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In Defense of Multiple Offers from Sacramento Home Buyers
The biscuit recipe for Sacramento home buyers that is guaranteed to drive multiple offers in the Sacramento real estate market goes like this: add 2 cups of a highly desirable home in the right location, perfect condition and priced well, toss in a pinch of salt representing all of the other homes for sale in that particular neighborhood (none), stir in 2 teaspoons of pending sales, cut in a stick of low interest rates and blend well with a cup of eager Sacramento home buyers. Drop on to a Sunday open house and bake at 400 degrees for 15 minutes — within 2 hours they’ll be history.
Our Sacramento real estate market reflects low inventory, low interest rates and a high demand from buyers. Sacramento home buyers, who often say things like: I don’t want to be involved in a multiple offer situation. It makes me wonder what they mean. Do they want to buy a home that nobody else wants? Some ugly dog that is overpriced and under-loved? Is that it? Because there are some of those homes for sale in Sacramento, and nobody is trying to buy those homes. The field is wide open for that kind of home. No competition for that stuff.
Don’t they want to be the winning bidder for a home that everybody drooled over but only they were smart enough and lucky enough to win? One thing is for certain when a home buyer goes into contract in these situations: when the time comes to sell that home down the road — maybe not next year, maybe not in 10 years, but eventually when that buyer turns into a seller — that same intense interest from buyers will still exist. The home will hold its appeal. Your hair might start to turn gray by then and your body might run off southbound, but that home will still be alluring, even after the Sacramento real estate market cools.
That extra $5,000 or whatever a multiple-offer might cost, can be the difference between owning a home or not owning a home. Think how less important that will seem 5 years, 10 years from now. Sure, your emotional conscience might be fighting a losing battle by telling you not to pay more than list price, but what if the list price is low to start with? Listen to your logical, rational side. What do the comparable sales reflect? Because remember, the home will most likely still need to appraise. It matters less what the list price is and matters more the value of the home.
And let’s not forget about appreciation. Home prices are on an upward swing right now.
I also wonder if “I don’t want to be involved in multiple offers” means the buyers intend to lowball the sales price and realize they can’t possibly win with that strategy when other buyers are offering more than list price. Of course, if that’s the case, they are not buying a highly desirable home in the Sacramento real estate market this spring.
I’ve heard agents say they think sellers are greedy when multiple offers occur. As though somehow it is the seller’s fault for maintaining such a beautiful home in pristine condition. It’s not the sellers who are driving the marketplace; it’s the buyers. Buyers establish final value. My advice is don’t worry about what everybody else is doing. Focus on yourself. Write your best purchase offer and call it a day. Don’t wander about wondering “what if” . . .
Should an East Sacramento Home Buyer Lowball if a Home Needs Work?
If a home for sale in East Sacramento needs work, does that mean a home buyer can or should offer less than the asking price? Imagine this scenario. A home buying couple has been out touring homes with her East Sacramento Realtor for several days. They had been looking at homes in East Sacramento both online and in person, trying to find the home that speaks the loudest and stirs up those emotional longings. Finally, they stumble upon a home with the right number of bedrooms and baths, the layout is perfect, and the location is highly desirable, but, alas, it’s not in the best condition.
The home needs a new roof, and the elderly sellers don’t have the money to replace the roof. The hardwood flooring under the carpeting is in pristine shape but rolling up carpeting to haul off to the city dump is really not in the buyers’ future plans. Perhaps the flooring slants a little bit because the home has been around for 75 years. The hottest design trends that are featured in all of the home remodeling magazines are not found in this home; instead there is basket-weave tile in the bath, which the buyers would prefer to rip out.
Still, there are very few homes for sale in the buyers’ price range in East Sacramento. This home might be perfect in every way except for the defects the buyers noted. How much should the buyers offer if they decide to move forward? That’s always the big question. This could be the home of their dreams.
First, a buyer might want to consider the fact that the home is priced correctly and at market value, which is often the case. The price probably already reflects the work. Perhaps another home the buyers don’t much care for is priced less because it is a home that is much smaller and located on a busy street? Figuring out an offering price does not mean buyers should automatically offer less because the home does not measure up to their ideal needs. Market value does not depend on a buyers’ future home improvement plans.
Buyers, too, might point to the days on market, as the novice typically assumes incorrectly that longer days on market always means a home is overpriced. Sometimes newbie real estate agents make that mistake as well. What longer days on market can also mean is many home buyers do not want to buy a home that requires any work at all, so they pass it by. Not that it’s priced incorrectly. For many first-time home buyers, any amount of work is too much work.
The savvy buyer will instead see an opportunity to buy an East Sacramento home that will increase in value after the right kind of improvements are made. They also welcome the chance to apply a personal touch to their new home and might even spend afternoons strolling the aisles of Home Depot. Often, these types of buyers, believe it or not, are real estate agents. If you want to buy a home like a real estate agent, then you might want to talk with your agent about the comparable sales and look at the sales price the way a professional would. Because only a novice would believe a lowball offer is the right answer.
How Much of a Deal Do Home Buyers Need to Get?
Ever wonder how much of a deal do home buyers need to get? What is the walking away number? The number that says nobody wants to sell and evidently nobody wants to buy so let’s just forget about the whole thing? If it’s less than one half of a percent, I say everybody in that transaction needs their heads examined. Somebody must be focusing on the wrong things.
When I see some demands from buyers, it doesn’t make sense. For that sake of clarity, I am not talking about any transactions I am personally involved in. Because I’d probably tear out my hair and go screaming into the night if I were. But say, for example, that a home was priced at $400K. And the buyer’s agent, through a series of negotiations and multiple counter offers, gets the seller to agree to a price of $360K.
Any normal, rational person would jump at that. But not the buyer. This particular buyer said no, it’s not low enough. The seller needs to go to $358K. So the parties are $2,000 apart. When the buyer says no . . . this is no longer about buying a house. This is about the game.
Naturally, the easiest solution is for the agents to work out an agreement amongst themselves to either reduce their fees or reduce other costs in the transaction. Or add an unexpected benefit. For the record, it is against the Realtor Code of Ethics for a listing agent to ask a buyer’s agent to reduce the commission just to make the transaction work. Further, why should either of the agents suffer this tragedy and take a loss in income?
Some agents will do it, though, just to stop the standoff and push it through. Others will not. That’s because figuring out how much of a deal do home buyers need to get is not always about the money. It’s about the winning. You can find a way to let the buyer win through some other type of negotiation. Maybe it’s throwing in an extra nicety as icing on the cake.
I could give you more ideas of what to offer when you’re stuck on how much of a deal do home buyers need to get if I knew more specifics of the transaction. A bargaining table like this type of situation that died mid-stream says there is something else wrong. It’s no longer about the money. And it’s certainly NOT about buying a home.
You’re not gonna like my next sentence but I need to write it. It’s about who can be the bigger asshole.
Buyers With Agents Calling Listings Agents, WHY?
Before the incident of buyers with agents calling listing agents happened yesterday, I had been rudely awakened at 4 AM. My fault, really, for leaving my Apple Watch on and not muting it on the charger. At 4:00 it went off, screeching with a Hawaii Emergency Alert that Hurricane Lane was approaching. Would the government purposely send out an alert at 4 in the morning if it wasn’t necessary? Must be important. I jumped out of bed.
Wasn’t much of an alert. Check media for an update was the message. I watched a CBS reporter talk about the flooding in High-Low as the reporter next to him lowered his head and whispered: Heeeeeee-Lo. Much of the flooding, raging rivers and landslides were happening inland or on the eastern side of Big Island. Hilo was hit extremely hard.
At the moment, I am in Kona, on the western side at our house in Hawaii for Labor Day. I wandered back to bed and fell fast into a deep sleep. Only to be yanked awake by the sound of my Apple Watch ringing like crazy a little before 7 AM. Wow, I had slept in. Sound asleep but able to dash for my phone in the kitchen, I grabbed my cell. This Hurricane Lane business has been exhausting.
I didn’t even announce my name; I was so groggy. Just mumbled: Hello. Did not realize this was a case of buyers with agents calling listing agents. The woman on the other end was rather brittle. She began firing off questions about a listing. Despite my present circumstances, I did my best to answer her questions.
Then she asked when she could do a “site visit.” A what? Is she local? She wanted to know if she could flip the house. If there was room for updates. I suppose so. Sounded like a flipper who might lowball, but I try to reserve judgment. Somehow I collected my wits about me and informed the investor I do not work with buyers. Not sure she knows how real estate teams work. Tried to be as nice and helpful as possible.
Well, she has her own agent, apparently. I began to explain that I was about to get blown away by Hurricane Lane in Hawaii. Which fell on deaf ears. OK, let’s focus on her. However, she really needed to engage her own agent. That’s why a buyer hires an agent. Buyers need to let their agent gather information from listing agents and to show homes. Buyer’s agents are more than happy to earn their commission.
If they don’t trust their agent, then don’t hire the agent. Buyers with agents calling listing agents are saying they don’t believe their agent can do their job. If they don’t think their agent will represent them properly, then maybe they need to find a new agent. Or, as I told this caller, she could work with one of my exclusive buyer’s agents.
It seems unprofessional and a bit rude to treat a buyer’s agent in this manner. Like, here, draw the contract, and the buyer will do everything else herself. Speaks volumes about how they view our profession.
Still, Hurricane Lane did very little damage to the Kona side of Hawaii Island. We prepared for the worst, and the best happened. Which was just a little rain. Off and on. Those clouds in the photo above passed very quickly over my house heading east within minutes. Seems like the storm is over for Big Island. I just lucked out.
Those on the other side of the island were not so lucky. You can help those affected by Hurricane Lane by donating to the Red Cross Hurricane Lane relief efforts.
How About a Thanksgiving Lowball to Go With Your Butterball?
A Butterball turkey from 11 years ago at my house in Land Park.
Not making this up, I actually received a Thanksgiving lowball offer for one of my listings yesterday morning. No introduction to the buyer, no notice the offer was about to arrive. I woke early morning to an email: here is an offer with the accompanying documents. When a Sacramento Realtor receives a Thanksgiving lowball without the usual notification, there is only one thing to do. Call all of the people responsible at oh-dark-thirty. Especially the person who sent the email with instructions not to call.
Further, no calls, we prefer emails. Oh, yeah? Grabbed my cellphone. One ringy dingy.
I’m not sure the buyer’s agent was happy with me waking him up. He sounded pretty sleepy. His assistant returned my call while I was on the phone with the buyer’s agent and rattled a long message that I didn’t listen to. What I hoped to determine was whether it was worth it to send the counter offer, along with the entire offer signed. Or, should we save my sellers the hassle and just send a counter offer? If it seems the counter will be met with dead silence, I don’t bother my sellers with a request to obtain signatures on the offer.
Don’t get me wrong, I will work on Thanksgiving. Obviously. But my 43 years of experience says dealing with lowballs generally means an unrealistic buyer on the other end. Over the years, a few lowballs have worked out but most do not. Probably because not much to argue over. The entire focus is the sales price. You can’t negotiate nor compromise when list price, an attainable and reasonable goal, falls off the table.
Work with us, the agent urged. As though somehow a listing agent’s job is to tell her sellers to accept less than they deserve. Maybe that’s how others do business. Not this Sacramento listing agent. People call me a bull dog. My goal, my commitment to the seller, focuses on delivering list price or better. I say to the agent, make a full price offer. Ensure the seriousness of your buyer about buying a home. The sellers would like nothing better than to sell this home to a willing and eager buyer.
You have a dated listing, the agent attempted to argue. Like it’s old, worn out, a home nobody wants. How is this when the days on market barely exceed 2 weeks? Already received over-list price offers, mostly contingent on selling homes not yet for sale. No reason whatsoever the seller won’t get list price. With that thought in mind, I prepared a counter offer at list price, obtained a signature and delivered the document to the buyer’s agent.
Hey, even a Thanksgiving lowball gets a response.
