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Pay Attention to Noise When Buying a Home in Sacramento
Don’t buy a home near an airport.
When buying a home in Sacramento, you need to pay attention to the noise factor, even if you’re half deaf, which I partly am. When I was in third grade, I stuffed a soda straw into my right ear canal. Why? I don’t know. Why do little kids ram crayons up their noses? I don’t even recall doing such a stupid thing but the pain afterwards was particularly memorable. My mother did not believe I had an ailment and sent me to school anyway, and I spent most of the morning with my head on my desk, quietly sobbing. Next thing I knew I had a large vacuum hose attached to my ear, which caused a great deal of pain as it sucked out the straw at the doctor’s office.
That soda straw pierced my eardrum. As a result I have a slight hearing loss in my right ear, which means when I sleep, if I want to block out sound, I simply sleep on my left ear. There is somewhat of an upside to this mishap, especially since I once lived in shared quarters with 17 other guys in Nederland, Colorado. When you throw loud rock-and-roll from my younger decades into the mix, it’s a wonder I’m not deaf, but I suppose there is still time.
I do find that the older I get, the more sensitive to sound I become. Because the older I get, the more I appreciate silence. (Silence is golden but my eyes still see . . . with the help contact lenses for old people.) I treasure the sound of nothing. Absolute quiet. Peaceful. Tranquil. Silent. No sounds of the freeway, children screaming, dogs barking, no helicopters overhead or planes, no logs crackling in a fireplace, no water running through a sprinkler system, no birds singing or crickets cricketing or frogs croaking, not even a sound of wind blowing through treetops.
Home buyers don’t want a lot of noise, either. A friend of my husband, a former editor at the Sacramento Bee, once said the thing she disliked about Sacramento was the sound of the freeway no matter where you were. She is right, it is hard when buying a home in Sacramento to stay away from neighborhoods where noise does not exist on some level. Even though my home in Land Park is at least a mile from Old Sacramento, I can still hear the train on the weekends, but dual pane windows blocks out all other sound.
My sister lives under a flight path in Minneapolis. You can practically identify what the first-class passengers are drinking, the belly of the plane flies so low. My husband lived 2 blocks from the El in Chicago. Home prices in those types of neighborhoods are much lower than in areas where noise is reduced.
If you’re in the market to buy a home in Sacramento, stand in the yard for a while and listen. Go there at different times of the day and different days of the week and listen. Ask yourself if you can adapt to the noises you hear. Because when it comes time to sell — and there will be a time you will want to sell — that noise factor will influence the price a buyer will pay. You just don’t realize it now because you’re surrounded by sound and noise every day, and you’re probably much younger than me. Not to mention, that noise-polluted home is probably very affordable. I always say the best time to think about selling a home is when you’re buying a home in Sacramento.
The State of Sacramento Real Estate Right Now
If you listen very carefully to the wind in Sacramento this morning, you can hear Ollie’s voice over the freeway hum: “This is another fine kettle of fish you’ve gotten us into, Stanley.” Because that’s precisely the sentiment I feel when I look at the condition of the 4th quarter of our Sacramento real estate market.
It’s not that any one person makes the real estate market in Sacramento what it is, but we do need to work within it when you’re a Sacramento real estate agent. I just don’t know whom exactly to blame for it, so I’ll pick the Feds because that’s an easy target and I didn’t get enough sleep last night. I’m still on Florida time, haven’t quite recovered from the Dry Tortugas.
Now, in case you’re thinking that I’m going to tell you some terrible news or say it is not a good time to buy or sell, that is not about to happen. I just report what I see and then figure out how to work within that framework to best position my clients.
First, let me say the market is typically seasonal in Sacramento. Just because we have more days with sunshine than without doesn’t mean real estate sells like gangbusters all year long. We experience ebbs and flows. In the graph above, though, inventory has been steadily falling, along with the pending and closed sales. But it doesn’t mean prices are following suit.
Second, the market has been relatively flat with regard to home prices. You can see in this next graph that our square-foot home prices have remained very stable since last summer. This could very well indicate that our big push for rising prices has leveled. As my 2014 real estate forecast predicted last year, I suspect we won’t see a lot of appreciation this year. But prices won’t fall.
I could show you the same graph for average home sales prices and median sales prices, and that graph would reflect the same behavior. Our median sales price in Sacramento County has jumped from $186,000 in October 2012 to $250,000 in December 2013. However, that $250,000 median price has remained stable since July.
Buyers don’t seem to know which end is up. I have seen offers range from ridiculous to borderline nuts. On top of this, many home buyers appear marginal, and then we’ve got the new federal regulations kicking in this month that say a buyer must be able to prove she can afford to buy a home. Who woulda thought this was a necessity? But they had to make a law, so you know it wasn’t.
In the last graph, you can see our absorption rate for Sacramento County. This is the number of homes that closed escrow as compared to the number of homes for sale. We had a slight uptick in December, but when compared to high points from last year, we are pretty low at the moment at 52.7%. This means about half of the homes that are for sale right now closed escrow last month. Compare this to December 2012 / January 2013 when that absorption rate was almost 125%.
Our inventory (number of homes for sale) is less than two months. This means it would take two months to sell every home we have for sale. It’s still a very strong seller’s market in Sacramento. The problem is we have fewer buyers and the buyers we do have are often marginal, with little in reserves. If home buyers have no reserves, it means sellers might need to start kicking in closing costs to help a buyer in Sacramento to purchase a home. If the buyer can find a home to buy because we have so little for sale.
Images: Trendgraphix
A Cactus Garden in Land Park
I met with a really sweet seller in Fair Oaks yesterday and, with any luck, we’ll be putting his home on the market next week. It has a to-die for backyard with a park-like view. It could be anything you wanted it to be in your imagination. A woodsy forest, like Sherwood Forest. A redwood retreat along the ocean just beyond the bluff. A plantation in the South, like Tara in the spring. I can’t wait to show you this home next week.
Until then, take a look at my cactus garden in Land Park. The spring blossoms are here. The pear cactus won’t have blooms until next month because the blooms are just beginning to form, but everything else in the garden is breaking out into song. Wait, I can hear Mary Poppins. Hope she doesn’t land in the cactus garden because the wind blew her the wrong way or she’ll have little spines and thorns up her skirt.
I also closed another home in Sacramento yesterday — that managed to drag on much longer than necessary. The mortgage brokers could not figure how to find the loss payable clause for the insurance policy, so they sent an email over and over to a person who hasn’t been in the office during our entire transaction! When I discovered this, they had already been sitting on their thumbs for several days. Some escrows close easily, and others you’ve got to kick and curse to get to the Recorder’s Office.
This particular escrow was a home in the pocket of homes just east of Broadway and south of 4th Street. It’s not Oak Park, and the homes are generally bigger and newer than those found in that part of Oak Park, but sometimes people confuse the two neighborhoods. This pocket of homes off Redding is so small that often there are no comps. The last comp in this area sold around $180,000. So when the seller asked me how much I thought he could get, I wet my finger, stuck it in the air and declared, maybe $200,000, maybe more.
We listed it at $200,000 and received several offers immediately. It sold at $211,000. Then the appraisal came in and, you guessed it, the appraisal was $200,000. Too low. We contested, no such luck. The buyer didn’t have the money to bridge the gap, as many buyers in this price range have limited funds. The seller could have canceled the transaction and sold to another buyer, possibly for all cash so it would not require an appraisal, but the seller was happy enough with the $200,000 price. Not to mention, he has a soft place in his heart for first-time home buyers. He was a first-time home buyer once himself.
It closed at $200,000, and a new family is very excited. It’s very hard to find a nice home in the $200,000 price range that is close to downtown and in an established neighborhood where the neighbors all know each other. Another happy ending for this Sacramento real estate agent and all involved.
Hope you like the cactus flowers! Welcome to Spring in Land Park.
Some Agents Are Dealing With Offer Rejection
A frustrated home buyer in Orange County called to ask why I thought that her offers weren’t being accepted and often, in many cases, were unacknowledged. I don’t know why she called an agent in northern California. Now, I don’t know the Orange County market because I haven’t worked in that area since the 1980s. I primarily sell real estate in Sacramento. But if that market is anything like Sacramento, entry-level housing is hot, hot, hot. Which means multiple offers. This buyer is trying to buy a short sale.
I asked the buyer if her agent had any experience working with short sales. The answer was no. I pointed out that some agents refer their clients to an agent with experience in exchange for a referral fee.
“But,” she moaned, “We’ve been writing offers since January; that’s when we moved in with our parents.”
Four months is a long time to be hitting a block wall. “If you don’t talk to your agent about this,” I answered, “You’ll still be living with your parents in September.”
That’s all the help I could offer because I cannot advise nor interfere with another agent’s transaction. It’s against the Code of Ethics.
I also received an offer from an agent on a Sacramento short sale listing after disclosing that multiple offers were coming. The agent offered list price and asked for the following:
- 3% concession to the buyer
- home protection plan
- pest report and completion certificate
- 2-year roof certification (which may require repairs)
- seller to comply with FHA requirements
I asked the agent why would she include all these things that the bank is unlikely to pay for? On top of which, with multiple offers, I can pretty much guarantee that every other offer will exceed list price by thousands, if not tens of thousands. Once the bank receives the estimated HUD-1 — even if every offer was identical in price — this agent’s offer would fall to the bottom of the pile because that net will be much lower than all the others.
The agent responded rather curtly, “Because we expect to negotiate those things with the bank.”
It’s not my place to tell another agent how to conduct her business, so I refrain from offering suggestions under these circumstances. The point is the bank will never negotiate with her buyers because those types of offers are rejected by the seller. Who wants to sit in escrow for 8 weeks with a buyer whose offer will be rejected or renegotiated? We want an offer that will be accepted first go around.
It’s the Going Not the Getting There for a Sacramento Agent
As a Sacramento real estate agent who works with a lot of sellers in the Sacramento area, I do basically 3 things during the week, besides brush my teeth twice a day.
- Take new listings
- Scrutinize and negotiate offers, and
- Manage existing escrows to the point of closing.
The one thing I really don’t do is spend a lot of time looking for new business. I don’t hunt for it because I get a lot of new business from the Internet and from referrals. Potential clients searching for a Sacramento real estate agent read my reviews and client testimonials, maybe they read about my extensive background and then decide to talk with me. Others might ask their friends or relatives for a referral and, since I’ve been fortunate to close hundreds of homes, I have many previous clients every year with good experiences to share.
Not having to spend any time scouring for new business lets me take that chunk of time — those 30% of hours another agent would spend prospecting — and put those hours into servicing my existing clients. That’s a lot of time to look for new clients — a third of your life. I bet if you asked a seller if he or she minds if a Sacramento agent uses their listing to advertise herself, a seller would object, but that’s what most agents do. There’s nothing really wrong with it because it brings the agent more business and it promotes the seller’s house, but it’s not an approach I employ.
I’m not the kind of Sacramento agent who says look at this house I listed, I can list yours, too. Because sellers don’t want a home listed. They want a home sold. They want a home sold for the most money they can get and not a lot of drama. Clean and efficient and professional. I will custom tailor a listing plan for my sellers because every seller and situation is different. I don’t have any qualms about grilling a buyer’s agent before my sellers accept an offer to discuss potential pitfalls and lay out expectations to see if a buyer is a good fit. How many agents do that for their clients?
Engaging in these types of conversations and providing quality service for my sellers is part of what my clients get with an agent who has almost 40 years of experience in the business. My experience is not one year times 40. I am constantly learning and trying to improve because I don’t care how good you are, there is always room for improvement. My career as a Sacramento real estate agent is a journey, not a destination. Like Harry Chapin said in Greyhound: it’s the going, not the getting there.
