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Should Sellers Always Issue a Counter Offer?
Sacramento real estate agents often get upset or irritated when a seller refuses to issue a counter offer, but there is no law nor rule that says a seller must. This is the thing that they don’t understand because they put themselves in the seller’s shoes, and they would act differently. Everybody has his or her own way of responding to situations, and not everybody reacts in the same manner.
I mean, look at those guys out at Buckingham Palace. They stand there with their cute little chin straps, big furry hats, and they don’t even blink much less smile. You can’t make them smile. You could take off all of your clothes and do cartwheels in front of them, and their eyeballs would not move. Not that I’ve ever tried it, mind you, just making a point. Everybody is different. It’s what makes the world go round.
When I see purchase offers from buyers when I’ve explained to the agent that he or she needs to be extremely aggressive and very strong, and they submit an offer that results in less than list price, I feel for those agents. Because I know they’ve explained it to their buyers, and their buyers have their own thoughts. I imagine their own thoughts are something like: well, I’m gonna buy a home under my own terms, and if I can’t, it’s just not meant to be. Or something else equally ridiculous. Thoughts like that simply mean they are not buying a home. Not today. Not tomorrow. Not until they conform to the market.
But in any case, it does not mean the seller is required to send buyers a counter offer. Sellers are not allowed to discriminate and they can’t turn down a full-price offer without noting such in MLS, but they are never required to counter.
As the seller’s listing agent, I can’t make them issue a counter offer. And I wouldn’t want to try to force them to do anything anyway. Not every purchase offer deserves to be countered. Years ago I might have suggested that it’s always a good idea to counter, but today, meh. In this market, not so much.
Desperate Times Call for Desperate Measures in Sacramento Real Estate
Do desperate times call for desperate measures?
Do desperate times call for desperate measures in Sacramento real estate? I’d like to believe otherwise but then I may as well make like an ostrich and stick my head in the sand. Except an ostrich would be likely to end up with a bunch of baby ostriches and I’d just mess up my makeup or lose an earring.
I realize it’s tough out there for home buyers right now. If they love a home, so will another . . . and another and another. That means some lucky sellers are receiving more than one offer for a home. Yet, this is absolutely a great time to buy a home because interest rates are positioned to rise on the horizon. On the downside, if a buyer’s offer contains anything out of the ordinary as compared to the other buyers — like maybe a contingency to sell an existing home — the buyer could be at a distinct disadvantage. To counteract this situation, some agents will write more than one offer for a buyer, even though it is frowned upon and could violate certain good faith contract laws.
The one thing an agent should not do, however, under any circumstances, is send two offers from the same buyer to the same Sacramento listing agent and, on top of it, include a note about how much the buyer LOVES the home. Ummm, which one does the buyer love? We don’t know. But I did receive 2 offers from an agent signed by the same buyers on two different listings. Guess the agent must have figured desperate times call for desperate measures; or, perhaps it temporarily slipped the agent’s mind that both listings are mine.
This is the same agent who called to ask how much the buyer had to offer to get the home. Well, the answer is I do not know. I am not the buyer, and I am not my seller. I can’t read my seller’s mind and, even if I did possess magical powers, I wouldn’t share that information. It’s privileged, covered under client fiduciary, in addition to it’s not fair to other agents. I need to treat all parties fairly. It’s in the Code of Ethics.
The agent moaned and said the agent would do it, and the agent’s general real estate practice is to often help other agents this way. Well, as a listing agent, the agent is only helping the agent who wins the offer, not all of the other agents. No point in explaining that as it’s not my place to educate; some agents would find it demeaning. But I did explain to the agent that we all work differently. My real estate business in Sacramento is undoubtedly unique compared to others. Some of us, apparently, adhere to desperate times call for desperate measures. I don’t tell agents how much to offer. That’s between agents and their buyers.
If you’re looking for an experienced agent to sell your home in the Sacramento Valley, call Elizabeth Weintraub at 916.233.6759. Elizabeth consistently ranks in the top 1% of all Lyon and other agents.
Discounting an Already Discounted Price for a Home
The thing about selling Sacramento real estate is the landscape and climate continually changes from year to year, the market is never the same. The only thing that manages to hold true is the shape-shifting of the challenges. We Sacramento REALTORS always tackle challenges, it’s the name of the game, they just change form.
A few years ago, it was things like the REDC Happy Thanksgiving short sale, in which the negotiator demanded that the seller stop celebrating with his family and start digging into his file cabinet for documents. On Thanksgiving Day. Today, most sales are no longer short sales anymore in Sacramento. They are regular equity sales with traditional sellers. Not only that, but our market has shifted a bit more toward normalcy, even with limited inventory; it’s more balanced.
Buyers seem to present more challenges. It’s like they are tiptoeing around on little mice feet, afraid of their own shadow. They make offers and then vanish. They don’t respond to counter offers and sometimes their agents go with them into that dark hole somewhere. One agent I have emailed, texted, left voice mails, over and over and nothing. Maybe she is in the hospital?
I am also hearing that some buyer’s agents do not present comparable sales to buyer before advising them on writing an offer. They tell the buyer to name a price. So the buyer looks at the list price and then deducts the (inflated) cost of upgrades and improvements the buyer would like to make. The buyer doesn’t realize the price might be a discounted price and instead might try to discount it further. Not to mention, upgrades don’t really factor in.
I’ve heard buyers sob, I would have to pay $50,000 to install a swimming pool so you need to knock 50 grand off the price. I suspect their agent is dying to say, hey, psst, this home doesn’t come with a swimming pool; get over it. But they smile and suggest that the buyer instead tour homes with swimming pools buuuutttt the buyer wants THIS home AND a swimming pool. I don’t envy buyer’s agents. They know a discounted price doesn’t often work.
Some fixer homes, well, they’re not every buyer’s idea of a new home. Buyers generally want to buy a home in move-in condition. This means the homes that need a bit of work can take longer to sell because they don’t appeal to everybody. But just because the days on market are longer than the flipper homes doesn’t mean the price isn’t right. The price might be just right.
Purchase Offers Under False Pretenses Can Backfire
When you list and sell as many homes in Sacramento as I do, you might begin to wonder what’s up when a buyer suddenly offers more than list price when there is no apparent reason to pay more than list price for a particular home. Even a full price offer can raise a red flag in Sacramento’s fall real estate market. It can make an agent a tad suspicious that the buyer might be trying to slip that home into escrow with intentions to later renegotiate. This is a bad practice with purchase offers known as locking out other buyers in an attempt to later force the seller into a price reduction.
I’m no lawyer, but that’s probably not a good faith contract if purchase offers are entered into under false pretenses. There are many buyers who think this way or it’s possible their agent may assure them they will always have the opportunity to renegotiate when they are presenting the purchase offer for signature. In some cases, it might even work. But it doesn’t work in a short sale at all. And it rarely will work when the seller has hired an assertive Sacramento listing agent because that kind of agent will fight hard for the seller’s rights.
The reason this type of underhanded approach does not work on Sacramento short sales is because once the bank has approved the short sale, there is a slim-to none-chance that the bank will renegotiate. Now, I have had short sale banks reduce the price when the buyer’s appraisal came in less than the contract price, which can happen when banks are unreasonable or the BPO agent messed up, yet not always. However, just because the buyer found a defect in the home or suddenly decided he no longer wished to pay the contract price, well, that is insufficient and not grounds to request a price reduction.
Negotiating with a short sale bank is not like shopping at Nordstrom. A collection agency, for example (which is where the bulk of short sales today land) won’t give the buyer a credit nor try to make the customer happy because they don’t give a crap about the buyer. Nordstrom doesn’t really give a crap either but it’s good policy for them. A happy shopper is likely to return to Nordstrom and buy more useless junk that will go out of style in a few months, but the short sale bank / collection agency has no relationship with the buyer.
A buyer asked a few weeks ago if we would ask the bank to reduce the agreed-upon sales price after receipt of short sale approval. The buyer struck me as the sort who would send back a pizza as the poor delivery guy is ringing the doorbell with his nose and juggling several steaming boxes of pepperoni pizza because the buyer suddenly decided he prefers ham with pineapple. He could have been delusional, too. Dunno.
The fact is the buyer probably would have lost more than the price reduction he requested if he canceled. That’s what it came down to, and I pointed out those facts to him. He had already removed all of his contingencies, and when a buyer releases contingencies, it puts the buyer’s earnest money deposit at risk.
A cancellation at that point could mean the seller might ask that the earnest money remain in escrow and file a suit in Small Claims Court to retrieve it. The seller would also lose the relocation incentive under the circumstances because the seller had already vacated the premises. If the home went back on the market, second-time around the bank won’t pay relocation if the seller doesn’t live in the home. The seller might sue the buyer for that loss, too. It’s not expensive to file these types of cases in Small Claims Court.
In this instance, the buyer needed to ponder whether he wanted to give that money to the seller and not own the property — or — if he wanted to own the property instead. Because it could cost him the same amount either way. Fortunately, he chose wisely.
Success is Focusing on the Joy
Sometimes, people tell me that my blog is just what they need to read for that particular day, and I hope today’s blog is that inspiration for some of you. Today I want to talk about focusing on the joy.
One of my Elk Grove sellers called yesterday after putting her home into escrow to personally say thank you for the wonderful job of negotiation — which was appreciated by this Sacramento real estate agent. Everybody likes to be appreciated. I am especially thrilled when my clients are thrilled. It makes what I do meaningful and worthwhile. It also validates that all real estate agents are not the same, something often overlooked in this industry.
There are those in the public who believe all agents are identical to each other, and therefore, we should all be paid as little as possible, because they sadly believe that what agents do is something a trained monkey can do. It’s an insulting attitude toward agents, but I can’t help what other people believe. It’s also craziness. Get this, I have had a former client once ask me to cut my already approved commission and yet spend more money to sell his challenging and overpriced property. They don’t get it. No matter what we do, we can’t force them to get it. But we can spend our time instead focusing on the joy.
Downer and negative attitudes, well, that’s OK because there are plenty of sellers who work from a different framework. It’s human nature to gravitate toward people who like and trust you. How do companies attract loyal and dedicated employees? They treat them well, show respect and value their contributions to the company. How many companies do you know of nowadays that do that? They don’t denigrate and expect an employee to perform well. ‘Cuz employees will quit and walk off the job.
Except real estate agents. Real estate agents take more abuse than most because there seems to be more of it going around. Tempers flare. Unreasonable demands made. Particularly near the holidays. Fortunately, I don’t encounter rude or demanding people very often and, if I do, I manage to stay clear. My sellers are delightful; I’m happy to say. It gives me great pleasure to call them with good news. I spend my time focusing on the joy.
Like this morning, I was able to call a single mom and let her know that not only is her short sale approved by both lenders, but she’ll receive $3,000 at closing, and we are closing the day after Christmas. I have one more Happy Thanksgiving call to make this morning as well, to say the nervous buyer has finally emerged from underwriting and his loan will close. This is a special business for those of us who harbor the right attitude and surround ourselves with fabulous people.
Successful people tend to concentrate on focusing on the joy, what brings them joy. Happy Thanksgiving.
