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Sell the Seller Benefits When Buying a Home
When most Sacramento home buyers envision buying a home, they tend to view their first home as a place to live in-lieu-of an investment. This means they want the home to be in tip-top condition without any defects. They strongly care about the sales price only if nobody else does. If there are no other offers, in today’s fall market, they might offer less than list price in hopes of negotiation. Yet, if the house truly meets their needs, home buyers will pay what it takes.
I think about how this compares to some of the homes I’ve bought in my life. I came into real estate as a buyer’s agent for investors, and I started at a small Newport Beach real estate company, which I later bought. My training was untraditional but valuable. Today, I strongly believe that every agent should at least work a few years for a major broker before trotting off on their own, if that’s what they desire, because there is so much to miss by not having the proper training and absorbing social etiquette about the business. It’s only in retrospect that I see this about myself. I was lucky in my ignorance.
When this Sacramento real estate agent decided to buy her third house, I found out everything I could about the seller. I had been watching this particular home in the Sunday open house ads (before the Internet). It had a white picket fence — a Dutch Colonial. It was so darned cute, oozing curb appeal. The listing agent was informative and told me things she probably should not have such as the sellers had bought another home across town and moved out months ago. She told me where they moved, which was a very expensive part of town. People just blab if you ask the right questions.
The house had many problems. It was overpriced; featured a lovely gaping hole in the living room ceiling; the hardwood maple floors were in terrible condition and the wallpaper was atrocious.
I made an offer that the listing agent said would not get accepted. It was less than list price. My earnest money was $500 and there was no down payment. This was 25 years ago, when loans were assumable, and I offered to assume the existing financing. My offer meant that the seller had to take money out of a savings account to pay the commission and closing costs, because there was no money generated in the offer to pay these things.
The listing agent expressed doubt that the seller would take my offer and actually said that in all her years in the business, nobody writes an offer like that. That’s because she was in traditional real estate and not investment real estate. In my mind, I figured I would fix up the house and increase its value; make it my own. I can tackle just about any home improvement project by myself. DIY is not difficult.
To help the agent submit the offer, I drew up a list of benefits for the seller, explaining why the seller should take the offer. I laid out how much the seller has already spent over the past 6 months or so trying to sell the house. Mortgage payments had to be made even if the seller wasn’t living there. I compared that sum of money to the smaller amount the seller would need to pay to close escrow. I pointed out that banks might be reluctant to loan money on a home with a hole the size of a small car in the ceiling. And I ended it by documenting the release of liability from the loan that the seller would obtain when I formally assumed the loan.
The seller signed the offer. The agent practically fainted. This was very different from the way homes are sold today. But sellers still sell because it’s a benefit to themselves to do so. That part has not changed.
I think home buyers pass up some great opportunities in the Sacramento market by insisting on buying a move-in ready home. They can’t personalize the home or express themselves when it’s already done for them. And they pay more for updated homes, making them completely dependent on future appreciation and principal reduction to build equity. But I just go with the flow and help everybody achieve what they want. That’s my job.
Where Are the Home Buyers in Sacramento?
If you’re wondering where the Sacramento real estate market is moving right now, then this blog is for you. Because I list and sell a lot of homes in Sacramento, I can easily spot trends — if I’m paying attention and not hanging out with Myrl at The Dive Bar late at night. The trend now is buyers are in no big rush to buy, and inventory is lingering on the market. It doesn’t mean that a home won’t sell, it will just take a little bit longer and there might not be multiple offers.
I see some sellers are dismayed when they hear they might not receive multiple offers, but geez Louise, how many buyers does one seller need? A seller needs one committed and dedicated buyer who loves that seller’s home. It’s all about loving that home. It always has been. You just need to find that special person among home buyers in Sacramento.
A seller contacted me yesterday for an update on selling a home in Natomas. I had sent him a comparative market analysis last spring when the market was a frantic hotbed of activity. At that time, the home he wanted to sell could have listed for $225,000 and probably received multiple offers, which would have driven up the price a little bit. Today, that same home should be listed a little bit more conservatively, closer to $219,000, and he will most likely receive just one offer, and that offer might be for a little bit less.
This doesn’t mean prices are falling; it just means the strategy to sell is a little bit different. I suspect prices will stay fairly stable and probably rise again next spring, depending on where interest rates move. The thing about interest rates is movement doesn’t remove buyers from the marketplace as the economist at NAR predicts. A rise in interest rates simply lowers the purchasing power of the buyer. A half-point increase in an interest rate knocks down a buyer’s sales price by about $25,000. A full-point increase? $50,000 less. Home buyers in Sacramento should grab these historically low rates while they can!
I am including a chart below from Trendgraphix which shows the last 15 months of average sold sales prices by month versus the prices of homes for sale. You can see the average for sale price is higher than where the demand for homes lies. This doesn’t mean that sellers are asking higher prices and buyers are paying less, so don’t get confused about that. It means that the average sales price is higher than the average price most buyers can pay. There are more sales in the lower end. But look at that increase. That’s a 142% jump in our average sold price since summer of 2012, and it’s continuing to go up.
My conclusion is buyers can demand a little more and sellers will give it to them. Even in a market of limited inventory. Our inventory has almost doubled but it sits at 1.8 months. That is still incredibly low, and not a buyer’s market, unless we have no buyers. Where are the home buyers in Sacramento? I’ll tell you one agent shared with me this morning that her buyer has a list of 100 homes that the buyer wants to see. Who looks at 100 homes?
48 Hours of Sacramento Real Estate
If selling massive numbers of homes in Sacramento was so danged easy, let me tell you, hundreds of real estate agents would be selling homes like there’s no tomorrow, and we all know, that for most agents, that’s not happening. It’s as though every single transaction lately has had a bunch of little snags that need to be poked with a toothpick and slipped back into place. And that’s assuming that buyers can even get into contract in the first place.
Part of the problem is people don’t read, they don’t listen to each other and everybody is in such a rush that they don’t take time to figure out how to make something work. You can’t get upset with them or irritated because people are who they are, and you can’t change them. You can only change your own view.
Way back in the old days, like 40 years ago when was a title searcher, just to keep the title officers giggling at First American Title, I would slip stick figure drawings of a guy hanging by a noose on an affidavit of death document. Things aren’t that different today now that I am a real estate agent and sell homes in Sacramento.
I’ll give you a few “real world” examples from the past few days. See, this is the thing about real life in real estate, it’s so real that a reality show could never be made about it. It’s so real that people might think this agent made up stuff just to be funny, but I don’t have to make stuff up because it’s the godawful truth.
- An agent sent me an offer and included a note saying she knew I had mentioned that my name needed to go on page 8; however, she had put another agent’s name in that spot and now there was no room for my name.
- I asked an agent if her buyer could afford a higher sales price if the short sale bank demanded it because the offer was low, and the agent said no, but the seller should help the American home buyer.
- When I asked a tenant if I could shoot photos of her home with furniture in place, she said sure, the movers were coming on Wednesday, so could I come over on Thursday.
- Sellers needed to transfer utilities in their name after the tenant moved to allow a final walkthrough for the buyer, and they agreed to do so as long as they could charge the buyer for it.
- First time homebuyers asked if they could buy a home with no money, no reserves, no way to borrow any money and the home needed to be a foreclosure because their sister bought 27 homes without any money.
It takes a special kind of personality to sell Sacramento real estate. If I let all of this get to me, I would not be doing a competent job nor taking care of my clients, and that’s not how I operate. Besides, it wouldn’t be a regular week in real estate without a little craziness.
September’s Closed Homes in Sacramento
Sitting in front of my manicurist yesterday, she asked how many homes in Sacramento I have sold this week. Sold is such a misunderstood term. To some people, sold means going into contract, which is coming to an agreement on price and terms between a buyer and a seller, subject to certain conditions and contingencies. But that’s not really a sold status, that’s a “maybe” status, it means the sale is pending. The likelihood is it will close, but there are also ways that it could do what we Sacramento real estate agents call “fall out of escrow.”
If a home falls out of escrow, it’s not like tumbling out of bed or falling down the stairs. It’s more like cartoon characters blown up by TNT.
To me, sold is when a home sale closes. This means the documents are recorded at the Sacramento County Recorder’s Office, title is formally transferred. Deeds do not require recordation to be considered delivered and title transferred to a buyer, but title insurance companies require recordation to issue a title insurance policy. Technically, recording a deed means the public has been given constructive notice that title has changed from the grantor to the grantee. There is a new buyer.
I have a pile of those folders of closed homes in Sacramento on my desk right now, awaiting disposition. The electronic files are easy to file but the hard-copy folders containing paper documents, paper is such a dinosaur, need to be filed into a cardboard box and stored. I had to redesign and configure an entire wall in my garage with shelving units to hold the storage of these boxes.
My manicurist was astonished when I told her I do not know how many homes in Sacramento I have sold this week. I don’t sit here and count them. In fact, if I ever have to count the number, I’m in trouble. My focus is not on how many homes I have closed. My focus is on keeping the escrows I have pending moving along smoothly and putting more homes into contract.
I mentioned to her that my husband is leaving shortly for a Boy’s Week vacation. This woman knows me pretty well as she’s been my manicurist for almost 10 years. She asked who will cook for me? That’s a good question. She suggested I consider take-out. But that would involve thinking about what I want to eat, finding a restaurant, calling and placing an order, getting in my car and driving to get it. It’s much easier to just throw a hot dog in the microwave.
I ask you, is there anything more pathetic than a microwaved wiener? It splits, gets grease all over and shrivels. It’s not the same thing as a grilled hot dog. Plus, it’s sizzling hot, having been cooked from the inside out. However, I am saved from this grueling tragedy because my husband is precooking meals for me. He knows where I prefer to keep my focus, and that’s on selling homes in Sacramento.
Where is the American River Bike Trail in Old Sacramento?
Have you ever wondered where to find the American Bike Trail in Old Sacramento? It doesn’t matter which direction you come into Old Sacramento, from the North or the South, the bike trail disappears. ?That’s because you’ve got tourist attractions, old wooden boardwalks and cobblestone streets, all of which is hazardous to riding a bike.
Nothing against the broasted-chicken-legged serious bike riders in Sacramento, I’m just a regular old-lady bicyclist with a pink Townie, featuring upright handlebars. Most days I take a bike ride before dinner. It’s a great way to interact with nature, get a little exercise and ponder all of the incredible crap that happens in Sacramento real estate every day; thrusts me into a different environment. Every day I almost kill myself, too.
Why do we have to ride with traffic? That seems so insane. I’d much rather look the driver in the eyes before I am sprawled with my face smushed against his windshield. I don’t like trusting other drivers not to hit me because half of them are morons. So, sometimes I ride on the sidewalks and almost mow down pedestrians. I ride on the wrong side of the street. So, sue me. I’ve ridden on those raised boardwalks in Old Sacramento, too, looking for the bike trail in vain, vibrating like crazy, and almost losing my cellphone, which is attached to my handlebars. I’m lucky my Jawbone didn’t bounce out of my pocket.
For lunch yesterday, it seemed like a good idea to stroll through Old Sacramento with my husband on our collective four feet and look for the bike trail. Old Sacramento is a smaller version of Skagway, Alaska, a town Robin Williams called the End of the World. We discovered a new store there called The Chefs’ Olive Mix. It’s on the corner of Second Street and J. The retail section is set up with stainless steel urns on the top shelves and the bottom shelves are filled with product, mostly balsamics and olive oils from all over the world.
You can sample fabulous olive oils and check the polyphenol percentages, the higher the percentage the more intense the flavor. I tasted the truffle salt. Word of warning, don’t lick a big ol’ handful of truffle salt because the taste will not leave your mouth. Not even after you fork out $1.76 for two pieces of candy at Candyland and carefully suck on that cherry Tootsie Roll Pop. The truffle will linger.
However, Eureka, we did find the bike trail. Because I ride from my home in Land Park, I hop on the American River Bike Trail from Broadway heading north, but you can also pick up the bike trail from Front Street past the Animal Shelter. Either way, once you reach the Tower Bridge, the trail will disappear. This means you’ve got to drive in traffic down Second Street, dodge the horses and little kids, or navigate through the throngs gathered in front of Joe’s Crab Shack and the Delta Queen. Those tourists just stand there and spin around directionless like they can’t believe where they are, watching pigeons poop.
There is no sign for the bike trail until you get there. But from Second Street, if you take a left, head west, at the Railroad Museum and go past the old-timey hardware store, cross the train tracks, there is the American River Bike Trail. If you’re coming from the north, just head toward Tower Bridge and Embassy Suites.
Photos: Elizabeth Weintraub
