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Selling a Home in Sacramento and Offer Negotiation
A seller who is selling a home in Sacramento should not have to wonder if the buyers who just wrote an offer on her home really want to buy the house. I mean, what if I told you that I am willing to sell you a Ferrari for $10,000, but you say the sale is subject to your ability to find the money buried in a barrel Breaking Bad style out in the desert somewhere? Oh, and on top of that, at anytime, you can decide to renegotiate the price with me or ask me, if you like, to throw in, say, a year’s supply of gas and car washes for you. You’d probably think you hit pay dirt.
This is exactly what buying a home in Sacramento is like for some home buyers. The market is super hot for sellers of well-priced homes. Doesn’t matter if that home is located in Elk Grove or East Sacramento or Lincoln; if it’s priced right, the seller will probably quickly receive a full-price offer, if not multiple offers. On the other side, buyers don’t like to compete with multiple offers. It’s just a mindset though. Because buyers are competing the minute they step foot inside a home for sale where another buyer has recently been.
Lately, I’ve been encountering buyers who must think they are clever. Their idea is to lock down the home immediately by promising the seller everything the seller is asking for and, after a few weeks have passed and all of the other buyers have gone away, then they will ask for a price reduction or a credit. I sell more homes than most agents, and I see this tactic used over and over. It’s not enough to elicit a promise from the buyer that a home is sold AS IS because some buyers conveniently forget about that promise.
In one situation, I reminded the seller that the buyer might not know any better. The buyer might be getting pushed by relatives or friends who say that even though the buyer promised to not ask for a repair, the buyer should demand a new HVAC installation. Because you never know. Sometimes, sellers cave. I don’t like to see buyers and sellers at each other’s throats when there is no reason for it.
However, the seller pointed out that this was no first-time home buyer who was buying his home in Roseville. Nope, this was a retired guy over the age of 65. The seller said the buyer knew exactly what he was doing. Maybe. Age is really no guarantee, but the seller could be right.
This Sacramento real estate agent sometimes advises her sellers to issue a counter offer when an offer comes in at full price, quickly and with a shortened time frame for acceptance. The counter is not about price. It’s about performance.
If the buyer blows a fuse because the seller insists upfront upon no renegotiations down the road, well, what does that tell you? Buyers always have the right to cancel within the contract default period of 17 days for any reason — but once a buyer commits to buy a home, the negotiations should really be pretty much over. Particularly in today’s real estate climate. There is nothing wrong with pointing out to a buyer that AS IS in the residential purchase contract means AS IS. It doesn’t mean maybe.
You can shake hands all you want, but a pen to paper is always better. If you’re thinking about selling your home in the Sacramento metro area, call Elizabeth Weintraub at 916 233 6759. Put 40 years of experience to work for you.
Selling Homes in Sacramento is Like Herding Cats
Working in real estate and selling homes in Sacramento is somewhat like herding cats. Just for the record, I don’t run a cat ranch or anything, but there are 3 cats who live in my home in Land Park, so I know a little something about herding cats. Cats will do whatever they want to do. They are somewhat predictable, but there are times a cat will completely freak you out, and the Sacramento real estate market is a good comparison. Just when you think that cat is headed for the litter box, it will abruptly stop and throw up on your feet.
I always look for trends because, as a Sacramento real estate agent, it helps me to properly advise clients. You know, just because buyers were wild and crazy last spring doesn’t mean that activity carries through to August. August is typically a slowing down month. A time for families to finish vacation plans, shop for back-to-school clothes, and prepare homes for winter which, in Sacramento, means closing the garage door.
I’m looking forward to the Sacramento Autumn Home Selling Market. It’s generally spectacular every year, and it shouldn’t be any different for 2013. About a week after Labor Day, the flood gates will open. That’s my prediction. But getting into escrow and closing are two distinct things. Any monkey can get into escrow. Closing is another story.
There are signs of increased listing activity right now. Sellers are calling and asking about selling homes in Sacramento. From just yesterday, I have 3 new listings in Elk Grove on the horizon, a home in Roseville will hit the market today, and I’m meeting with another seller in Citrus Heights this weekend.
Buyers, on the other hand, are a bit slower to submit offers now. They are spending more time thinking about it. Not every transaction that every agent has in escrow will close. I’m seeing more fallouts from buyers with cold feet, buyers who can’t qualify, buyers who probably should not have been trying to buy a home in the first place. There are also buyers who can’t understand that a rising market means if they’re buying a short sale, that price might be higher after waiting a few months.
What we need are incentives like my cat Pia’s freeze-dried chicken treats that we can throw in front of these guys. We need to continually check in with our buyers and make sure they’re still on board and headed for closing. Remove obstacles from their path. Keep the positive vibe going. Because I tell ya, it’s not easy herding cats when you’re selling homes in Sacramento.
Turn a Sacramento Short Sale Into an Equity Sale
The Sacramento real estate agents who are only in the real estate business to make money will never know how truly wonderful it feels to help our sellers and buyers accomplish their goals. Those kinds of agents are missing the motivational aspect of this business, the driving force that makes agents stay in Sacramento real estate for the long haul. On top of which, I believe they have their priorities turned around. It really is true that if you do what you love, the money will follow. That’s not just a hokey thing people say to sell books, it’s real. An agent should focus on the client and not on the end result. That belief is how I became a top producer.
This Sacramento REALTOR doesn’t have to look any further than her own back yard for evidence. For example, I was watching people stroll by a restaurant in Midtown the other day during lunch at the Bento Box over on 16th Street. A young woman got out of her car wearing a T-shirt that said Can’t Buy Me on the front. I thought hooray for her! No trendy designer logos for her. No Ralph Lauren or Tommy Hilfiger or Hollister. She would never sell out. As I was silently rooting for her nobleness, she walked into closer view and I could read the rest of it: Love was printed at the bottom. Not being a guy, I suppose she doesn’t understand. Not being an older woman, she truly doesn’t understand. Many of us would like that diamond ring.
My clients from Orangevale probably felt like I handed them a diamond ring last week. I called them after escrow closed to confirm that it had recorded and their transaction was over. We talked about how they had initially thought they were going to do a short sale for their home in Orangevale. You probably won’t find an agent who knows more about short sales in Sacramento than this agent. But I’ve also been selling traditional real estate for almost 39 years. After I looked at the comparable sales, part of me had agreed with them. But another part of me could see that if I was able to just push that sales price about $10,000, they could probably sell as an equity sale. What? Turn a short sale into an equity sale? You betcha.
I offered that option, and we opted to go that route. An equity sale. A regular real estate transaction. Yes, let’s turn a short sale into an equity sale.
The real estate market in Sacramento has calmed a bit since July. It’s slower and more reasonable. I say it’s just the lull before the storm that will hit after Labor Day. What you read in the paper happened months ago and is not today’s market; it never is. But even during this slower period over the summer, I was able to sell that home in Orangevale for all cash at the list price. After running the numbers for an estimated net sheet, I suspected that some of the bank payments might add up to more than the sales price. It’s better to make sure the buyer could cover those costs before going into escrow, so we drew a counter offer. It basically said the buyers would pay all of the closing costs and back payments in an amount not to exceed a certain price. That “certain price” was padded enough to allow for any hiccups.
Sure enough, it closed. The additional funds needed were about 1/3 of the estimated amount, which made the buyers ecstatic and the sellers relieved. The sellers were able to pay back all of their delinquent payments and pay off the loan. They stopped the foreclosure proceedings and avoided a short sale. They turned a short sale into an equity sale. The time period between when we put the home on the market and when it closed was about 2 weeks. The sellers couldn’t believe how fast it happened. This is what happens when an agent focuses on a resolution.
If you’re looking to buy or sell a home in Sacramento, call Elizabeth Weintraub at 916 233 6759. Your home might be worth more than you think. You might be able to turn a potential short sale into an equity sale.
Must a Sacramento Seller Accept a Full-Price Offer?
A Sacramento real estate agent can bring her seller a full-price offer, but she can’t make the seller sign it. Not if the seller flat-out refuses. You might wonder what kind of seller would turn down a full-price offer, and the answer would probably astonish you. All kinds of sellers would do this. Smart sellers, ignorant sellers, wealthy sellers, dirt-poor sellers, sellers who live in the country and sellers who live in the city — it doesn’t seem to matter.
What I suspect is bringing on this baffling phenomenon is the rising market in Sacramento. Sellers hear all about multiple offers and they mistakenly believe that it is permissible to demand a higher price when the seller receives an offer. I now make it a practice to have this discussion with my sellers before we go on the market. I explain that if we receive a full-price offer and no other offers, then the seller needs to accept the full-price offer. You would think that an agent would not need to explain how real estate works, but she does:
- Johnny offers a product for sale at X dollars.
- Susie offers to pay X dollars for the product.
- Johnny gives Susie the product in exchange for X dollars.
Johnny can’t say, no wait, now that you have decided to buy my product, I want to charge you more for it.
Sellers don’t live and breathe real estate the way a Sacramento real estate agent does. Because it’s not their job. They are doctors and lawyers and business executives.
Probably the worst example that has happened to me lately was a seller who owned a home under the freeway. Not only was the home located under a freeway, but it was next to a commercial franchise business. Not only was the home under the freeway, next to a commercial franchise business, but it was on a busy street, and not one busy street but pretty much the intersection of 3 extremely busy streets with a lot of traffic. I wondered to myself, what would be a worst location? Graveyard? Next to a school? Across from a church? Nope, probably a worst location would be next to a garbage dump or maybe a toxic waste site.
Location, location, location. The number one rule so many forget.
But I don’t judge the properties I sell. Some sell quickly and some will require that one special buyer, and I do a pretty good job at finding that one special buyer. Some homes don’t appeal to the masses but only to a select few. The reason a person would buy a home in the above type of location is if the home was the least expensive home in the neighborhood. Finding that sweet spot in the pricing can be challenging as well, but not impossible.
When I brought a Sacramento seller a full-price offer and the seller uttered the dumbfounding words: “I’m not signing that,” I was blown away. It was the third time in a few weeks that has happened. This was an offer that would release the seller from a bad investment that he should have never made in the first place. The offer paid off his back taxes, delinquent utilities, many years of unpaid interest, all of his loans, the commission, all costs of sale, plus it put a nice chunk of change into his pocket. Moreover, it was an offer for a little bit more than his list price. The buyer was willing to purchase the stripped and vandalized property in its present condition. Where are the smelling salts when you feel faint?
Sellers don’t understand that they cannot issue a counter offer for more money. A seller cannot put a home on the market, get an offer at the price advertised, and then decide they want more money because that could be called false advertising. It could be considered against the law to advertise a property under false pretenses.
Say, I am a grocer. I stick a big sign in my window that advertises 5 pounds of apples for $1.00. You walk into the store, spot a 5-pound bag of apples, bring it to the cash register and hand the clerk $1.00. The grocer can’t pop out of the back room and demand that you pay $2.00 for that bag of apples. You might feel like you were a victim of bait and switch, wouldn’t you? Same thing.
Why Did That Sacramento Home Sell for Less?
The question arose at my midtown office this week about whether all offers are presented to the seller when it seems a Sacramento home sells for less. The reason the caller questioned whether it happened is because the final sales price was so much less than the caller’s purchase offer. This buyer could not fathom any other reason why a home would sell for less than the price this buyer offered for it; therefore, this buyer concluded that there must be have been monkey business going on. It’s amusing that when a buyer doesn’t understand, the accusing finger is automatically lobbed toward the Sacramento real estate agent. It’s also sad because it tells you what some buyers really think about us but are afraid to voice.
First, all offers are always presented to the seller. I don’t know how other listing agents handle their processing, but I immediately forward offers when I receive them, and I imagine other agents follow suit. Offers are logged in my records 3 different ways to mitigate mistakes. Whether the seller reads, acknowledges or accepts which offer in which order is up to the seller. I don’t care if you write an offer on a roll of toilet paper and deliver that roll to my office, that roll of toilet paper will end up in the seller’s hands. You can offer $1.00 and write it with a bloody finger, and that offer goes to the seller. Not that I’m giving anybody any suggestions, mind you. Just making a point.
But I get asked the sell-for-less question so often that I thought it’s probably a good idea to explain some of the reasons how it can happen that an offer for more money is not accepted in favor of an offer for less. There are legitimate, behind-the-scenes reasons:
- The seller has taken a personal shine to the buyer, regardless of price.
- The offer was originally for more but the appraisal came in less.
- The offer was originally higher but the buyer negotiated a price reduction based on yada-yada.
- The home was vandalized and the seller adjusted the sales price to allow for the damage.
- The higher offer was written incorrectly and was missing pertinent documents.
- The previous offer was pending rescission and that original buyer elected to move forward.
You will notice that nowhere in those reasons is a line item that says the listing agent did not send your purchase offer to the seller. More often than not, it is the last reason, especially in a short sale situation, that is the actual reason why the home sold for less. Whenever I am faced with a buyer whose agent tells me is planning to cancel, I will put that home back on the market, with a pending rescission modifier.
I’ve had several of those lately. One last year comes to mind quite clearly because that particular buyer had been in escrow on a short sale in Elk Grove for almost a year. Why so long? It was a Bank of America HAFA, that’s why. When the buyer’s agent told me the buyer wanted to cancel, I put the home on the market at the pre-approved HAFA price, which was about $20,000 higher than the price the buyer had offered and the bank had accepted. I immediately received a handful of full-price and all-cash offers. I gave the buyer one more chance not to cancel. I explained that if the buyer wanted to cancel, he was a fool. Because a bunch of other buyers were waiting in the wings to step right into his shoes and pay $20,000 more.
That buyer saw the light and closed escrow. Sometimes, a listing agent has to show them the light. If often happens this way. Happened that way last week, too, on several transactions. Buyers tend to want what others want. A home can sit in escrow for weeks without any offers as an active listing before it turns into a pending sale, but as soon as “pending rescission” is added to the modifier, the offers roll in like crazy. If there is an existing offer pending on a listing, priority goes to that buyer. Another buyer could offer a bazillion dollars and a Lear jet, and the seller couldn’t sell to that buyer.
If you want to know why your offer wasn’t accepted for a home that may sell for less than your offer, ask your agent.
