going for it. Um, like price. And, then, there’s the price.
But I’m wondering if buyers in Davis don’t like to buy short sales. We received yesterday a lowball offer. We thanked the buyer and his agent for their interest, and expressed regret that we could not accept such an offer. ?The agent sent me an email, in the interest of promoting his client, I suppose, and said, he wished me “luck with my protocol” in Davis — which is expecting a buyer to commit to buying a short sale. We do ask buyers to commit. That protocol just makes sense. If you want to buy a house, you should act like a buyer. ?And then he added, that he is 15 minutes and a galaxy away from my Sacramento short sale environment where I could “pull off” that kind of approach.
Huh?
I want you to know that one of my team members lives in Davis. Her name is Linda Swanson. She is also a broker like me, and not just a salesperson. I love Linda to pieces. Linda has almost 25 years in the real estate industry. She’s worked for several prominent new home builders, too, and was a sales manager for one of them.
Linda’s heart and soul goes into selling homes in the four-county area of Sacramento, including the city of Davis. I would trust Linda with my life. She adores first-time home buyers and has the patience to show home after home until the buyer is 100% ecstatic about her selection. I don’t have that kind of patience, to tell you the truth, which is why I rarely work with buyers. I prefer the listing side of this business.
But Linda does, and she is an extreme professional, always ready with a smile and to help because she loves her job. Smart, witty and efficient. She is also my co-agent on this listing in Davis. If you would like to buy a two-story home in Davis for less than $340,000, you should call Linda Swanson on the Elizabeth Weintraub Team. We are working with Chase Bank on this short sale, and they might get the BPO today. If you’re willing to invest a little sweat equity and can handle a paint brush, you could transform this home in Davis. Call Linda Swanson at 916 607 0111.
