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It Is Not What You Say It Is How You Say It
It is not what you say, it is how you say it.
Everybody knows it is not what you say it is how you say it, but how often do you see a professional in action? OK, let’s not talk about Donald Trump because that’s a really malo example. He has about as much finesse as a termite. He violates the first rule of it’s not what you say it’s how you say it porque he doesn’t consider his words before opening his mouth. He says whatever lingers on the short string between brain and tongue.
Real estate agents are taught to convey information, but who spends the time to teach agents that they should consider how that information will be received by the recipient? If it could be construed as damaging or irritating or in some way produce an unanticipated result from the recipient, perhaps a better choice of words would be in order? Supuesto, to get to this point, one would need to lay it out there and analyze the results.
The first rule of it’s not what you say but show you say it is to imagine first the recipient’s reaction. Will it be favorable? ¿Simpatico? Are you trying to persuade a person to act in a certain way or to change a perception? One of my pet peeves are the well meaning managers in real estate who advise agents to always ask a potential buyer if they are working with an agent. Just so we don’t tread on anybody’s toes or violate the Code of Ethics. So that’s what agents do. They ask: are you working with an agent?
What buyer ISN’T working with an agent? Are they a loser, for crying out loud? Does nobody want to work with them? Don’t they know ANYBODY in the universe who is a real estate agent? Wow, what a deadbeat sucker. You can get the same point across by asking: If you haven’t settled on an agent yet, I would love to help you to buy a home. Would you like to work with an agent like me?
Agents are not required to “grill” potential buyers.
Another incorrecto question is: do you have a preapproval letter? It sounds like a personal attack. An agent who blurts out this question is saying a) she does not trust the buyer, and b) perhaps the buyer really is a deadbeat.
Remember, it is not what you say it is how you say it. Doesn’t it sound much better to say: Wouldn’t you love to start looking at homes this weekend? If so, we need to round up a lender letter before then so you will have it ready to submit with our offer; this is a tough market and sellers tend to reject offers without such a letter. Just thinking ahead for you. I can refer a lender to you who can produce a letter for us if you like.
It’s easy when you’ve been in the business for decades to develop bad habits, just as easy as it is to pick them up in the first place. We are in a service business. We develop fiduciary relationships with our clients, which means putting the client first. If agents are not working with very many buyers, maybe it’s time to reassess the approach and to consider it is not what you say it is how you say it.
For buyers, por favor disculpen the agents who sound like they are attacking you. They’re trying to do their job, they’re just not doing a very good job of it. You might want to reassess your own strategy and choose an agent who thinks before she opens her mouth. That’s the type of Sacramento Realtor who will get your offer accepted.
What Happens If You’re Turned Down for a Mortgage?
When I reflect on my earlier years in real estate, way back to some of the first homes I ever bought in my life, it amazes me that I did not know if I would get turned down for a mortgage. That thought just never occurred to me, although in retrospect I don’t know why not. I suspect that my reasoning was I had a job, a steady income and I could afford to make the payments, even if it meant I would have to eat Ramen noodles.
That’s not the case in mortgage land anymore. Borrowers can’t just decide that they can afford to buy a house and go do it like charging that Jimmy Choo bag to your Nordstrom credit card. Nowadays, a borrower needs to prove that she can qualify for a mortgage, and she might get rejected. The qualifications levels are more stringent, ratios are tighter, rules stricter.
This means it makes a lot more sense to get a preapproval letter before one starts house hunting. Not only does it give a borrower peace of mind, but it means a person won’t dash out, find the perfect home, fall madly in love with it, and then be informed she can’t have it. It also gives the seller a sense of security that once she accepts the purchase offer, the buyer will be able to perform. Desire and ability are two different animals.
But a preapproval letter, unless it’s been through underwriting, is really more like a pre qualification letter. It’s just a general idea of what a person can do. It’s still no guarantee that a borrower won’t get turned down for a mortgage. As a top listing agent in Sacramento, I see many so-called preapproval letters instantly ignite in flames before my eyes just as we are getting ready to close. There are so many things that can go wrong in underwriting it can make your head spin.
A preapproval letter does not mean you won’t get turned down for a mortgage. It’s a good idea to work with a top-notch mortgage lender.
How Do You Know if the Sacramento Home Buyer is in Love?
Because it ain’t over ’til the fat lady sings in Sacramento real estate — meaning home buyers basically make a zero commitment during the first several weeks of escrow — it’s not unusual for a seller to worry about the buyer’s intentions. Is the buyer serious? Is the home buyer in love with your home? An offer means little, believe it or not. The offers I receive from buyer’s agents on behalf of my sellers generally provide very little insight. I’m lucky if the agent manages to tell me anything tangible about the buyer. It’s not unusual for an agent to scan the offer to my email without so much as an introduction or greeting.
You remember the components of a letter, right? Well, if you’re of a certain age and dig way back in your attic, you’ll recall the salutation, body and closing. Nobody bothers with that formality today. In fact, I’m grateful if an agent says, “Hey, here is my buyer’s offer.” Or, maybe they send a link so I can retrieve the offer myself from ZIPforms or Dropbox.
There is no interaction. No discussion, usually, unless I generate it. The bulk of emails with offers attached that share any insight whatsoever about the buyer will commonly note: The buyer is in love with the home. They better be in love with the home; I don’t know any buyer who isn’t in love with the home — except the buyers who swear on their grandmother’s grave they are so in love with the home and then won’t pony up an extra thousand or two to meet the seller’s counter offer.
They’re in love to a point. Don’t tell us how much a buyer is in love with the home, show us. Put your money where the agent’s fingertips have traveled on that keyboard: present that huge honkin’ earnest money deposit and make a few concessions.
A seller asked this morning how we can tell if a buyer is serious. That’s a tough one because we are forced to rely on the documents before us and veteran agents with a few decades behind our big fat butts, well, we partly rely on intuition. Gut instincts is a collective intangible asset developed over years. Listing agents like me will draw attention to any item that could cause a problem in the purchase offer as a reason to disqualify a buyer when helping the seller to choose between two or more buyers. Anything that makes a buyer appear less qualified or uncommitted, pffft, out of the running.
Choosing between offers can result in assigning negative points to certain things such as type of financing, credits, length of escrow, repair demands, mortgage lender, agent experience, inspection periods, among other aspects of the purchase contract. Too many negative points and your offer won’t get accepted. In this market, sometimes one negative point is enough to make a buyer lose a home.
Tip: If you’re a buyer who is trying to buy a home in Sacramento, figure that you have competition for every home you want and ask your agent to perform accordingly. Agents, take a few minutes to share the strong points of your offer / buyer qualifications with the seller. Don’t just email an offer and skidaddle off to your lake house for the weekend. Tell us why the seller should take your buyer’s offer over another.
How to Profit from a 50% Pending Home Sales Fallout in Sacramento
It pays today to be a home buyer on a backup offer in Sacramento since we seem to be experiencing such a high cancellation rate on escrows; in some cases up to 50% of the pending sales are falling out. I say this not to be an alarmist but to point out what other real estate experts are too frightened to bring up because they are worried this kind of data would harm our fragile sales market. Every real estate professional, just about, knows this is happening in the Sacramento real estate market, if they’re doing any kind of business. They’re just not talking about it.
That’s because we have to be positive and spread only good news about Sacramento real estate. Oh, spittooey. You’ll read in other news media that sales are UP. What media is not telling you is real estate sales naturally increase in the spring. Inventory is low, which is true, inventory is low as compared to previous years, but it doesn’t matter because there aren’t enough buyers for it. Home buyers today typically lust over only the best home on the block and the rest are ignored.
On top of this, buyer’s agents think they are working with buyers because buyers tell the agents they are buyers. They might even pop up with a pre-approval letter in possession. But it doesn’t mean they are a buyer, because a buyer closes escrow and eventually ends up with a home.
It’s not the end of the world if an escrow cancels, because it will generally turnaround and go back into escrow again under a second purchase contract within a relatively short period of time, but that’s why you want to be a backup buyer, if you can. Don’t think you can’t write a contingent offer, either, if you have a home to sell, because sellers are accepting contingent to sell offers from buyers.
For other listing agents, my advice is don’t put that listing into pending status until the buyer has deposited funds into escrow, which should occur within the 3 days MLS gives us to change the listing status. Because nobody wants to deal with the unfair stigmatization of a back-on-market listing because some doofus buyer on a whim canceled the escrow.
For buyer’s agents, don’t write multiple offers when your buyer can’t afford to buy each of those homes. Not only is your reputation as a Sacramento real estate agent at stake, but those types of “buyers” can easily morph into a vanishing act after both offers are accepted. If your buyers really want a pending home, consider writing a backup offer.
For buyers, get over the fact that homes might cost $100,000 more today than they did 3 years ago. Those days are gone. But prices are still low as compared to the prices pre-market crash. Don’t wait for interest rates to go up and slowly rising prices to price you out of the Sacramento real estate market all together. Get in while the getting is good, and for heaven’s sakes, stay there.
The Main Reason for a Preapproval Letter
A stack of 700 francs from French Polynesia sits on my desk. Primarily because I can’t throw them away, and I don’t know what else to do with them. They are pretty much worthless. People who exchange money for a living don’t want them because they are coins. If I were back in Bora Bora, these 7 coins might buy me two diet Cokes. But here? Nuttin’. Just like some home buyer who wants to write an offer without a preapproval letter — that kind of purchase offer would be worthless, like my pile of francs.
Yet, I know that home buyers struggle with the issue of obtaining a preapproval letter. Heck, even my neighbor doesn’t understand why she should get a preapproval letter. She says when she finds a home she wants to buy, she’ll get a letter. This is why she might not ever buy a house, though. Because by the time she finds something to buy, there will be a dozen other home buyers wanting to buy the same house, and no seller in this market will accept an offer without a preapproval letter to accompany that offer. So, my neighbor is at a huge disadvantage. She doesn’t want to hear about the market in Sacramento or how to buy a home in Sacramento. She has her own ideas about how it’s done, none of which are working out very well for her.
After all, she only buys a new home once every 30 years. We Sacramento real estate agents write offers for clients every week. Real estate is our business. We want to help our clients not hinder them.
This is a seller’s market in Sacramento. No inventory. Lots of buyers. This market is very tough for buyers. It’s more important now than ever to get a preapproval letter before buying a home. Not only does it tell you how much you qualify for, which doesn’t mean you have to go for the max, btw, but it assures the seller you have the means to close. It says you are serious and not some lookie-loo. Besides, sellers don’t accept offers without a preapproval letter. The preapproval letter is not for your agent. It’s for the seller.
The question might be where does one get a preapproval letter from? For starters, it should be from the lender where one intends to get a loan. Moreover, it should be from a lender who can perform. The two aren’t necessarily the same. Lots of home buyers want to go to their own bank or their own credit union to get a loan, and that’s probably the worst place to go. The reason is there is no guarantee that their own lender will perform. They all have access to the same bag of money, basically, but some lenders guarantee performance and some do not.
Why is performance important? Because a purchase contract is typically written for 30 days. That means the buyer must close escrow within 30 days of the seller’s acceptance or the contract expires. If your bank can’t close on time, the seller has the right to cancel. And you know what? With prices going up, sellers are canceling contracts that have expired. Yup! I’ve had it happen twice when representing the seller. The other agent’s buyers struggled to close because of this or that or some other thing and asked for an extension. Instead, my sellers canceled. The buyers had no say at that point. The contract time period had expired and it was within the seller’s rights to cancel. Do you want to lose your home because your lender can’t close on time?
You might want to ask your agent for a couple of recommendations. Real estate agents know which lenders perform because they work with those same lenders over and over. In case you’re thinking that agents get kickbacks or some other kind of incentive to recommend a lender, think again. That’s against the law. The only reason for an agent to recommend a mortgage broker or lender is performance. Period.
