Email Elizabethmultiple offers
Bidding Wars to Buy a Home in Sacramento
A potential home buyer called yesterday to talk about buying a home in Lincoln. Lots of buyers gravitate toward Lincoln because it’s newer and often more affordable than Roseville, although it’s a bit further out from the core of Sacramento. He wanted to know what the market was like in Lincoln. The real estate market in Lincoln is the same as anywhere else in Sacramento right now, mostly a seller’s market. Limited inventory. Too many buyers. Crazy bidding wars.
This fellow said he did not want to get into a bidding war. Hey, I did not want my car to stop in the middle of the freeway the other day either but it did. All the lights on the dashboard came on and it just stopped running. Fortunately, I was in stop-and-go traffic, coming back to Sacramento from Roseville, one of the few times I was grateful for the slow down in traffic. And now that I think about it, my car is not even 2 years old, and I better take it in to have it checked out or I could die next go around if it happened again. This is how busy I’ve been — not enough time to think about why my car died on the freeway, of all places.
The point is we deal with what’s at hand, and right now, we have a seller’s market. This means that some first-time home buyers will not buy a home. Because there are not enough homes for sale to feed the demand. There is not enough for everybody, no. No sense griping or complaining, it’s just the way it is. If you want to buy a home, you might end up bidding for it against one or more buyers. It’s not the fault of your Sacramento real estate agent, so don’t blame her.
Is it a good time to buy? You betcha. Interest rates are so low it’s almost laughable. It’s as though you’re getting money for free. Prices are still low, even though they are edging upwards. Do you want to wait until interest rates reach a point where they double? Do you want to be priced out of the market or have to settle for a home you don’t want? A little competition doesn’t kill you. What can kill you is to sit back and watch all of this action without participation. Or, not taking your car to a mechanic, as in my case.
So, the worst happens and you pay $5,000 more or $10,000 more or whatever amount more than the seller asked. The list price is not all that important in today’s market. The market value carries a lot more weight than a silly listing price. And what difference will it make a year from now or two years from now?
Why Multiple Offers Are Wrong
It’s not that I don’t trust people; it’s that people can’t always be trusted. Which isn’t necessarily the same thing. When you’re a Sacramento real estate agent like me — and been in the business since kids wore bellbottoms — you see enough to question what seems odd to you. People take that as mistrust, but it’s just enough usually to put my radar on alert. It’s the reason I was accepted into law school in my younger years. I am naturally inquisitive. The oddball in any equation is often suspect for a reason.
Sure enough, the offer that stood apart from all of the other offers this weekend for that home in Elk Grove did not make it past a 24-hour period. It’s not that the purchase offer crumbled and fell, it’s that it was most likely falsely presented in the first place. A statement in MLS informed buyer’s agents that all offers would be reviewed on a certain day at a certain time. This put buyers on notice that all offers would be given an equal opportunity for presentation. Therefore, by extension, a buyer who was not willing to wait for a response by that certain day should not submit an offer. To submit an offer without an intent to wait could very well invalidate the good faith covenant inherent in purchase contracts.
Whether a buyer realizes it or not, a buyer can make only one offer for a home in Sacramento. Some agents will tell buyers that they can make as many offers as they want and those agents would not only be wrong but they could be subject to discipline. If a buyer does not have the financial means to purchase every home a buyer writes an offer to buy, the offers are not real. There are laws that prohibit writing pretend offers. Buyers writing multiple offers they can’t afford to all buy is a big, huge, no-no. It’s also unprofessional, and fiduciary could be called into question as well because who would advise a buyer to break the law?
Yet, that did not stop an agent and Elk Grove buyers from writing more than one offer for a home in Elk Grove, offering as a lame excuse the buyers did not want to wait. This intent was undisclosed. This agent does not work for Lyon Real Estate, thank goodness. I can’t tell you which company but it wasn’t Lyon. I love working with Lyon real estate agents. I know they have been trained and they are supervised. Any little problems that could ever pop up are handled in a prompt and efficient manner. We have great management and communication among our agents at Lyon Real Estate. I can always trust a Lyon agent to do the job correctly.
When agents don’t respond after being informed their buyer’s offer has been accepted, that’s the first sign something is amiss. I didn’t hear from this buyer’s agent for more than 24 hours. A full 24 hours was also enough time to negotiate another offer. Of course, unknown to me, the agent could have dropped dead from a heart attack and been found lying splattered in the street somewhere, but that’s a long shot, don’t you think?
In any case, I have 3 very happy buyers this morning who have a renewed chance to buy a home in Elk Grove. If you read yesterday’s blog, 35 offers for a home in Elk Grove, you’ll see my gut said we should have countered all four offers. That was my suggestion. It’s not that I don’t trust people; it’s that some prove unworthy of trust. Being cautious is always wise in my playbook.
One deal is not worth a reputation. The shame is some agents never learn that lesson.
Multiple Offers: Does it Matter Who Buys Your House?
Depending on to whom you speak, my position as a top Sacramento real estate agent could be enviable or unfortunate when it comes to giving my sellers intelligent advice about multiple offers and helping them to decide who should buy the house. After all, it is the sellers’ decision. It doesn’t matter if the home is a short sale or a regular equity sale, who buys the house is still the sellers’ decision. The seller owns the home and the seller is in control, making all decisions. I’m just that yappy little Yorkie in their corner trying to help them to make the right decision — which is the decision that is best for the seller.
As such, I sometimes slip on my sellers’ shoes, although I don’t walk very far in them. Like those Lady Gaga shoes. I’d probably break my neck trying to walk down the front steps in 7-inch heels. I step into my sellers’ shoes at times because I want to make sure they consider all of the information they need to make an informed decision and not just pluck a number out of the basket of multiple purchase offers.
You might be thinking, what’s the deal? The seller should take the highest offer, end of story. However, please hang on and bear with me; I propose there is more to the story. Whomever buys the house is the person who will take care of that house after escrow closes. After the agents collect their commissions, the seller pockets that big fat check, the keys tossed into a kitchen drawer and, lights out, everybody goes home happy as little clams, who bought the house might matter.
Was it an investor or an owner occupant? Why do you care? Does it matter who buys your house?
You care because it’s your neighborhood you are leaving behind. Your neighbors and probably your friends, the community in which you served, built memories and forged lasting relationships. Some of us believe we have a responsibility to leave the world in a better place after we touch it. One by one we can make a difference in our communities. We can help to transform and improve or we can help to destroy.
Sometimes, it’s as easy as deciding between what you would want for yourself if you were the person left behind. Or, what would you like to see in the neighborhood where you move? Do you want to move into a neighborhood as a homeowner in which half or more of the homes that were once owner-occupied have been converted into rental properties?
There are large groups of non-local investors buying up huge chunks of Sacramento for rentals and they are changing the face of Sacramento. These corporate investors are paying cash and do not always offer market value, either. Lately, I’ve been receiving lowball offers from these groups. Some are brash. I see unreasonable demands. And they are turning our neighborhoods in Sacramento, block by block, into rentals, away from owner-occupied homes, which once reflected our pride of ownership. Do first-time home buyers stand a chance against these cash-rich bullies? Who is helping the little guy to succeed?
Before you sign that purchase offer, think about does it matter who buys your house. You might have a choice. Consider what your mother might say. Then do the right thing.
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.
What Will a Sacramento Home Seller Take?
Would a seller take this to sell a house? Would a seller take that to buy a mouse? Would you, could you, in a car, take them, take them, here they are? This is what it’s like putting a home on the market in Sacramento today. Offers falling out of the woodwork and from all directions. I tell sellers that I’m almost afraid for them because I know what will happen, and they do not. Sam, I am. I am prepared. But sellers are freaking out. I know it before it happens.
There is a long parade of offers coming my way today. Thinking ahead, I had mentioned to a seller last week that we should go on the market on Monday so we can all enjoy a relatively quiet Labor Day Weekend. Meaning her home will probably be sold by this Wednesday, at the latest. What is a little bit wild are the calls and emails that I’ve been receiving from buyer’s agents. They all want to know what the seller will do and what the seller will accept.
The answer to those kinds of questions is I do not know. I am not the seller. I am just the listing agent. I’m not inside the seller’s head. I don’t make decisions for the seller. It’s the seller’s house, and she can sell to whomever she wants in this market. It’s a seller’s market. If your buyer is not a cash buyer, you’re probably at a disadvantage, but not necessarily. There are some sellers who care more about the type of person who is making the offer than the type of offer. But let’s not fool anybody, cash offers, as long as the buyer is not a jerk, are more likely to win.
Especially in a short sale situation. In the past, like a few months ago, a cash buyer might be a drawback and not as desirable to a short sale seller. That’s because cash buyers are often distracted by a new listing, something else shiny to buy, and they can bail with great ease. But today, they are very unlikely to walk away because there is nothing else for them to buy. So, that makes a cash buyer just as attractive commitment-wise as, say, my personal favorite, which are VA buyers. VA buyers will stick with the deal because they have no other place to go. But now, neither do the cash buyers.
This is a really good time to be a seller in Sacramento. If you’re searching for an experienced and straight-forward Sacramento real estate agent to help you get top dollar for your home, call Elizabeth Weintraub at 916 233 6759. I’ll help you to navigate these crazy multiple offer waters and get the edge in the market. It’s what I do, Sam, I am.
