Selling the Over-improved Home in Sacramento: The White Elephant

If you have an over-improved home to sell in Sacramento, call Elizabeth Weintraub.

If any Sacramento Realtor can sell an over-improved home in Sacramento, it is Elizabeth Weintraub. I know this to be a fact, Jack, because I’ve done it a number of times. Further, I’ve even owned such a place myself, many years ago. My first residence, which I bought in 1979, was a sprawling ranch of 8,600 square feet with an indoor in North Tustin (Orange County). I bought it utilizing seller financing and no-money-down from a lawyer. It didn’t dawn on me at the time but one of the main reasons the seller took my offer was because he himself could’t sell it. It was a white elephant for the neighborhood. All the surrounding homes were around 3,500 square feet, and that was almost triple that square footage. It belonged in the hills, not at the base of the foothills.

I met with a seller yesterday who owns an over-improved home in Sacramento. His first question was whether he should do a short sale. I ran the comps, and while it might look that way to him, to an appraiser, it doesn’t. To an appraiser, there are homes within a 1/2 mile radius that sell for enough that he’s got equity. We are in a unique market at the moment because there is not enough inventory to meet demand. There is also not enough inventory to make appraisals easy to do.

It is easy to do an appraisal when there are a dozen homes that sold in the same neighborhood. It’s another story where there are ZERO homes that sold in an existing neighborhood, forcing an appraiser to pull comps from the neighborhood down the street. I tried to explain this, and even showed him a map of where the comps are located. Only one comp is in his neighborhood. The rest are located in more expensive neighborhoods.

I pointed out that the underwriter will want to see homes in close proximity used as comps. If a home nearby of similar square footage and age is not used, the underwriter will question why. The problem with this guy’s home is it is worth, let’s say, around $800K. But it’s located in a neighborhood of homes worth around $400K. People who want to buy a $800K home want to buy it in a neighborhood of other homes worth $800K. Right now, this very minute, the similar values are in another neighborhood, which makes this an excellent, if not perfectly opportune time, to sell an overpriced home in Sacramento.

Buyers are unlikely to know that the surrounding homes are not of a similar value because none is for sale. But this guy is not ready yet to sell his over-improved home in Sacramento. He thinks if he waits, he will get more money because his home will continue to appreciate. Maybe it will. However, if interest rates go up or inventory increases, both of which will eventually happen, that could put a damper on those plans. Sometimes, when opportunity presents itself, one needs to jump right on it.  Not to mention, 9-year-old improvements will continue to lose value as time marches forward.

Perhaps he will see the light. But if not, I’m sure I’ll find another over-improved home in Sacramento to sell. There are no shortage of homes that people improve within an inch of its lives, a white elephant, out of step with the rest of the neighborhood, with no regard to an eventual sale. You never want to be the best home on the block. Quite the opposite. But if you are, call me, because I’ll have a plan. I always have a plan. 916-233-6759. Elizabeth Weintraub.