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Home Buyers Not Looking for Home Improvement Projects
Just because you and I may love tackling home improvement projects does not mean everybody shares our point of view. Especially not first-time home buyers in Sacramento or, for that matter, even move-up buyers. Today’s home buyers want move-in ready homes. They do not want to make repairs. Gone are the days of buying a resale home in average condition. There are two instances under which a buyer would purchase a home in average condition. Either the home is priced way below market value, making it an absolute steal, or wait . . . there is no second reason.
Trying to sell your home without making repairs is like inviting guests for dinner and expecting them to bring their own food and cook it, too.
I was thinking about this as I drove yesterday to Rosemont. The traffic on Highway 50 is always a bit rough on that stretch of freeway between downtown and Watt, but yesterday I spotted a hearse. When I saw it, the first thought in my head was not party-time! Nor did I wonder how many people we can stuff into it. Hearses were very popular as a vehicle for private citizens when I was a kid. We painted them psychedelic colors and drove them around like they were a limo. People lived in them, too, and held wild parties. But no, this hearse made me feel respectful of the cargo it may have carried. A different point of view than my initial instincts.
Also, the hearse was in the lane next to the fast lane. I guess there was no reason for it to be in the fast lane. Who is in such a rush in a hearse? Nobody, that’s who. In fact, I would feel rather uneasy watching a hearse exceed the speed limit in the fast lane. Wouldn’t you?
Sometimes sellers are in a big rush, too. They can’t wait to put their home on the market, even though it might need work. If it needs work or updates, then sellers should complete those tasks before putting their home on the market. You will not get top dollar for a home that needs work. I talked with sellers last night who said a bath might need work, but they want to let the buyers use their own vision for that job. I had to explain that buyers are not looking for home improvement projects. Buyers would rather pass on a property and will buy another home that doesn’t need any work.
The mindset today seems to be they just want the work done. They will pay a bit more for a remodeled house but they want it to be perfect. No major flaws or defects. No home improvement projects.
In fact, I visited with several sellers this past week. Two of them are not sellers. They think they are selling their homes, but they aren’t. I can tell just by chatting with people. I’ll be visiting new sets of sellers next week and helping them to fix up their homes prior to selling. If you’re thinking about it, give me a jingle at 916.233.6759. Put 40 years of experience to work for you.
Second Chance to Buy Vintage 1927 Bungalow by Southside Park
Within the first 6 days on the market, this vintage 1927 bungalow by Southside Park in Sacramento attracted a ton of attention. We were close to offers with 2 other agents when another buyer’s agent quickly submitted a purchase offer. That action resulted in a pending sale for a few weeks. It didn’t last more than a couple of weeks in escrow because the buyer was unhappy that the home wasn’t bolted to the foundation. However, no homes of this vintage are bolted to the foundation. She should have known that going into the transaction.
You never really know what will trigger fears in a first-time home buyer, which is why the buyer’s agent’s job is so incredibly important in a transaction. Can’t really speak to what transpired in this situation except that the buyer lost a beautiful home in a wonderful location that fit everything the buyer supposedly wanted. Or, so they say. Not privy to what actually goes on. A Sacramento listing agent never gets to talk to buyers under fiduciary with a buyer’s agent.
The home inspector also noted in the home inspection that a breaker switch was inoperable. It wasn’t. Turned out the inspector did not flip that breaker switch into the Off or On position. It had been shoved into an intermittent position. But you know, they don’t license home inspectors in California. Anybody can become a home inspector. No idea about that particular inspector’s experience level, either. The guy could have just made a mistake. Dunno. Regardless, the seller replaced the breaker switch anyway, just to alleviate any future problems.
We have a clear pest report on this vintage 1927 bungalow by Southside Park. This home has been babied by the seller ever since he purchased it. I’ve never seen a seller pay such meticulous attention to a home. Even the smallest of details seem to attract massive focus from the seller.
If you’d like an affordable and darling vintage 1927 bungalow by Southside Park, why not check out this 2 bedroom, 1 bath home at 411 U Street, Sacramento, CA 95818? Offered exclusively by Elizabeth Weintraub and Lyon Real Estate at $349K. This is your second chance — the second chance that doesn’t come around very often, you know!
The information in this advertisement, including, but not limited to, square footage and/or acreage, has been provided by various sources which may include the Seller, the Multiple Listing Service or other sources. Lyon Real Estate has not and will not investigate or verify the accuracy of this information. Prospective buyers are advised to conduct their own investigation of the Property and this advertised information utilizing appropriate professionals before purchasing this Property.
Fixing Bay Area Offers Involves Finesse While Closing Sacramento Sales
Fixing Bay Area offers without offending the parties involved often means stepping back and putting your client’s needs first and foremost. There is no easy way to tell a Bay Area agent that so much stuff in the agent’s buyer’s offer is wrong. At first blush, I was tempted to quickly judge the parties as not being serious. They made demands that nobody asks for in our Sacramento seller’s market. The buyer asked the seller to pay for things no other seller pays for. In fact, it was about as one-sided as a buyer’s purchase offer that I would have written myself in 1978, but certainly not in today’s market.
To make matters worse, it wasn’t just a matter of fixing Bay Area offers, there were also 2 or 3 other offers on the table. After talking to the sellers, it was clear to me they would like to find a way to make the Bay Area offer work. After all, it was cash, so no appraisal. Getting an appraisal on this home would be difficult because there were really no comparable sales. The home was a white elephant. Overbuilt for the neighborhood.
After every open house, buyers would ooh and ahh over the upgrades and improvements. But after driving the area, they said no thank you. It was one of the nicest homes in the area. Plus, with cars parked up and down the street, basketball hoops blocking driveways, well, it didn’t present the neighborhood in its finest light. However, we knew that walking into the situation. The sellers were patient because they didn’t have to move until the end of October. They felt now would be a good time to sell over October, and they were right.
I decided to try to find a way to make the purchase offer work because that’s what my sellers desired. The buyer was doing a 1031 exchange, although the home would not be a rental. It would be occupied by family. Not even about to argue how it is not a 1031. Not our problem. So, I asked the buyer’s agent if the buyer would consider renting back to the sellers until the end of October. The buyer said yes and named an agreeable rental amount. This was a hugely important benefit to the sellers. Not moving twice.
OK, the dilemma was how to handle the fact the buyer refused to purchase the home in its AS IS condition. The way I saw it, we could argue over the black-and-white verbiage in the purchase contract which clearly states the home is sold AS IS. Or, we could find a way to make it work. The agent said the buyer expects all repairs from inspections to be completed. What? And we didn’t even have a home inspection yet. How could we agree to do all repairs when we don’t know what they are? That sounded like a recipe for disaster.
Well, what we could do is have the seller pay for a home inspection from a reputable home inspector. Not some fly-by-night idiot. There are idiots doing home inspections in Sacramento because they don’t need to be licensed. Anybody can pretend to be a home inspector. An teenage mouth-breather can be an inspector. So I drew a counter offer that included the seller paying for a home inspection, subject to successful negotiation of a Request for Repair. We agreed not to open escrow until the Request for Repair is executed, and if it can’t be, then the offer is void and canceled.
Seemed like a perfect solution. We signed all the counter offers and the purchase offer. A few days later, the buyer’s agent noticed we were holding an open house because our status was changed to Active With Release Clause. The agent accused us being dishonest and underhanded. What? The agent threatened if we did not cancel the open house, the buyer would cancel the offer. Then, the agent tried to cancel the offer.
However, the offer could not be canceled until the terms and conditions were met. We had a binding agreement.
But they do things differently in the Bay Area, and not every Bay Area agent sells a lot of real estate. Many sell only a few homes a year. So you really can’t hold it against the agents. Some agents just don’t know what they don’t know. All I really wanted to do was spare my sellers the anxiety and drama. Very difficult under the circumstances. I was fully prepared for the buyer to make more unreasonable demands, especially after receiving all of the inspections.
However, suddenly we received the Request for Repair from the buyer and it was not completely unreasonable. Very surprised and excited over this. In keeping with fixing Bay Area offers, I also rewrote the response to the Request for Repair to make it very specific. The Bay Area agent copied the numbers from the home inspection report but it was not easily understood and could be misinterpreted. The report did not identify how to make repairs, and it alluded to further inspections. After laying out each specific repair, we went into contract. We signed the Request for Repair, which also stipulated the buyer would immediately release all contingencies.
By being very clear from the beginning, we can often avoid misunderstandings later.
This is also the first escrow I’ve ever closed in which we entered escrow ready to close. I’ve closed thousands of sales over my 40-some years in real estate, not one like this. Twenty-day closing. No monkey business, no weirdness. Oh, and it sold over list price.
Search Your Home Sale History Before Listing in Sacramento
Today I want to share a tidbit about a way to search your home sale history before listing your Sacramento home. You might consider this a bit over-the-top analytical, but it’s important information that many listing agents overlook. I mean, let’s face it, in this town, many agents are so elated just to take a listing that they don’t spend a lot of time looking at the home sale history or otherwise scrutinizing the data available to them. Many agents just run the comps in a half-mile radius and get on with the show.
But that home sale history can prepare a seller for the actual home selling experience. You know what they say about history, right? It repeats itself. Not always verbatim but close enough for government work, as I like to kid about.
What is home sale history, you might ask? It is the information available to your Sacramento listing agent in MLS about previous sales of the same property. Two of the important items in that home sale history are 1) the date the home had previously been listed and 2) how long it took that home to sell. You need to examine both aspects of that history because a home that closed escrow in December has much lower demand than a home selling in May, for example.
However, if a home was listed during the height of our Sacramento home selling season in the spring, and the days on market exceed several months, it might mean it will take your home that long to sell today. Of course, for me it is easier because I remember what each of our decades and years were like in real estate history. It’s all there in my rear view mirror. That’s an advantage to hiring an agent with decades of experience.
In fact, in a conversation with a seller yesterday about what a pain it was for him to sell a rental home in 1987, I was able to shed a bit of light on why. Because that was the year following the 1986 Tax Reform Act, which limited passive write-offs for investors. Put a huge damper on the investment market in California.
I try to set my seller’s expectations when taking a listing if the home sale history shows a bunch of previous sales, all within 2 to 3 months of listing. That’s important information for a seller (and her agent) to know. It could be something as simple as the seller owns a unique home that doesn’t fit parameters from most of the traditional homebuyers of today. Which just means the home might take longer to sell.
It could also mean the home was not updated. Naturally, if the home with a long sale history of many months to sell is now remodeled, it will most likely sell faster. I could go on and on. There are dozens of conclusions a Sacramento listing agent can draw from studying the home sale history. Ask your agent to share that information. It’s readily available in MLS under the “history” tab.
What Happens When Sellers Reject a List Price Offer?
Is it smart for sellers to reject a list price offer? You might wonder why a person would put her home on the market and then turn down an offer at full list price or better. But it happens. You know why? One reason is the seller is mentally ill. I’ve certainly experienced a few of those. But much of the time it is because sellers harbor unrealistic views of how much their home is worth. They probably get that mindset from asking Uncle Joe or they wrongly trust Zillow estimates, and both are most likely widely inaccurate.
Or, they add up all the money they have ever put into the house. For some reason, sellers tend to believe improvements do not depreciate. That new kitchen 10 years later is not new. Further, if they put on a new roof several years ago and it cost $15,000, they think their home is worth $15,000 more. It pains me to say, it is not worth $15,000 more. Not on the day the roof was installed or even two years later. Because a roof is a maintenance item, not an improvement.
It might appear as an improvement to the seller because maybe the old roof was really old shake and now this roof is a 50-year warranted comp. Still, it is not an improvement. A new roof just makes the home more sellable. Further, I find the amount of money people put into a home tends to grow in hindsight.
Then we have the Sacramento listing agents who have done their homework and they suggest a sales price the seller does not agree with. However, maybe the seller didn’t share with her agent that she was not in agreement. She might have signed the listing agreement at a lower price than she wanted. Maybe the seller figured multiple offers would push up the price. And then no multiple offers happened.
Whatever the reason, when sellers reject a list price offer, the seller has several options. The first is the seller can take the home off the market. Especially when it is clear there won’t be any higher priced offers. The second is MLS regulations require that the Sacramento listing agent put a note into MLS for other agents that lets agents know the seller has rejected a list price offer. This option is rather defeatist for the seller because now other agents are likely to suggest their buyers pass on viewing the home.
When sellers reject a list price offer, they tend to appear unstable to everyone. The third option is to raise the price in MLS. However, if you’re a seller who thinks that’s a good idea, well, that option is pretty much like putting a gun to your head and just not pulling the trigger yet. Hate to say.
