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What is Buyer Due Diligence for Sacramento Home Buying?
In my pending sales at the moment, it seems that many right now involve buyer due diligence. Yet another sign we are on the tail-end of the seller’s market. Normal transactions over the past 5 to 7 years have not really involved a lot of buyer due diligence. Seems buyers were so excited and thrilled to be given the opportunity to buy a home, they skimmed through the seller disclosures. They also waived inspections, sometimes submitting offers with an inspection contingency release upfront.
Not today. Nope, now buyers are very involved with buyer due diligence. As a seller, you want to give the buyer all the time the buyer needs to release contingencies. You never want to be accused of obstructing buyer due diligence, no siree. However, some of the questions we’ve received have been very detailed. So detailed an agent can’t tell if the buyer wants to move forward with the sale or if the buyer wrongly believes she needs a good reason to cancel.
During inspection periods, buyers can cancel without giving a reason. That’s a fact few buyers really understand. However, buyers have a responsibility to themselves to conduct every desired inspection and ask every pertinent question during their due diligence period. Agents cannot perform this task for them. They must do it themselves. They can cancel for any reason during the inspection period. The reason does need to be specific.
In fact, sometimes it is better not to give a reason. Without a reason, the seller will find it difficult to sue — not that the seller has a right to sue. People don’t always file lawsuits because they have a legal right. They file lawsuits often due to emotional misunderstandings. Rather than saying, let’s work this out, some people prefer to hastily blurt: I’ll see ya in court, buddy. But you already knew there are a lot of idiots in the world.
As a buyer’s agent, it is important to follow the estimated timeline of a transaction. Agents, line up all buyer inspections as early as possible. Because a general home inspection might suggest other inspections. Buyers, talk to your agent about those “other inspections” because it might be a case of a home inspector covering his or her own butt. Not necessarily a necessity.
Inspections are for the buyer to gain a thorough understanding of the condition of the home. It is not to renegotiate with the seller or ask for a credit. It is very rare in my listings that sellers ever get stuck with repairs, price reductions or credits. But I also know this is not true of other listing agents; many insist their sellers cave in just to “hold the deal together.”
Throughout our strong seller’s market in Sacramento, I have been pretty much a bull dog about no repairs. However, with the amount of buyer due diligence happening in our present market, I have a feeling the tide is changing on that, too.
985 Regatta Drive in Sacramento is Now Pending with Bay Area Buyer
Without going into specifics about the offer for the home on 985 Regatta Drive, yesterday the buyer removed all contingencies and we opened escrow. I know, it is backwards to how homes are commonly sold in Sacramento, but we are not negotiating in a normal market. Usually in a Sacramento transaction, the buyer presents an offer, the seller accepts and we enter escrow. Then the seller has 7 days to deliver disclosures to the buyer, and the buyer typically pays her own closing costs.
It goes without saying that I work with Bay Area agents to make a transaction close. I do what it takes. They are not always easy to work with because some do not sell very many homes and have little experience. Some do not have a lockbox key so they can’t access the property without assistance. And some do not know how we do business in Sacramento, just like we don’t really know how they do business in the Bay Area. Our practices are very different.
When we received the original offer from the Bay Area buyer for 985 Regatta Drive, I had never seen anything like it. The buyer pretty much asked for the moon and the stars. It would have been easy to dismiss. However, there was plenty to like about the offer. It started out a little rocky, a bit of misunderstanding, probably on both sides. But I quickly tried to work with the agent, and we began negotiating.
That’s all it really was. Negotiating what we want, while they negotiated what they wanted, and we found a way to make it work. We negotiated the Request for Repair before we entered escrow. Turns out the home is in pretty good shape, and there wasn’t much to worry about. Of course, we paid for our own home inspection upfront, but that was a small price to pay to make the transaction work.
Realtors can’t let ego get in the way as a Sacramento listing agent. Our client’s needs should always come first.
Unfortunately, two other buyers who were so patient and waited for us to finish the lengthy negotiations now cannot buy the home. Because 985 Regatta Drive, Sacramento, CA 95833 is presently pending. If I can sell this remodeled home in South Natomas by overcoming challenges in this manner, imagine what I can do for you.
Story of Closing at 4909 Laguna Woods Drive in Elk Grove
Last month I featured an updated pool home in Elk Grove for sale and yesterday this turnkey home on Laguna Woods Drive closed escrow at list price. Once everything comes together and the home enters MLS, activity happens fast. But it was a fairly slow beginning. For example, I started working on this listing the first week of January, in the middle of my 9-week winter vacation in Hawaii. Since then, I’ve been back to Hawaii twice. That’s how long I’ve been working on this sale.
When I came home to Sacramento in February, I met up with the seller to inspect the home. Without going into detail, let’s just say it wasn’t show-ready. I made a number of suggestions to the seller of things she could do, and she took me up on all of them. If you had seen the condition of the home when I first viewed it in comparison to how it presented cleaned up and staged, well, you would say it was the difference between night and day. Like the difference between extreme vog and no vog.
Remarkable improvement. We painted the cabinets a rich chocolate brown. Installed granite. Finished the engineered hardwood floors. In short, we transformed a 22-year-old home into a modern updated home that looked almost brand new. If you had seen the “before” condition of the home on Laguna Woods Drive and the “after,” you would not recognize it.
The seller expressed concerns about the pricing because she thought it was too high. Her home was not located in the subdivision of more expensive homes. She did not feel comfortable right away that she could get upwards of $600K for her home. The seller also fretted about a recent foreclosure affecting her value. But given the market conditions, I felt that she could. I’m right more often than not, and in this case, we were right on the money.
Everything went smoothly until we received the Request for Repair. For some reason, the buyer asked for 8 repairs, including replacing the windows, of all things. However, anybody who knows me knows what I think about Requests for Repair in a seller’s market. Especially over-the-top requests. The answer is no and no again. Of course, the decision is the sellers’ but they often follow my advice.
The buyer backed down from her requests and elected to close escrow. Now my seller can relocate to Alabama and get on with her life. Five months of work this took. But the end result is priceless and the seller was very happy. That’s all that matters to me.
4909 Laguna Woods Drive, Elk Grove, California 95758 closed escrow on May 30, 2018 at $595,000.
Does a Sacramento Seller Need to Do Home Inspection Repairs?
Telling sellers they do not have to perform home inspection repairs can fall on deaf ears.
When I send home inspection repairs and findings to a seller, it is for the seller’s records only. I tell them this. But still, some home sellers react in unexpected ways. Some sellers take the home inspection very personally. They want to call the home inspector and chew off his ear. (For some reason, more men than women opt to become a home inspector.) Sellers find the composition of the report offensive. Many don’t like the “repair” or red flags noted.
Often, these are the very sellers who tell me at the time of listing that there is nothing wrong with their home. In their mind, they have the perfectly maintained home. I chuckle to myself because I know better. But I don’t argue with them. It’s not always so much that there is a lot of stuff wrong as it is buyers may feel as though they paid all this money for a home inspection, there better be some actual discoveries. Otherwise, why did they pay $450 for nothing?
So there are home inspectors who go out of their way on the well maintained homes to find a handful of defects, regardless of how small or insignificant. A chip on the edge of a roof shingle. Water marks on the windows. Scuff marks on the screen door. Which is really amusing when you think about this. Instead of a buyer feeling relieved to discover no major problems, some buyers openly choose irritation.
Funny story to interject. When I sent a recent file of home inspection repairs to a seller, the seller thought he was supposed to fix everything. Why? I dunno. He ordered delivery of light fixtures and lined up workers. It’s a good thing he checked with me because I told him to cancel the order and the workers. He sold his home in AS IS condition. Just like every California Residential Purchase Agreement states in paragraph 11. The home is sold AS IS.
Now, one of the problems lies with buyer’s agents who don’t want to alienate buyers. So, when their buyer makes noises about not buying a home with defects, the buyer’s agent has a go to. That go to is to write a request for repair and to ask the seller to fix things. I always tell my sellers they don’t have to fix anything. Especially when receiving a petty request for repairs. Instead, I lay out the options. They can just say no and take a chance the buyer will get her knickers in a twist and cancel.
But then again, the next set of buyers won’t ask for things. Pretty much guaranteed. If it’s a substantial sum of money, we might want to sell the house again to a more reasonable buyer. I do not mind selling a home twice and getting paid once if it helps the seller. Or, the seller can agree to give the buyer a credit or renegotiate the price. Or, fix some things and not all things. It’s all negotiable. But generally, my sellers just say no. It’s their right.
A list of home inspection repairs and suggestions is for the buyer’s edification. It’s not to reopen negotiations. And I have to admit, when I work with experienced buyer’s agents on the other side of the transaction, I almost never get a request for repair for my seller. Why is that, do you think?
Campus Commons Condo Just Closed Escrow at Full List Price
1102 Dunbarton Circle closed escrow at $425,000.
My first blog about this Campus Commons condo published 5 weeks ago and now this beautiful Powell condo has closed escrow. When I shared the good news yesterday with the seller, she seemed very pleased. She said, “Well, you got us list price,” and she seemed a bit astonished that it happened. Maybe because at first she had suggested a price that was $25,000 less than my suggested list price. I take into consideration how much sellers want, but it’s not generally a factor for me when determining a listing price.
Now, I suppose it’s possible that she got a price of $400,000 from Zillow, which is always inaccurate. I use actual statistics and compare apples to apples, studying all of the interior photographs of comparable sales. My CMA preparations are intense and generally right on the nose. That’s because I promise my sellers we’ll leave no money on the table, and I mean it. I came up with an asking price of $425K.
When I met with the seller in September, we discussed the types of improvements she would make, such as painting a super bold wall, putting a frame around the mirrors to hide fading edges, replacing flooring on the second level, painting a chandelier (and yes, that gold tone is history!). Small improvements. We staged the home as well.
While other Campus Commons condos sit, this Campus Condo received a lot of traffic. Due to the beautiful photographs filled with emotion and passion. Sure enough, shortly after going on the market, we received our offer of $425,000! Everything was hunky dory and we were happily moving along to closing when BAM, the buyer fell out of the boat.
I was in Los Angeles that weekend to see Hamilton when the Request for Repair arrived in my email. It was 2 or 3 pages long, filled with just about every item on the home inspection. Did the buyer send this? Wondering, I called the buyer’s agent and sure enough, the buyer had indeed provided this list to her. The buyer also demanded that the seller replace all of the single pane windows with dual pane. What? So NOT gonna happen.
We prepared ourselves for the possibility the buyer would walk, and I’d have to sell the home twice and get paid once. Which occasionally happens. We offered the buyer a small token, agreeing to replace the bath and kitchen receptacles with GFI. Fortunately, the buyer’s agent kicked into high gear and persuaded her buyer to accept the token and to forget about her Request for Repair demand.
Crisis averted! Good thing the buyer’s agent pulled it off because it allowed us to close escrow yesterday! Everybody is happy now. This lucky buyer got possession of this Campus Commons condo just before Thanksgiving.
