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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.
Sacramento First-Time Homebuyers Now Have a Fighting Chance
Compared to a few years ago, first-time homebuyers in Sacramento now have a fighting chance to buy a home without a ton of competition from cash investors. They just have each other to compete with, yet some of them are going about it the wrong way. The wrong way is when the buyers refuse to take their agent’s advice. They might say they listen to it, and then they do things their own screwed-up way. When the offer doesn’t get accepted, though, they tend to blame their agent instead of themselves.
This is nuts. My heart goes out to buyer’s agents who end up writing offer after offer that gets rejected because buyers are hung up on the wrong things. Like list price, for example. List price can be meaningless. It’s a measurement. It’s the comparable sales that matter. But people get attached to personal agendas, mantras and odd beliefs, not to mention our favorite sidekick: fate.
Homebuyers last week told me they had a specific price point in mind, but they were looking at an Elk Grove home priced higher. This home had been on the market for only a few days and they wanted to offer less than list price because it didn’t fit their plan to pay slightly more. Well, a reasonable person would say: stop looking at a home you can’t buy at the price you want to pay. But reasonable people aren’t necessarily buying real estate. The fact is a hesitant buyer needs to conform because some other proactive buyer will conform. These buyers reconsidered, conformed and they got the house, over a full-price cash investor.
This market in the spring of 2014 in Sacramento is different than previous markets. We no longer face stiff competition from cash investors. Of course, we Sacramento listing agents still receive full-price cash offers and a few lowballs from investors, but for the most part, the market is made up of first-time home buyers and move-up buyers. I counsel my sellers about choosing between an investor buyer and a buyer who will occupy the home. Does it matter who buys your house? You bet it does. And sellers can legally choose to sell only to an owner occupant.
Not surprising to real estate agents, a story in the Sacramento Bee says homeownership in Sacramento has fallen to a 40-year low. That’s not surprising, given the number of sellers we observed who said yes to the cash investors over the years and no to the first-time home buyers. But now the tide is reversed, and we still have a fighting chance to take back our neighborhoods, providing first-time homebuyers step up to the plate.
The kind of purchase offer a buyer makes can mean the difference between buying a home and not buying a home. Here’s my general advice: Study the comps, listen to your agent and, if the home is on the market for only a few days and the price is justified, pay it or somebody else will. A more savvy buyer will probably pay more than list if the deck is stacked against them. If the home is super desirable, a hot commodity and you’re an FHA buyer or a VA buyer, you’re just not as desirable to the sellers as the conventional buyers, so step up your price and terms or you’ll fall to the bottom.
Hey, agents don’t make the rules. The market dictates.
Red Flags on Purchase Offers for Sacramento Homes
Every Sacramento listing agent owes a fiduciary to her sellers to try to ensure that the offer the seller has received is a bonafide offer, especially those that seem a little bit weird. I’m not about to say that all out-of-area buyers, especially those from the Bay area, are crooks or are not to be trusted, but I have seen my fair share of purchase offers that require additional scrutiny and most of them seem to stem from the Bay area. To be fair, though, there are crooks right here in Sacramento, and there are doofus real estate agents right here in town who enable them.
Part of my job to my sellers is to look for what can go wrong and advise accordingly. The first red flag I might see in an offer is due to the fact the agent might not read the MLS listing nor adhere to the requirements. I suspect they do not always read all of the instructions because they either don’t have full access to MLS, they are confused, inexperienced, or they just didn’t bother to look for attachments. Some agents probably do not want to comply, so they simply ignore the requirements.
The second red flag is the offer itself might appear as a template. This means all of the standard information is typed in a different font, often an odd color, and a different point size, and the pertinent data such as property address and sales price do not match. Agents use this procedure when they are creating multiple offers and throwing those offers to the wind. They think nobody notices this.
The third red flag is the offer might be missing information. Certain boxes might be left unchecked and blank lines will be incomplete. Attention to detail is not always a strong suit among thieves, perhaps the APN number is missing or the agent’s license number is not there, which are important items to include.
The supporting documents are often a mishmash of papers tossed together. The proof of funds might not contain the buyer’s name. The earnest money deposit might be from a new stack of checks, numbered in the low 100s and containing no date nor identifying information. The pre-approval letter is most likely outdated if not expired.
You might ask yourself why do they bother to do this? What is the point? The point is the investors think they are clever and smart to lock down as many properties as they possibly can while they figure out which ones they might want to buy. They might make offers on 10 or 20 listings but be able to buy only one. This practice is not advised and many lawyers say it is against the law, but when has that stopped the crooks?
When you look at all of this damaging evidence, coupled with the fact the agent has not shown the home to the buyer, these are not really offers. If you need further proof, just ask the agent a question such as did you show the home? The agent won’t reply. And there you go.
What Sacramento Buyer’s Agents Want to Know
As a listing agent in Sacramento, I hear almost immediately from a lot of buyer’s agents when any of my new listings hit the market. Ding, ding, ding, my phone rings, one call after another. Especially if the listing is priced well and a turnkey home. The first thing agents want to know is if it’s still available, even if it’s only been in MLS for 30 minutes. That’s not as unusual as it may sound because my photos look enticing, the marketing verbiage is attractive and, in our competitive market in Sacramento, sometimes buyers don’t view the home before writing an offer. With digital online signing services such as DocuSign, buyers can quickly sign an offer within minutes for submission.
Of course, I check the Supra lockbox online showings to determine if the agent representing the buyer has entered the house. But that doesn’t tell me if the buyer was with the agent at the time. The buyer could live in San Francisco for all I know, but I can get a clue from the address on the buyer’s preapproval letter or earnest money deposit check. I can also just ask the agent. This is part of the information I pass on to my sellers as together we analyze the purchase offers.
The second thing buyer’s agents want to know is how much their buyer must offer to buy the home, on top of how many offers we have received. I will answer the third question but not the second, unless the seller instructs me to do it. And since it’s not really in the seller’s interest to disclose how high a buyer needs to go, few sellers will give me the go-ahead, yet buyer’s agents will still ask about it. They need to study the comparable sales and act accordingly; do their job.
Buyer’s agents will say: My buyers really wants to buy this house, so tell me how much they have to pay to get it. Well, I don’t know because it’s not my house. That’s the seller’s decision, and the seller probably doesn’t even know. If there is financing, the home needs to appraise. Moreover, if I tell that buyer’s agent how much everybody else offered, then I have to go back to all of those other agents and tell them how much the other buyers have offered. I can’t treat one agent with preference over another agent. They wouldn’t like it if the tables were turned and it was done to them. I am a REALTOR, which means I have to abide by the Code of Ethics, and I must treat all parties fairly.
It’s not just a made-up code that nobody follows.
The Waiting Period for Multiple Offers in Sacramento
How many purchase offers does it take to sell a home in Sacramento these days? Maybe a better way to put it is how many days should a seller wait to accept an offer after receiving the first purchase offer?
An agent in San Jose called Thursday afternoon about a listing in Elk Grove that went on the market on Monday. I informed her the home was pending. Wha? She was shocked. She stuttered, “Bu bu bu but, it was ONLY three days — THREE days!!” What can I say? Indeed, some agents have been sleeping under a rock. Another agent called to say her clients had finally looked at the home Wednesday night and went home to sleep on it. When they woke up Thursday morning, they decided they would like to make an offer. Except now the home is pending. How is this my fault, I want to know?
If a person is seriously searching for a home to buy, that person receives listings directly from MLS through their Sacramento real estate agent, and they study those listings every single day. Buyers can opt to receive listings more often than once a day as well. Then, when they find a home, they need to be Johnny-on-the-Spot, run over, inspect and write.
The problem with most purchase offers is the offer itself is good for only 72 hours. So, if a seller receives an offer on Monday, to keep the offer alive, a seller needs to respond by Thursday, typically by 5 PM. Although, few homebuyers want to wait 3 whole days for an answer. It makes them antsy and agitated. I mean, what if it was you? Would you want to wait 3 days for an answer?
Usually the first day or two, offers come in from buyers who have not viewed the home. Many of these types of buyers are investors, with the bulk hailing from the Bay area. These people are hopeful that if they are the first offer, they will get the home, and that’s not really how it works. If the buyers haven’t seen the home, their offer does not hold as much validity as the offers that arrive on Day #3 and Day #4. After a while, all of the offers are about the same. There will most likely be a lot of cash offers.
Is it worth your time to write an offer on Day 4 when the seller has multiple offers? Depends. What do you have to offer that hasn’t already been offered? It should probably be cash or at least over 20% down conventional, in this market. Because the seller doesn’t really need 50 offers. The seller needs the offer that is the best and the offer that will work for the seller.
