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The Lengths Some Sacramento Investors Will Go
When I started in real estate in the 1970s, I represented mostly investors looking to buy a rental home. I also cultivated investors by showing regular homeowners how they could tap the equity in their homes to buy investment properties. It was a completely different world of real estate back then. You may find this difficult to believe, but I never asked my investors for their opinion or how they would like to write a purchase offer. I bought all of their properties in my name as assignee using promissory notes. The world of Sacramento investors has changed a bit.
The premise back then was as a real estate broker I could better negotiate and ferret out the good deals for them. After I bought the property, I assigned it to my investors, they put cash into escrow and we closed a week later. I received a commission and they got the property. It was a strange way to do business but it worked for many years.
One of the advantages to this system was I could act very quickly when a new home came on the market. Back then, we didn’t have computers. MLS books were printed once a month with weekly updates. Real estate agents found homes for sale through networking and the daily newspaper. It’s hard for me to even imagine doing business like that now. It seems so dark ages, like etchings on a cave wall, to think about having to stop at my office or a telephone booth if I needed to make a phone call.
Today in Sacramento the market is desperate. Sacramento investors are nearly hysterical. And first-time homebuyers are in tears. The problem is no inventory, and it’s getting worse as we head into the time of year that is generally the slowest — December. Five years ago there were almost 10,000 homes for sale in Sacramento County. I just ran a search in MLS, and we have 1,373 residential homes for sale in Sacramento County. We have 5,162 homes in escrow with accepted purchase offers. But most frightening is over the past 30 days during the month of November we have closed 1,370 homes. That’s only the number of homes that have been reported and many companies lag MLS input by a few days, so that number will increase by the time all is said and done.
We have less than 30 days of inventory. There is nothing to buy and the demand is extremely high. To say it’s a seller’s market is like saying we have a little rain here in Sacramento right now. We have a torrential storm.
Investors have figured out what they need to do is target the top producers. They are calling the biggest listing real estate agents in Sacramento and begging for first chance at writing an offer. I rank up near the top so they are calling this Sacramento real estate agent. One of them, and I won’t tell you who it is, called yesterday. They offered to kick back 66% of the commission to me if I would give them an edge in negotiations and make suggestions as to how they could beat out their competition.
I don’t think they were prepared for my response. That’s because this approach must work with other real estate agents or they wouldn’t be doing it. I said: “You know, it sort of sounds like you guys are asking me to compromise my fiduciary and give you a leg up in exchange for additional compensation. To grant favors. To ensure you win the purchase offer. I know you probably don’t mean it that way, but that’s exactly how it sounds.”
Their response:“I take it you’re not interested.”
Bingo.
If you’re looking for a Sacramento real estate agent to sell your home, give Elizabeth Weintraub a jingle at 916.233.6759. I answer my phone.
How to Buy a Pending Home in Sacramento
Sometimes, a Sacramento home buyer is in the right place at the right time. Or, better put, sometimes their Sacramento REALTOR is in the right place at the right time, and that means having her finger on the pulse of MLS. You’d be amazed at how few times during the day any given real estate agent gazes upon MLS, but that’s where one will find all of the action. Ya gotta cruise the news. If you think you can’t buy a pending home in Sacramento, think again.
Say, for example, that you are a Sacramento listing agent, and you’ve got a buyer who isn’t exactly cooperating. You might think: oh, who would do that in a seller’s market? A person like that would have to have a screw loose. But you would be surprised. Maybe it’s the buyer’s agent who has stopped responding to emails or phone calls. You might be astonished at how many agents struggle with communication issues or simply ignore attempts to reach them. There might be a contractual obligation that needs discussing such as putting an earnest money deposit into escrow, and maybe that hasn’t happened. That’s a warning sign a contract is about to be canceled and you might be able to buy a pending home in Sacramento. Or, maybe the buyer needs to release contingencies, and his 17 days has come and gone. Another warning sign. If you’re that listing agent, how would you get the word out to buyers that a listing might be coming back on the market soon?
Personally, I favor those big lights in the sky myself. Those honkin’ beams. Our days in Sacramento are getting shorter. Maybe with a bat insignia, like Batman. But I don’t have any of those. Can’t remotely run a scroll across the bottom of anybody’s iPhone like a CNN ticker tape. So the next thing that’s available is to do two things:
- If the purchase offer was more than the list price, raise the price in MLS and
- Slip “bring backups” next to the pending status in MLS.
It’s like going fishing. (Increased sales prices tend to gather more attention in MLS than a price decrease.) Minutes after that’s done, low and behold, this Sacramento REALTOR got a bite. I received an email from an inquiring buyer’s agent. She had shown a particular home in Sacramento to the buyer, and the buyer was very disappointed when it suddenly went into pending status, like they’re all doing right now. The buyer wrote an offer as a backup offer. Tip: To write a backup offer a seller can legally sign, one needs to submit a document that puts the offer into backup.
The seller signed the backup offer and issued a Notice to Perform to the buyer’s agent. The buyer failed to perform, so strings were cut and the new buyer slipped into place without this home ever going back on the market. So, if you are a Sacramento home buyer you might ask your buyer’s agent to glance over at MLS inventory several times during the day to see if there are any homes in pending status in which the seller wants a backup offer. This just might be your lucky day to buy a pending home in Sacramento.
Selling a Home and Buying at the Same Time in Sacramento
I stopped by yesterday to visit with a nice couple who are thinking about selling and buying at the same time. They want to sell their pool home in Citrus Heights and buy another home. Their challenge is similar to other sellers in Sacramento. Because it’s a seller market, undoubtedly their home will immediately sell. The problem is buying a new home. There are more home buyers in Sacramento than homes for sale right now. So while you can easily sell, it might be a bit of struggle to buy. For some, selling a home and buying at the same time isn’t gonna happen.
To give you an example, just 5 short years ago, we had more than 10,000 homes for sale in the entire county of Sacramento. Today, we have fewer than 1,800 homes for sale. The numbers work out to about an 82% percent drop in inventory. That’s an astounding number. Not only that, but with interest rates below 4%, buying a home means a buyer will most likely pay less than it would cost to rent a home. Since investors can now receive positive cash flow, those guys have thrown their hats in the ring, too, and it’s like a war zone out there.
I tell you this, if you’re in escrow right now, stay there. Don’t get fancy schmancy ideas about asking a seller to fix a leaky sink or think about trying to renegotiate a sales price. If you’re lucky enough to have a home to buy, count your lucky stars. Kiss the ground you’re walking on. And thank your Sacramento REALTOR, who probably had something to do with it.
One of my Sacramento home sellers found a home to buy over the weekend. She was in an excellent position because her buyer had removed contingencies. So, it was a contingent offer without much of a contingency. Sometimes, agents get a little testy when we ask for a Contingency Release but it’s extremely important. It means the buyer is committed. We ask for a Contingency Release for every transaction, whether the seller has equity or it is a short sale, it makes no difference. The buyer must release contingencies or the seller just might cancel the buyer.
This seller had no trouble selling a home and buying at the same time. She was able to sell her home in Sacramento and buy another home in the Pocket. Plus, she was up against multiple offers. Her offer won because she was represented by the Elizabeth Weintraub Team. I sold her home, and my team helped her to buy a new home. Was it easy? For her family, it was. But that must be why we make the big bucks.
What It’s Like to Be a Sacramento Home Buyer
Where does a Sacramento home buyer get her information? She talks to friends, family and coworkers. Maybe she dabbles around at the Sac Bee website on her cellphone but she’s pretty much focused on her life, her own situation. Just like anybody else. She puts on her pants one leg at a time, brushes her teeth, worries about her job, feeds the cat or walks the dog and doesn’t spend a lot of time thinking about the state of the real estate market in Sacramento. That’s because she is not a real estate agent. She is a Sacramento home buyer looking for Sacramento homes.
It’s up to real estate agents to explain to potential home buyers what the market is like in Sacramento. Tell them what they can expect. I tell it to them straight. I figure it’s better that they be prepared than shocked. Don’t need anybody having a heart attack and dropping dead at my feet. Maybe this is NOT the time for them to buy a home. I know I would NOT want to be a home buyer in Sacramento today. That’s the truth. Because there is tremendous competition for the same homes. It’s an extreme seller’s market. Many buyers, little inventory. Many all cash buyers who will outbid an FHA or VA buyer. Multiple offers are normal right now. This is a sizzling hot market!
I spoke to an agent yesterday who told me she had submitted an offer for her buyer and the listing agent said her offer was #18. The funny thing about this situation is the listing agent was holding out for more offers. Why? Why on God’s green earth would a seller or an agent need to collect more purchase offers than that? Talk about misery. If one can’t find an acceptable offer among 17 offers, I hate to say this, but something has gone horribly wrong with the agent, the seller or both. Another agent lamented that he had not had an offer accepted for any of his buyers for more than 30 days, and he writes 4 to 5 offers a week.
Sacramento buyer’s agents are suffocating.
I’ve had buyers call me directly and ask if they can get an edge by working with a high producing Sacramento listing agent. I guess they figure they’ll go where the homes are rather than waiting for the listings to come to them. It’s a desperate situation. Buyers need to prepare for disappointment. A Sacramento home buyer might not be able to buy her first choice or even her 10th choice. She needs to slap on that steel armor and keep her eyes on the horizon. Above all, don’t give up. Align with an experienced Sacramento REALTOR.
It is possible to buy a home in Sacramento. I see happy home buyers go into escrow every week! In addition to hitting refresh on that MLS link, home buyers can also check my Sacramento short sale updates to see which listings are coming live. Voodoo dolls, prayers on your knees, salt over your shoulder, whatever you’ve got — use it.
Welcome to the Sacramento Fall Home Selling Market
The Fall home selling market in Sacramento starts today! Aren’t you excited? Many people don’t even realize that Sacramento has two real estate markets. Some concentrate only on Spring home selling without realizing homeowners get a second chance to sell in Sacramento, and that season starts in the Fall, the day after Labor Day weekend.
After the vacations are over. After the kids are back in school. After it’s no longer considered cool to wear white, that’s when your real estate market in Sacramento takes off. The only problem with this is the market was already steamin’ hot in August. It’s a seller’s market in Sacramento, for those of you who have been living under a rock. It’s no longer a buyer’s market and hasn’t been for some time.
The conditions in Sacramento are tough, almost as tough as driving down the hill from Lake Tahoe after Labor Day in crawling bumper-to-bumper traffic. I swear, we probably would have been better off if we had turned off at the intersection and drove out of our way to Jackson than continuing to inch along Highway 50 from Tahoe. We have tough conditions in Sacramento because we have about 10% of the number of homes for sale that we had 5 years ago. Mix that with low interest rates, below 4%, and throw in first-time home buyers on top of cash investors, hit the chop button, and you’ve got a blender full of something inedible.
I’m doing my part to help. This Sacramento REALTOR has a handful of new listings today hitting the market. Fresh-faced and scrubbed. Priced right. First-come, first-serve. We don’t play favorites. There’s a home in the Pocket that’s been pre-approved by Bank of America as a Cooperative Short Sale. There’s a newer home in Natomas under $150,000, offered as a short sale. How about a hot little number in Arden Manor as a starter home? We also have another Cooperative Short Sale with 4 bedrooms near Elk Grove, passed over by a confused soul. Coming attractions this week include a home near College Greens that is a traditional sale, offered by a seller with equity, and a third Cooperative Short Sale in East Sacramento’s River Park.
I tell Sacramento home buyers to look on my website for new listings, and to stay away from the dated inventory they find elsewhere. But do they listen? What do you think?
