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When Sacramento Buyer’s Agents Use the Wrong Comps
Sometimes agents use the wrong comps or don’t provide comps to buyers.
Sacramento buyer’s agents do not always give the comparable sales to the buyer and, if they do, sometimes agents use the wrong comps. Buyers often base a price decision on what else is for sale and not on closed comps. It is not uncommon. Further, the reasons why agents use the wrong comps are varied. Agents might pull comps that are outside of the property’s radius. Or, there might be too many comparable sales in that particular neighborhood to choose from. Or, perhaps the agents just don’t know the neighborhood very well.
Maybe the buyer’s agent is unfamiliar with appraisal terms. There are all kinds of real estate agents in Sacramento real estate. A seller mentioned to me the other day that the first agent she considered to list her home was a property manager. He wanted to list her home for almost $50,000 more than the comps supported. Why? We don’t know. Maybe he didn’t want to lose the listing.
I explained to the seller that many property managers are not really real estate agents, per se. She said ever-so-sweetly, “Oh, but he has a real estate license.” Certainly, he has a real estate license because it is required by law to manage rental properties, but a license doesn’t make a property manager a real estate agent. Those are two different occupations and specialties. A person who deals with tenants, evictions, collections, repairs, does not necessarily know how to sell real estate, and could very well be one of the reasons agents use the wrong comps. I don’t know why he gave her the wrong price.
We also received an offer from a buyer that was $20,000 less than our list price. When I asked the buyer’s agent why the buyer made such a lowball offer in light of the comps, she replied there was a similar home on the market at that price. An active listing is not a comp. It is an active listing for sale. Homes do not become comps until they close escrow. Further, why didn’t the buyer go buy that house? That would be a reasonable question. Probably because there are things about that house the buyer doesn’t like. Doesn’t like enough to pay $20K less for, apparently. Which makes that home worth less than its list price, but not ours.
My solution? Since we cannot assure that a buyer’s agent will give the comparable sales to the buyer, the next best thing to do is make the comparable sales part of the counter offer, as an attachment. Little tells the story better than the numbers in black and white. Just check that little box for an attachment on the counter and merge the two seller-signed documents into one PDF file.
If you’re looking for an experienced Sacramento listing agent, please call Elizabeth Weintraub at 916.233.6759.
Is the Sacramento Real Estate Profession Countercultural?
The Sacramento real estate profession is made up of people from all walks of life.
Most of the agents I know in Sacramento practice our real estate profession honestly, ethically and with integrity. Still, it astounds me when a few bad apples — and why do apples get the rap, what have apples ever done; why isn’t the phrase a few bad grapes, or maybe the California Association of Winegrape Growers cracks a bigger whip — set such terrible examples from which judgments and stereotypes form.
This came up a few days ago because an agent said he was less concerned about his buyer’s disloyalty and more concerned about my honesty because I let him know his buyer was trying to go around him by contacting me directly. He called my alert of his client’s inappropriate contact and solicitation “refreshing.” I call it doing business the way I expect to be treated. It’s that simple. This agent, though, obviously has had a different experience with other agents.
Sure, there are those in the real estate profession who live in their own world. You might wonder how they make it in a demanding business that requires communication when they do not communicate. For example, I texted a few agents with listings in a condo complex last week to ask if they knew the percentage of owner occupancy. Crickets. I begged another buyer’s agent to send an addendum, required to meet a tight deadline, repeatedly calling, texting, leaving voicemails. Crickets. I routinely contact all buyer’s agents after showings to request feedback and, much of the time, you guessed it: crickets.
It doesn’t make these agents dishonest or unethical. It makes them ineffective, maybe lazy confused or lacking business. Some “forget” to send signed purchase offers to this Sacramento Realtor because they are busy with their children’s preschool or caught up in some other routine that interferes with their practice of the real estate profession. They haven’t yet learned to make their business a number one priority.
I read this morning about how the author and philosopher, Cornel West, while lecturing this week at Sac State, said that exhibiting honesty and integrity makes a person in business countercultural. It seems odd to me. I believe that working honestly, ethically and with integrity means you attract others of the same mindset. Like I said, many of the agents I know in the real estate profession possess those qualities, and they don’t think twice. But maybe it’s me who lives in her own world.
Why Overpricing Does Not Encourage Buyers to Negotiate
Buyers don’t want to make an offer when sellers insist on overpricing.
Overpricing doesn’t matter to some home sellers in Sacramento because sellers who knowingly overprice a home often have a hard time putting themselves into the shoes of a home buyer. No matter how much they try to squeeze size 10 1/2 feet into those size 9 shoes, they are still walking in the shoes of a seller. They make decisions as a seller and hope a buyer will see things the same way, when buyers do not.
When I talk with sellers about overpricing and why they need to reduce the price to a point where a buyer will make an offer, they’ll fallback on an old wive’s tale, which is not true. They will say, but a buyer can just make an offer, right? Any offer, and I will negotiate. They know that right?
No, they don’t know that. And further, they won’t do it. They don’t want to insult the seller or cause hard feelings. They might even believe the seller is stubborn, too stuck on the price, and to try to negotiate would be an embarrassment, not to mention a complete waste of time. Buyers don’t want to feel uncomfortable when negotiating. They just want to buy a home.
I realize sellers have a hard time believing that. But it’s absolutely true. I know it’s true because I’ve seen it happen over and over during my 40-plus years in this business. But some sellers still think it’s a good idea to jump on the overpricing strategy and then cross their fingers that buyers will lowball. This type of thing might work well in a classroom but not in real life, not in Sacramento real estate.
The people who are comfortable writing lowballs are the guys who won’t budge much. They’ll write a lowball on as many as 100 properties a day, hoping one of them will stick. It’s the principle of throwing enough crap at the wall until something grabs a hold. Those are not the guys these types of sellers want to sell to.
If you’re considering overpricing, at least have a plan for a price adjustment if things don’t work out. Generally speaking, if you don’t receive an offer in Sacramento within the first 30 days, you are priced too high.
Ways to Hold Title in Sacramento When Buying a Home
Sacramento home buyers should discuss ways to hold title before opening escrow.
Home buyers often give little thought to the ways to hold title. I hear escrow officers ask the question over and over, and watch buyers’ puzzled faces as they grope for answers. How to hold title is something buyers should decide upon about the same time as they receive a lender preapproval letter, but unless their agent brings it up, they might not give it a second thought.
Be aware that Sacramento Realtors are not licensed to practice law, so we can’t advise buyers, unfortunately. It’s a legal question that is best answered by a real estate lawyer. But let’s get real, how many buyers are going to run to their lawyers and pay for this type of advice, even though it’s suggested? Not one.
Here are some of the ways to hold title in California:
- Joint Tenants with Right of Survivorship
- A Married Person, Sole and Separate
- Community Property
- Community Property with Right of Survivorship
- Trust
- Corporation or Partnership
- LLC (limited liability corporation)
Apart from possible tax ramifications, the way a buyer holds title affects transfer, rights of transfer and whether the remaining interest will pass along to the survivor in the event of death. It’s an important consideration and should not be decided upon simply because one form sounds more familiar or because that’s how your parents hold title.
Please do your own research and get legal advice before deciding. Just don’t pick joint tenancy because all your friends pick that option. Community Property with Right of Survivorship is probably the most common that I see buyers leaning toward. It gives you the benefits of survivorship in the event one person dies, the property transfers to the remaining spouse but you can’t sell your interest.
Working With First-Time Home Buyers in Sacramento
First-time home buyer in Sacramento receives keys to their new home.
Probably because of the low inventory in Sacramento, we have been working lately with a larger than usual number of first-time home buyers. Almost half of sales this year so far are first-time home buyers in Sacramento. The rest are move-up buyers, which are also out in droves and sellers. Generally I work with these sellers to list and sell their home, and my team members help them to find a new home. We have a lot of competition for some homes but our buyers tend to end up in escrow fairly quickly, because we know the business.
It’s not easy for buyers to write that first purchase offer. Many are filled with trepidation that they will screw up somehow or make a huge mistake. But that fear is quickly overshadowed when they find out their offer was rejected because it wasn’t high enough, and some other lucky buyer snagged their dream home. Winning offers are not always reasonable. That’s extremely stressful for first-time home buyers in Sacramento to digest. To be so close, yet so far away, from home ownership.
Yet when we deliver an accepted offer, some buyers can’t believe it. They keep waiting for the other shoe to drop. They say, “Something is wrong with this deal. We got everything we wanted.” And then irrational fears set in. That little nagging voice in the back of their minds can’t let them sleep at night. Some worry something awful might happen, and their transaction will not close. But our transactions close. I make certain they close.
Two couples who were buying homes in Land Park last week expressed those fears, and neither of the couples knew each other. They both called on the same day to ask identical questions. It was eerie. But in retrospect, not uncommon.
Here are my top 10 tips for first-time home buyers in Sacramento can use to help alleviate the angst that accompanies buying a home:
- Get preapproved by underwriting. A mortgage broker can submit your loan application and verify your employment before you write an offer.
- Find a real estate agent you trust — in whom you can place your confidence.
- Get a copy of the documents you will sign before you sign them.
- Read the purchase contract and buyer broker contract — ask questions. For example, I point out paragraph 14-b-1 in the C.A.R. contract, which explains that buyers are entitled to inspections and can get their deposit back if it comes to that.
- Ask for a timeline on the closing process to fully understand all the steps involved. Always find out what happens next.
- During the transaction, don’t be afraid to call your agent with questions. Your agent will guide and advise you.
- Line up your insurance agent, don’t wait until closing to shop for insurance rates and plans.
- Locate a qualified home inspector. Ask your agent for recommendations, interview the candidates and ask for sample reports.
- Read every disclosure and report. Ask questions.
- Don’t change your financial situation once you are under contract. Don’t buy anything new.
And finally, realize that even the most organized and rational first-time home buyers may experience stress. It’s OK to shed a few tears. We don’t sugar-coat the journey and promise that nothing will ever go wrong because it might. But almost anything that can go wrong can be fixed. Have faith in your convictions and your agent’s track record.
Buyers go through highs and lows during escrow because it’s a complex and emotional process. If any real estate agent suggests that buying a home is all butterflies, cinnamon cookies and puffy-white clouds, you might want to find a more experienced agent to guide you.
What’s paramount for us is that when the transaction closes, our buyers are ecstatic. That’s our goal for first-time home buyers in Sacramento, and we don’t settle for anything less. Call Elizabeth Weintraub at 916.233.6759.
