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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.
On the Fence About Buying a Home in Sacramento?
If you’re on the fence about buying a home in Sacramento, this blog is for you. How often have you said to yourself, I would like to do this other enormously fun and hugely rewarding thing, but I have to work or perform some other pure drudgery I don’t really want to do, so I’ll have to pass? Yeah, I’ll have to do the responsible thing. Make the adult choice. And then later you regret it? I once passed on a trip to London with my mother because I spent the money I would have used for the trip on fixing my car, a 1965 Mustang. I should have gone to London, even if it meant borrowing the money.
When faced with choices of do or don’t, this is where analyzing risk comes in. You’ve got to ponder what would happen if you did it anyway and whether you could live with the possible downside of those results. I’m not saying you should do something stupid like run out into the freeway at rush hour because the likelihood is you would get killed. But what if when faced with an unusual decision, you did something nice for yourself or someone else instead, something that was out of the ordinary for you?
People spend so much time trying to plan for the future. As though we have all the time in the world and nobody can take that time away from us when everything can change overnight with the snap of a finger. We’re so busy with our noses stuck in our cellphones that we don’t see the here and now. We can’t be here and now if we’re elsewhere. The future most likely will come regardless of our plans, but the here and now will be gone tomorrow.
Why not give yourself permission to enjoy something different or just be happy? There is innocence in happiness, and as we grow older sometimes we forget about that innocence, but it’s still there. We tell ourselves that we’ll be buying a home in Sacramento when we have secure jobs (ha, ha) and have socked away a big down payment, but that day might never come. Emergencies pop up, stuff happens, things change. Life gets in the way. Before you know it, you’re in your 40s and have never owned a home. You get into your 50s and your bucket list gets longer and longer.
If you want to take tomorrow off work and head for the beach, just go, follow your heart. If you’re thinking about buying a home in Sacramento, talk to a mortgage broker and find out what you need to do to clean up your credit report or apply for down payment assistance. Think how you’ll look back at your situation 5 years from now. Try a different perspective. For guidance, call a Sacramento real estate agent like Elizabeth Weintraub, 916.233.6759.
Why the Time to Buy or Sell a Sacramento Home is Now
Clients have been asking lately if the end of summer of 2014 is a good time to buy or sell a home in Sacramento, because they are wondering whether prices will continue to rise. If we have collectively learned nothing from the market crash years of 2006 to 2011, it’s that prices will not always continue to go up. I’ve been advising clients all year to sell now or buy now and to not wait until 2015, and that’s not just because I’m a Sacramento real estate agent who stands to make a buck or two.
It’s because I watch and analyze the market. I sell a lot more homes than your average Sacramento agent, and I see first-hand a lot more activity than your average agent. It doesn’t matter all that much to me whether home prices go up or home prices go down, like that Eddie Murphy movie, I will still be in business. People are yakking that Sacramento home prices have risen only 8% and lamenting that figure instead of rejoicing. I am very happy with the market prices lately because they’ve made huge gains over the past 2 years. Enough so that many homeowners are pulled out from being underwater — no more short sales, thank goodness — and scores of Sacramento homeowners are able to sell and move up.
All of a sudden, like an overnight magical fairy-wand tap on our chimneys, many sellers have an additional $100,000 of equity that they didn’t have a few years ago. Even sellers who bought a home in 2010 and 2011 are able to sell now. All of those foreclosure buyers and short sale buyers are morphing into equity sellers in this new Sacramento real estate market. Interest rates are incredibly low, and I can tell you this, they won’t stay there forever. You can get a loan around 4% right now, and that gives you heart-pounding savings. Don’t be crying a few years from now when interest rates are up to 5% or 7% or worse.
Once rates begin to edge up — and interest rates absolutely will rise — watch out, because Sacramento home prices will feel the affect. The impact of interest rates on the rise is huge, for example, each 1/2 percent interest rate increase can lose a buyer roughly $25,000 of purchasing power. What do you think that kind of rate increase will do to home prices in Sacramento? It will suppress prices a bit, sure, but you’ll lose more disposable income through the interest rate increase. Overall, your payment will be higher than it will be today.
You’ve got a window of opportunity right now to sell a home in Sacramento and capture the momentum of our upcoming fall market in Sacramento — which is the second hottest real estate market in Sacramento. It’s also an excellent time, due to low interest rates, to buy a home. Are you in or you are you out? Call me, Elizabeth Weintraub, at 916.233.6759.
The Enormously Big Deal of Buying a House
When it comes down to choosing between buying a house in Sacramento or having a baby, the latter is a bigger deal for most people, yet you can’t rule out the enormously big deal of buying a house. The Washington Post talks about the financial constraints felt by many in today’s economy and how, while waiting for improvement, some decisions are postponed, as in this part of the article: “Choices large and small hang in the balance — whether to buy a house, go to college, get married. Have a baby.”
I don’t know about you, but all of those choices seem ginormous to this Sacramento real estate agent. I don’t spot a “small” choice in that grouping. Not only that, but buying a house is often said to be the single most expensive investment a person can undertake. They are all big choices and decisions, accompanied by their friends: anxiety, risk and anticipation.
As a person who works with people to sell and buy Sacramento real estate, I can tell you it’s also a highly emotional experience, mixing the love of all things drywall and wood with Ben Franklins. One moment a person is hyperventilating and the next cooing. I never know what I might find on the other end of the phone when I answer.
It’s my place to be empathetic and listen. To be that rock to lean on. To offer support and guidance and help sellers and buyers through my decades of experience to make the right decision. Sometimes it means taking the lead and saying, OK, look, here’s what we’re gonna do. Offering that solution. Other times, I need to sit back and wait for the information to sink in and for the parties to reach a state of calmness, awareness and decision-making capability.
I help people make a transition. And transitions are a big deal in life. Your Sacramento real estate agent is a coach for you, not a crutch, but we can be that, too, if that’s what you need.
Will a Sacramento Seller Sell for Less than List Price?
Buyer’s agents in Sacramento continually hear the question from buyers which, they in turn, pass along to the Sacramento listing agent: Will the seller sell for less? It’s not always phrased in those exact terms, but that’s what everybody wants to know. And that’s the one thing they cannot know and will never know unless they write an offer. For starters, no listing agent worth her salt is about to disclose to anybody for any reason how much her sellers will take to sell that home.
You might wonder why not. Because the listing agent has a legal fiduciary duty to the seller of confidentiality. The list price is the sales price. Period. If the seller prefers a range of value, then the sales price will be listed as a range of value indicated by a big ol’ V that nobody understands so nobody does it. Second, the listing agent doesn’t know what her seller will do because the listing agent is not the seller. She doesn’t own the home, and she can’t make decisions for the seller.
Every so often, I receive an email from a buyer’s agent that lays out all of the reasons why that agent’s buyers are such spectacular human beings and why they deserve to get an incredible break on the sales price — primarily because they are looking at a home the buyers cannot afford to buy. In my mind, of course, I wonder how that is my problem and what that has to do with me, Al Franken? I mean, why doesn’t the agent show her buyers the types of homes that her buyers can afford to buy? Why is she showing her buyers homes that are too expensive for her buyers?
You know why she’s performing such an unproductive service maneuver? Because she doesn’t want to take a chance that her buyers will dump her and run off to some other real estate agent in Sacramento. She wants to make her buyers happy. She wants to do what her buyers ask of her, like any agent. But somewhere along the line, an agent needs to educate her buyers. Explain the market, how pending sales are moving, supply comparable sales and provide education. Buyers are not real estate agents. That’s why they hire an experienced real estate agent: to guide, assist and help them to buy a home.
When an agent sets aside her professional self-worth in a feeble attempt to keep unreasonable clients happy, she loses credibility with those clients, which in turn makes clients miserable. It’s not a win-win.
Further, when a buyer is pre-approved to buy a maximum amount, buyers should look at homes priced below that maximum amount. At homes they have a chance in hell of buying. Buyers should not ask their agents to show them homes that are listed higher than that price point unless those homes have lingered on the market and are stale, overpriced. You don’t ask to see a brand new listing and expect to a seller to accept a lowball and sell for less. It doesn’t work that way. Well, maybe it does on HGTV, but not in the real world of Sacramento real estate.
