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Sacramento Home Sellers Dump House at Huge Loss
Impatience lost a couple of Sacramento sellers $50,000, and I don’t have the heart to tell them. These sellers don’t read my blog, and I doubt they know anybody who does, so it’s not like I’m breaking the news to them in this manner. Besides, it wouldn’t have changed anything for them because they had already made their decision; they just apparently didn’t have the heart to tell their Sacramento real estate agent about it.
Instead they elected to remove their home from the market so they could refinance. At least that was the story. One can’t get a loan on a home if it’s for sale in Sacramento. Maybe they started out thinking about a refinance and then some EP (equity purchaser) guy called? Maybe that EP guy was a client of another agent whom he wanted to cut out of the deal or maybe the guy just regularly combs the canceled listings, calling sellers, trying to strip out every last dime of equity and leaving a few scattered pennies on the table? Hard to speculate, and it doesn’t matter.
The situation is the sellers grew impatient. Their home wasn’t selling fast enough. It was due to price, like most homes that don’t sell fast enough. The price needed to be a little bit lower but the sellers continued to hold out hope for their price until they just gave up. Out of the blue. What I know is they asked to cancel the listing because they planned to refinance, and the next thing I saw they had suddenly sold their home at a gigantic loss. It’s called a For Sale by Owner.
The new owner then put the home back on the market for $50,000 more than the owner had paid for it. Along came a buyer who contacted me. The buyer contacted me because I sell a lot of homes in this particular neighborhood in Sacramento. My buyer bought it. That $50,000 is going into the pocket of the EP guy. Telling my former clients that they messed up would be pointless and mean. But it’s not pointless for readers of this blog. It’s a good example of what can and does happen.
If they had only waited for the fall market in Sacramento and continued to list with their Sacramento real estate agent.
Yoda says: Patience you must have, my young padawan.
Selling a Home in Sacramento and Offer Negotiation
A seller who is selling a home in Sacramento should not have to wonder if the buyers who just wrote an offer on her home really want to buy the house. I mean, what if I told you that I am willing to sell you a Ferrari for $10,000, but you say the sale is subject to your ability to find the money buried in a barrel Breaking Bad style out in the desert somewhere? Oh, and on top of that, at anytime, you can decide to renegotiate the price with me or ask me, if you like, to throw in, say, a year’s supply of gas and car washes for you. You’d probably think you hit pay dirt.
This is exactly what buying a home in Sacramento is like for some home buyers. The market is super hot for sellers of well-priced homes. Doesn’t matter if that home is located in Elk Grove or East Sacramento or Lincoln; if it’s priced right, the seller will probably quickly receive a full-price offer, if not multiple offers. On the other side, buyers don’t like to compete with multiple offers. It’s just a mindset though. Because buyers are competing the minute they step foot inside a home for sale where another buyer has recently been.
Lately, I’ve been encountering buyers who must think they are clever. Their idea is to lock down the home immediately by promising the seller everything the seller is asking for and, after a few weeks have passed and all of the other buyers have gone away, then they will ask for a price reduction or a credit. I sell more homes than most agents, and I see this tactic used over and over. It’s not enough to elicit a promise from the buyer that a home is sold AS IS because some buyers conveniently forget about that promise.
In one situation, I reminded the seller that the buyer might not know any better. The buyer might be getting pushed by relatives or friends who say that even though the buyer promised to not ask for a repair, the buyer should demand a new HVAC installation. Because you never know. Sometimes, sellers cave. I don’t like to see buyers and sellers at each other’s throats when there is no reason for it.
However, the seller pointed out that this was no first-time home buyer who was buying his home in Roseville. Nope, this was a retired guy over the age of 65. The seller said the buyer knew exactly what he was doing. Maybe. Age is really no guarantee, but the seller could be right.
This Sacramento real estate agent sometimes advises her sellers to issue a counter offer when an offer comes in at full price, quickly and with a shortened time frame for acceptance. The counter is not about price. It’s about performance.
If the buyer blows a fuse because the seller insists upfront upon no renegotiations down the road, well, what does that tell you? Buyers always have the right to cancel within the contract default period of 17 days for any reason — but once a buyer commits to buy a home, the negotiations should really be pretty much over. Particularly in today’s real estate climate. There is nothing wrong with pointing out to a buyer that AS IS in the residential purchase contract means AS IS. It doesn’t mean maybe.
You can shake hands all you want, but a pen to paper is always better. If you’re thinking about selling your home in the Sacramento metro area, call Elizabeth Weintraub at 916 233 6759. Put 40 years of experience to work for you.
Three New Home Listings in Sacramento Metro
As a Sacramento real estate agent who lists a lot of homes, I’ve got to replenish inventory that closes with more homes for sale. It’s the same with anything in life. If I run low on milk, for example, I might have to stop by the store on the way home and pick up another carton. I apply the same principle to items in my own home. If I buy a new piece of furniture or article of clothing, something else must go out the door. It’s a system of checks and balances. It also means after a few homes close escrow, more homes had better go on the market or this agent would soon run out of homes to sell.
Fortunately, the replenish system has been working well for me. I love to sell homes, even if I have to sell homes twice. You’d kind of expect that to happen in a short sale but not in a regular real estate transaction. Two homes that should have closed escrow last month did not, and they canceled. Both were traditional sales involving buyers who could not get a loan at the very last minute. The files sat in underwriting and were spit out. Denied.
Both sellers were understandably distressed and dismayed. I get their pain. In one situation, I told the seller that I was confident we would put the home back on the market, sell it for more money, and he’d look back at this particular cancellation and say it’s the best thing that could have happened. That was my intuition talking.
I love it when my intuition is right. It generally is, and I can rely on it. That’s exactly what happened, too. The next buyer paid cash, no appraisal. In the other sale, the replacement buyer had written a contingent offer. Sellers are often wary of contingent offers, but they can also be used as a benefit. And the contingent offer buyer removed the contingency within a couple of weeks and closed as well. Both of these escrows closed on Friday.
I’ve replaced these two sales with three more listings: An energy-efficient home in West Sacramento near the river at $240,000. An Elk Grove home, updated kitchen with granite counters, new appliances and wood floors, featuring 4-5 bedrooms, more than 2,700 square feet, turn-key ready at $395,000. These homes are open for viewing this afternoon. And last, but not least, a short sale home in Sacramento near Calvine, offering allergy-free floors, 3 bedrooms, formal living room with a brick fireplace and cozy family room at $225,000. Check out my new listings:
142 4th Street, West Sacramento, CA 95605
You Can’t Trust All Sacramento Appraisals
It’s not astonishing that people do not understand how a Sacramento appraiser appraises a home, and why not all appraisals are a guarantee of value. Unless you’re a person who is really wedded to this business, like, say, this Sacramento real estate agent. But most individuals don’t sell or buy enough homes in their lifetime to care much about the details. They also might think a bank appraisal is like receiving a certificate of gold, as though it’s redeemable somehow or an item of value to treasure.
I see the look in the eyes of my sellers when I explain that a home needs to appraise at the price a buyer is willing to pay in order to actually close escrow. The eyes glaze a bit and they hear: real estate agent talking — a phrase my husband likes to use to illustrate how carefully I listen to him as in husband talking, yada yada.
For example, if you’ve got two offers for a home, and one offer is cash at $400,000, and another offer involves minimum-down FHA financing at $400,000, a seller might elect to take the cash offer. Because there is no appraisal. Of course, the downside to that is the cash offer buyers typically possess little emotional investment, and once they snag their fish, they often try to haggle over other small things to even out stuff.
Now, some buyers might agree to bridge the difference if an appraisal comes in low. They might say they will pay, say, $10,000 in cash, meaning if the appraisal was $390,000, they would pay out of pocket the difference for the low appraisal. Some do, but not very many. That’s because people still believe the appraiser’s word is like the 10 Commandments. Others also might promise they’ll bridge the difference but then cancel under an inspection contingency, rendering that promise worthless.
An appraisal is just an opinion of value. It’s an educated and calculated guess. Ask 3 appraisers, and you’ll probably get 3 different answers. They might be close in value, but still not match.
Sometimes, the swing in value between two appraisals is tremendous. Had one of those recently in which the home initially appraised for 10% more than it sold for, which was pretty ridiculous in a seller’s market for long days on market, and the second appraisal was 2% less than it sold for, still ridiculous. An appraiser almost has to be trying to mess up the deal to do that.
I recall an appraiser a few years ago who appraised a home for .0001 less than the sales price. Just enough to make the buyer pay for a new appraisal. Who does things like that? Most appraisers in today’s market want to appraise at the sales price because they recognize that prices are increasing. They don’t want to be that cog in the wheel dragging down the market, and they want to fairly assess homes.
But until you get past that appraisal stage, you don’t really have a sale. So don’t be spending that check yet. It’s common in today’s real estate market, especially for an FHA transaction, for a lender to order a second appraisal. It says if a bank doesn’t trust its appraisal, why should you?
Humor in Dying and the Affidavit of Death
You never know who you will touch with your words when you write online, but you can bet it will probably be a person who is alive. An agent in my office yesterday asked how I can be “everywhere online,” and he asked if I spend a lot of time in front of the computer. Not really. I write a blog every day about what I do as a Sacramento real estate agent. I’ve written other articles online that stay there and continue to be read by people day after day and year after year. Like I reminded the agent in my office yesterday, I was sitting on top of a desk talking to him. I was not at my computer.
That’s the beauty of writing online. People will read articles long after they are written. I also write a homebuying newsletter that I send out every week to my subscriber base. I can’t tell you how many people subscribe to it because it’s confidential information that About.com won’t let me divulge, but let’s just say it’s a good thing I don’t have to maintain nor update that database of subscribers.
I often highlight a new article I’ve written in my newsletter. Most of the time, I never hear anything from anybody, but the article I wrote about an Affidavit of Death generated a lot of emails (positive, thank goodness). First, I must admit that it is a humor piece. It starts out pretty serious, and then it heads into a different direction, one that I hope tickles. It might take you a little while to figure out that it is one huge parody. Real estate agents in particular find it amusing. It was a real estate agent who initially asked me about an Affidavit of Death as a marketing tool and prompted the article.
I’ve had people ask if the agent who initially wrote to me had responded to this article, and yes, she did. She changed her mind after reading it, apparently. Another agent wrote yesterday to say she received my newsletter while she was in the hospital with her husband. He died a few hours later. Right when she was sitting there reading my Affidavit of Death article! . . . and laughing. She thanked me for it. I guess humor helps. See, it’s stuff like this that makes my day.
It also reminds me that no matter how bad a situation might seem, there is generally an upside to it somewhere.
