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Are You Really Prequalified to Buy a Home?
Just because a buyer is holding a preapproval letter from a lender, it does not mean that buyer is prequalified to buy a home in Sacramento. Of course, the buyer does not understand that because, after all, the lender issued the letter, what could possibly be wrong with it? I don’t have enough time in the day to talk about how many things could be wrong with that preapproval letter, but I’ll tell you this, no seller wants to find out in underwriting that a particular problem exists that should have been discovered before the darn approval letter was issued in the first place.
If you think these kinds of thing don’t happen, then you don’t work in Sacramento real estate. Faulty preapproval letters are almost becoming the norm. Each one is different, so a seller needs to read the letter to figure out if the lender even has a loan application from the borrower. The lender might not. The lender is not required to obtain a loan application in person prior to issuing a prequal letter.
We are presently working with a very sweet couple who hope to buy their first home soon. Like most first-time home buyers, they are filled with the excitement and a little bit of stress over finding a home. The home buying process is very new to them, and they aren’t sure where to start, but they knew enough to go to their local credit union and a major bank to get a loan pre approval letter before calling me.
Hot off the presses from the credit union, that pre approval letter was their ticket to viewing homes — because it meant they could finally write an offer if they fell in love with a home. The major bank was issuing the preapproval letter as well, although it seemed to be delayed by a few days. It takes only a few hours to get a preapproval letter from our preferred mortgage brokers.
Just to compare rates and service, we suggested the buyers call Dan Tharp at Guild Mortgage. He handled the refinance for my home a long time ago, and I’ve referred Dan Tharp for years. Honest, ethical, hardworking, devoted to the mortgage business and extremely smart. He verified the buyers and guess what? They are not pre-approved. The credit union made a big mistake. The buyers verified this with the credit union as well. They didn’t just take Dan’s word for it, although they could have. Because now Dan is helping them to fix that roadblock, and they will be back on the road to home ownership in no time at all.
Just because you are holding a pre-approval letter, it does not mean you are actually pre-approved. Not even if it comes from the biggest credit union in California.
Will a Sacramento Seller Sell for Less than List Price?
Buyer’s agents in Sacramento continually hear the question from buyers which, they in turn, pass along to the Sacramento listing agent: Will the seller sell for less? It’s not always phrased in those exact terms, but that’s what everybody wants to know. And that’s the one thing they cannot know and will never know unless they write an offer. For starters, no listing agent worth her salt is about to disclose to anybody for any reason how much her sellers will take to sell that home.
You might wonder why not. Because the listing agent has a legal fiduciary duty to the seller of confidentiality. The list price is the sales price. Period. If the seller prefers a range of value, then the sales price will be listed as a range of value indicated by a big ol’ V that nobody understands so nobody does it. Second, the listing agent doesn’t know what her seller will do because the listing agent is not the seller. She doesn’t own the home, and she can’t make decisions for the seller.
Every so often, I receive an email from a buyer’s agent that lays out all of the reasons why that agent’s buyers are such spectacular human beings and why they deserve to get an incredible break on the sales price — primarily because they are looking at a home the buyers cannot afford to buy. In my mind, of course, I wonder how that is my problem and what that has to do with me, Al Franken? I mean, why doesn’t the agent show her buyers the types of homes that her buyers can afford to buy? Why is she showing her buyers homes that are too expensive for her buyers?
You know why she’s performing such an unproductive service maneuver? Because she doesn’t want to take a chance that her buyers will dump her and run off to some other real estate agent in Sacramento. She wants to make her buyers happy. She wants to do what her buyers ask of her, like any agent. But somewhere along the line, an agent needs to educate her buyers. Explain the market, how pending sales are moving, supply comparable sales and provide education. Buyers are not real estate agents. That’s why they hire an experienced real estate agent: to guide, assist and help them to buy a home.
When an agent sets aside her professional self-worth in a feeble attempt to keep unreasonable clients happy, she loses credibility with those clients, which in turn makes clients miserable. It’s not a win-win.
Further, when a buyer is pre-approved to buy a maximum amount, buyers should look at homes priced below that maximum amount. At homes they have a chance in hell of buying. Buyers should not ask their agents to show them homes that are listed higher than that price point unless those homes have lingered on the market and are stale, overpriced. You don’t ask to see a brand new listing and expect to a seller to accept a lowball and sell for less. It doesn’t work that way. Well, maybe it does on HGTV, but not in the real world of Sacramento real estate.
When Will My Home in Sacramento Close Escrow?
Sellers don’t take kindly to the correct answer when they ask: when will my home in Sacramento close escrow. The correct answer is, of course, when fairies sprinkle pixie dust. If a buyer is lucky enough to be working with one of our preferred mortgage lenders, I can accurately predict a closing date for my sellers, but if it’s some other lender, an exact closing date is difficult to nail.
Oh, sure, there is a closing date specified in the purchase contract on page 1 near the top. It will either indicate an exact date, such as April 30th, or it will give an approximate number of days (usually 30) from the date of the contract to close. The date of the contract is the date the agent (or buyer) received the executed contract, which is usually the date the last buyer signed, not the date the purchase contract was drawn. However, to many mortgage lenders in Sacramento, those closing times are simply estimates and mean little.
If the closing date expires, the mortgage lender will simply expect all parties to extend the purchase contract. That’s because mortgage lenders might not give a crap about whether the loan blows up because the seller refuses to extend. They work in some other financial arena, worlds apart from Sacramento real estate. It happens. Sellers are not obligated to extend the purchase contract upon expiration. Buyers might cry foul under those circumstances but what happens if a seller could sell to another buyer for more?
Big name banks, and you all know who they are, are the most guilty of not closing on time, but so are the itty bitty real estate companies that try to wear two hats and be a mortgage broker plus a real estate agent to some poor fool. The first is because they’re too big to care and often employ salaried employees who don’t give a hoot either. The second is because they’re generally inexperienced and too small to carry any weight.
The fact is we real estate agents can push and shove or be as sweet as sugar all we want to manage escrow closings, but until the underwriter releases the file from underwriting and sends docs to title, we don’t really know for certain when we will close. Once we get the docs, then we can target the date. This is why it’s so important to work with a mortgage lender who can guarantee a closing date. These lenders do exist.
The Lost Art of Pie in the Face
The movie studios don’t really make slapstick comedies anymore and I miss that kind of humor, unless you count the world of Sacramento real estate — in which one can almost always find a highly amusing moment as there are so many to choose from. I kinda like slapstick because I grew up with it, not to mention, it gave me a good excuse to whack my brother’s face for no reason. I laugh at pie in the face from the old Soupy Sales skits. Don’t get me started on the Marx Brothers or the Three Stooges. But today so much is PC you don’t get that kind of humor from Hollywood or media.
Not that I’m against being PC because I’m not. As an enlightened human beings of the 22nd Century (Is that right? Are we in the 22nd Century now? How did that happen?), we don’t need to reinforce stereotypical issues that harm people or encourage discriminatory opinions, but what’s a pie in the face gonna harm?
I wish I could carry whipped cream pies in my briefcase for spur of the moment chuckles. I mean, maybe for health and safety purposes they could be stored frozen in the freezer like Cool Whip and removed to thaw just before I needed them. I could find many uses for this product.
Thank you for this lowball offer, whoosh, pie in the face. Thank you for never intending to close escrow, whoosh, pie in the face. Thank you for that Request for Repair on this AS IS sale, whoosh, pie in the face. Thank you for listing with your husband’s cousin, whoosh pie in the face. Thank you for picking my brain about all the fine nuances to sell and then sticking a FSBO sign in the yard, whoosh, pie in the face. Thank you for failing to deliver loan docs, whoosh pie in the face.
See, just thinking about this makes me laugh. But maybe that’s why I’m a Sacramento real estate agent who has survived and thrived all of these decades. If you gravitate toward goofy stuff, you’ll probably enjoy Anchorman 2.
Why Condition Matters When Selling Sacramento Real Estate
Condition of property is one of the big three elements when selling Sacramento real estate— or any home in the Sacramento seven-county region — but it’s often overlooked or dismissed by sellers. They get used to their house the way it is. They might say something like, “Oh, we’ll let the buyer take care of that issue.” Unless the house is pretty much a tear down, or needs such extensive work that we call it a fixer home, a home buyer will not do those repairs / corrective work. End of story. Only an investor will buy that kind of home today. And investors aren’t paying full price this spring.
The three key elements for selling a home in Sacramento are:
- Location
- Condition
- Price
You can have a great price at market value that would apply to a turnkey home in a fabulous sought-after neighborhood, and it still won’t sell because the home is not fixed up. You can have a great price for a good location and a home in move-in condition, and the home won’t sell if it’s located in a bad place like under a freeway or next-door to an apartment building.
If the home needs major work, you should just do the work before putting that home on the market or else adjust the sales price accordingly. If the home is located in a bad location, your sales price also has has to come down and be adjusted for that location. You can’t get top dollar for a beautiful home in a bad location. You can’t get top dollar for a fixer home regardless of its great location.
These are the rules of real estate. I don’t make them up. These rules are not something this Sacramento real estate agent has plucked out of thin air or can bend at will but that’s the way some people react to the news.
The only way you’re getting top market value for your home is if that home has a great location and is in top condition. You need all three elements to command the top of the market, even in a seller’s market.
Buyers want a turnkey home in a good location, and they don’t want to do any work. If you’ve got ugly carpet, you need to replace it or be prepared to be hit with a lowball offer that will far exceed the cost of replacing that carpet.
