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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” . . .
Buyers Hesitate To Write Offers On a House, Consequences?
A scenario we are seeing as of late, buyers hesitate to write offers in a timely manner, consequences? Well, yes, in a spring Sacramento market, homes sell faster than in the winter. A listing located in Midtown Sacramento we already put in escrow. Of course, now another couple who had seen it 4 times didn’t write soon enough. They submitted an offer a little too late, and are trying to get into back up offer position.
Another listing in Natomas, the buyer wrote three consecutive offers; however, the first two were not viable. Of course, another offer comes in! Now, they are competing in a multiple-offer situation. If the first buyer had written a substantial offer instead of writing lower offers, they would have been in contract long before today.
When buyers hesitate to write offers, in a timely manner, consequences almost always happen in Sacramento real estate. Time will tell if they are the successful buyer. Waiting can cause buyers to lose an opportunity or can drive the price up. When you have multiple offers, demand can create a feeding frenzy.
As buyers hesitate to write offers in a timely manner, consequences for both of these properties happened. One lost out and the other faces multiple offers. Buyers, a bit of advice, always write your offers quickly. Just because a property isn’t sold today, it doesn’t mean it won’t be sold tomorrow.
If you want to buy a house and beat out other offers we will guide you to write offers as soon as possible. This could help you to avoid this scenario above. Call Weintraub and Wallace Realtors at RE/MAX Gold Real Estate 916-233-5769.
— JaCi Wallace
How to Miss the Train in Sacramento Real Estate
Christmas-time is a perfect example of how a buyer can miss the train in Sacramento real estate. The buyer’s agent was trying to write an offer while juggling a bunch of small children, picking up family members at the airport and unwrapping presents on Christmas Day. We agents work all the time, but sometimes, maybe we should not. Or maybe we should hand the buyers over to an agent who has time.
This particular agent was in such a rush, she did not stop to consider that she could miss the train in Sacramento real estate. When she called, I let her know we had sent a counter offer to other buyers. Also explained I fully expected that buyer to accept the counter offer. It was mostly clarifications and we had already agreed upon the terms. However, if she sent a better offer, the seller is always free to pull back the counter offer.
As long as the counter offer is withdrawn prior to the listing agent’s receipt of the acceptance, that is. Once the counter offer arrives in the listing agent’s hot little paws, it’s delivered and the deal is sealed. But this agent had a window of opportunity. She managed to draw an offer and submitted.
To be fair to the first agent, I also let that agent know we had received another offer.
The offer from the agent who was about to miss the train in Sacramento real estate was not prepared correctly. Her buyer’s signatures were wrong. The agent did not send proof of funds. I could not in good conscience suggest to my seller that he accept an offer like that. Anybody can say they have the money, but in real estate you have to show us the money, especially when the offer is cash.
On top of that, I let the agent know the competing buyer had removed all contingencies, and if she wanted to be on par, her buyer would need to do the same. There are only so many times I want to sell a house four times and get paid once.
Did I mention this happened on Christmas Day? Yes, I was at my neighbor’s Christmas party, huddling in a corner, dictating to my phone. The agent sent several offers, all incomplete or missing crucial info and no proof of funds. How difficult could it be to download a bank statement?
She did not appear as committed as she claimed to be. Plus, she suddenly included a contingency in the offer and for some odd reason thought the seller would not care. The seller cared plenty. This situation provides a good example of not listening to what people say but watching what they do.
And the following morning, the day after Christmas, we received the accepted counter offer from the original buyer. We were in contract. And this buyer missed the train in Sacramento real estate.
Tips When Selling a Home and Reviewing Offers on a Future Date
Although I am pretty much against reviewing offers on a future date when selling a home in Sacramento, there are circumstances when it makes sense. Sometimes I see listings that read “we will look at all offers next Friday.” Then Friday comes and goes and there are no offers. Now everybody knows that seller’s angle. They have the seller’s number. Exposed hand dealt. And sellers might pay for that arrogance.
The other drawback to reviewing offers on a future date is the fact sellers will eliminate buyers from trying to buy their home. From the seller’s point of view, if a buyer is interested, it doesn’t matter. But that’s because sellers often try to judge the situation from a seller’s point of view instead of a buyer’s point of view. They say to themselves, “well, if I were a buyer, I wouldn’t care.” But they don’t know that to be fact. They simply wish it to be fact.
Buyers do not like multiple offers. No buyer hopes a million other buyers will bid on the same house. In fact, some buyers openly state if there will be multiple offers, they want no part of those negotiations. The stress is too much. Further, they feel pressured into making decisions they don’t want to make, like paying more for the house. Some feel overpaying is a fool’s job. Even though those that overpay often end up with the house and those who do not, cannot buy a house like that.
On top of which, overpaying is subjective and time sensitive. If other buyers are willing to pay more, it defines market value. If it’s market value, then a buyer is not overpaying. If the value is higher than appraised value, in a year or so, it won’t be. And bottom line, somebody will buy the house, why can’t it be a buyer who doesn’t particularly enjoy multiple offers?
Reviewing offers on a future date makes sense if it’s pretty much iron clad that demand will be high. If the property is gorgeous enough to warrant it. On the other side, it also makes sense when selling fixer homes. Two extremes. Polar opposites. It’s even easier to attract top dollar when pricing a home at that sweet spot. Then a seller can sit back and collect offers without feeling pressured. It leaves no doubt lingering in the seller’s mind that she could have left any money on the table. Investors don’t whine much about reviewing offers on a future date.
How to Pick the Best Offer in a Multiple-Offer Situation
Your agent can help you to figure out how to pick the best offer.
Helping the seller to pick the best offer is an important part of a listing agent’s job. Sometimes we have only one offer so it’s a no-brainer. Although, I will say we received a full-price offer on another listing recently when the seller snapped, “I’m not taking THAT.” What? Why not? Because the seller expected buyers to fight over her home and to offer more than list price. She just didn’t share those thoughts with me until we received an offer. It was our only offer, too.
The only thing we could do was take it off the market and put it back at a higher price. I didn’t want buyers to see we had raised the price, or they might not want to buy it. They might misjudge the situation and think the seller is crazy. I wanted a nice clean presentation at the higher price.
Now, obviously, when we receive multiple offers much of the time there might be that one particular offer that stands out from the rest of average offers. Sometimes, I might suggest the seller counter only one offer. Other times I might suggest we counter two or three, even offers we don’t want. We make the counters outrageous that if they did accept, we might reconsider.
But the problem that happens more often than not is we will receive two offers that are very similar to each other. They might even be for the exact price. Then what do you do? How do you pick the best offer? One method is to consider the qualifications of the borrower. For example, how much is the earnest money? Who is the mortgage lender? We usually lean toward local lenders, btw. A loan officer with a recognized track record and local appraisal management companies.
Yeah, so what happens if all of those things are equal? Maybe the net is identical to the seller. Both buyers very strong, qualified, committed. What can make the difference then? In my experience, it boils down to the buyer’s agent. Who is the buyer’s agent? Is that agent difficult or cooperative? After all, we need to count on the buyer’s agent to educate the buyer throughout the process and manage her or his side of the transaction.
We are often in daily contact with the agent. Is the agent responsive? Quick to communicate? Professional? The agent can make or break the buyer’s chances of winning a multiple offer situation. One of the last determining factors when considering how to pick the best offer is deciding on which agent we want to be in escrow with. While Sacramento listing agents don’t pick the best offer themselves, we do help the seller to choose.
So buyer’s agents should think about whether it is really wise to be argumentative off the bat. How being pushy and aggressive is not the way to best represent their buyer. I’ve watched more than one deserving buyer lose the house because of their agent’s lousy attitude.
