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What’s Up With Free Seller Rent Backs in Sacramento Real Estate?
Free seller rent backs are common in today’s Sacramento housing market.
Given our strong seller’s market in Sacramento, many home buyers today are finding themselves closing escrow but not being able to move into their new homes due to the free seller rent backs. Part of the reason for the free seller rent backs is to induce the seller to accept an offer over another offer without the holdover possession. It’s also because many sellers are not moving up. At least not in my listing inventories.
Sellers are either a) a successor trustee or trustee of a trust; b) moving out of the area; c) selling an investment rental or d) buying a brand new home. They are not coming to me and asking to sell their home so they can buy a bigger, nicer home in a different neighborhood, which would be a normal Sacramento real estate market. But these are not normal times. We need to remind ourselves that much of what is happening today is NOT NORMAL. We can’t get complacent.
Ordinarily, buyers are sometimes a bit timid about offering free seller rent backs. This is a new concept to many home buyers. They don’t understand why they can’t collect rent from the seller, nor do many feel the full impacts of the craziness in limited inventory neighborhoods, but it is a fact of Sacramento real estate today. Sellers expect it and buyers will agree or the seller will sell to somebody else. It’s that simple.
To protect all of the parties, though, we do ask for signatures on a Seller in Possession addendum. This legal document was prepared by C.A.R. lawyers to protect all sides and state who is to continue paying for things such as utilities.
Three of my recent closings involve free seller rent backs. One was for 45 days. Another 3 weeks, and yet another a couple of weeks. In the last transaction, the seller was worried. Now I could understand a buyer’s reluctance, but a seller exhibiting hesitance was unusual. Why, I asked, would you fret over the free rent back when you’ve already closed escrow? Not to mention, you have your big ol’ pile of money, and you get to stay put until you’re ready to go. Doesn’t this exhibit peace of mind for you?
Because what if I broke something, the seller responded. Hmmm . . . you’ve lived in the property for 7 years, have you broken anything yet? No, but I might. OK, good point, let’s discuss.
But for everybody else, it’s a super great deal for sellers, even if buyers have to wait a little.
Selling a Home Without an Appraisal in Sacramento
Selling a home without an appraisal can result in a much higher price.
Selling a home without an appraisal in Sacramento is not that difficult to do if you identify which homes might qualify for this set of circumstances. You may ask how do you do that? Well, for starters, you hire an experienced Sacramento Realtor who knows how to spot these types of homes. I remember a while back when I shared with a reporter from the Washington Post how I sold a home in Elk Grove without an appraisal and pulled underwater sellers out from under the house by selling over appraised value. I saved them from a short sale.
That reporter asked how does a person go about finding an agent who can do that? I don’t really know. I only know how I do it. I don’t play by the so-called expected rules all of the time, especially when I don’t have to. For example, most agents would run the comparable sales and try to determine a fair market value. If they’re really good agents and they actually pull up photos of the sold comps and compare interiors, upgrades, with the subject property, if they study the landmarks in Google to make sure they’re not analyzing homes on the wrong side of the street, they can produce a value the way an appraiser might do it; that’s one way.
But there are other ways to determine value. Part of selling a home without an appraisal in Sacramento is to determine demand. The way I sold the home in Elk Grove that by all practical standards was an underwater property and pulled those sellers out of short sale status was to figure out how to make that home appeal to an investor. I looked at what was available for sale and figured a 3-bedroom, 2-bath would produce X amount of income, it was in good condition, and I pushed the price to a breakeven cashflow point. It sold to a Bay Area investor for a lot more than it would appraise.
Contrary to popular belief, selling Sacramento real estate is not always about win-win. Nobody says things have to be equal or fair. Everybody has their own agenda. My agenda for my sellers is to get them the highest price. Not necessarily the price the home might appraise at. Selling a home without an appraisal in Sacramento is one way to accomplish that goal.
A buyer asked me the other day about buying a home. He asked too many questions, which made me think he had so many objections, he might pull out of an escrow. I explained our seller’s market, low inventory, high demand, multiple offers. Yet, he offered less than list price, knowing others would probably offer more, hoping, I suppose, we’d get only one cash offer instead of more than than one cash offer. I have that ability to figure out what a buyer will pay and market to those kinds of buyers.
I asked his agent why the buyer did not do what I told him he needed to do to buy the house. Her response was she didn’t think it would appraise at the amount we were asking. Why, she’ll have me know that she’s been an appraiser in a previous life. So, they offered a fair price. A market price.
I ask you, what does any of that have to do with the price of tea in China? Market price is what a seller is willing to sell at and what a buyer is willing to pay. It’s not appraised value.
How to Customize Sacramento Listings to Reach Targeted Buyers
The Weintraub cats snoozing on a Sunday afternoon, Jackson, Tessa and Horatio.
To customize a Sacramento listing, especially to target certain buyers, you’ve got to know your audience. That’s the first rule of listing customization. When I walk into a home for a listing presentation, I pay close attention to the way the home is decorated and to the people who live in it. I am replacing the people who live in it with new people. And for most practical purposes, the new people generally tend to share things in common with the existing homeowners. People who are alike gravitate toward certain products.
Once you know your audience, that is the buyers you want to target, you can design a marketing campaign to reach those people. It can be simple things from the way the home is presented in MLS, to the words chosen to describe it and the places where buyers find the home. Or, it can be more complicated and marketed to specific mailing lists. Each listing I take is different because the people and the homes are different. I think about the preferences in music, books, TV Shows, extracurricular activities of my targeted buyers.
I would like to believe that all Realtors will customize Sacramento listings, but I know they do not. Some walk through the home and shoot vertical cellphone pictures. I don’t know how they sleep with themselves at night. As hokey as it sounds, each home has a certain feel to it. My plan is to turn that emotion into buying verbiage. To present the benefits in such a way my targeted buyers feel they absolutely must go see the home. I stand in the home and absorb it.
The second way to customize Sacramento listings is to find that one thing that propels purchasing buyer. There is always something. For example, it’s a known fact that buyers generally know whether they want to buy a home within the first 3 seconds of entering the home. It’s my job to find what they spot or feel during that first 3 seconds and transform that energy into clarity for them. I don’t want buyers to second guess. It should be right in front of them. Easily understandable.
There is always a way to make things work. The third way to customize Sacramento listings is to get rid of the things that interfere with the first two rules. When we decided to adopt a third cat in our household, we needed the perfect cat that would blend in with our existing two cats. Our adoption wasn’t just about Horatio, we had to take Tessa and Jackson into consideration. But, hey, that thought process paid off. Look at how well those three cats sleep together now.
If you’re looking to sell a home in Sacramento, why not call a Sacramento Realtor who treats each listing as a precious commodity that deserves her 100% attention? Put 43 years of experience to work for you. Call Elizabeth Weintraub at 916.233.6759.
Be on the Lookout for Fake Proof of Funds in Sacramento Real Estate
Sacramento sellers expect to see proof of funds with the offer for all-cash or large down payments.
Back in the old days of Sacramento real estate, nobody cared much about proof of funds. A lot of business was done on a handshake and, when I started in the business in 1974, via a one-page NCR contract. To put that time period into perspective, this was before most families even owned a microwave. But times change, and we quickly adapt to the times they are a-changin’. I can’t believe I ever survived in a world without computers and cellphones, but I obviously did.
Nowadays, people want proof of everything. There are no good-ol’ boy deals. We don’t trust anyone. Nor should we, necessarily. There are too many crooks and scam artists, just more sophisticated, and electronic crimes are becoming more complicated and commonplace. It seems like every day I get an email from somebody asking me to click on a link that is clearly a trick. I’m always on the lookout for fake crap, and I hold a duty to my sellers when I receive a purchase contract to check it out for red flags, one of which is often the proof of funds.
I don’t want my sellers to be subject to bogus transactions. We have enough of those buyers as it is, which is a whole ‘nother blog. The problem seems to be in part that buyer’s agents don’t bother to review the proof of funds they get from their buyers. They often automatically assume it is legit.
When we receive a cash offer, proof of funds had better accompany the offer or otherwise the offer is deemed worthless. Ditto with a large down payment. I know of one set of buyers whose down payment was coming from a particular kind of loan, so when they decided to change loans and suddenly could not longer qualify, they had to pay to cancel escrow or otherwise go back to that loan. They opted to pay to get out of the sale.
Some proof of funds arrive without an account holder’s name on the paperwork. That is not considered proof of funds. That’s nothing more than wasted paper to put through a shredder. Proof of funds should be liquid or relatively liquid, not an untapable retirement account, for example. Buyers can download a bank statement to their computer as a PDF or take a photo of a bank statement with their cell and scan it to their agent. Documentation is available instantly, pretty much.
There is just no excuse not to include proof of funds with a purchase offer anymore. But please make sure the name on the account matches the name on the purchase offer. A letter from the bank needs to be on letterhead. This Sacramento Realtor calls the individual who signs it and not through the number on the letter. If you’re buying a home as an LLC, we can’t take your personal savings account or your mom’s, for crying out loud. If it’s a check, that check should be printed with the individual’s name, with a check number. Be dated today.
Last year I recall an agent who submitted proof of funds that turned out to be a cashed deposit check, already sitting in another escrow. Don’t ask me how I uncovered that little fact, but I did. Saved my seller a lot of headache, and I will never suggest a seller do business with that agent ever again. That was deliberate. He could lose his real estate license for that kind of crap.
So don’t hate a Sacramento listing agent when she asks for proof of funds. It’s a requirement for most sellers and simply good business practice.
Realtor Magic When Getting Pulled Over by Sacramento Police
Obviously, this fellow is not a Realtor, therefore Realtor magic does not protect him.
One of the craziest lessons passed down to me from the guy who trained me in real estate, in the 1970s when I was first licensed to sell real estate, involves Realtor magic and getting pulled over by the police. Now, I have to admit, I did not believe Realtor magic when it was first presented to me because it sounded too far fetched. I also wasn’t sure that the agent who relayed this principle wasn’t joking around, but he swore by it. He said that holding a real estate license gives an agent permission to overlook the rules of the road. Traffic violations don’t apply to us. It’s Realtor magic.
I saw him apply this principle in action one day. We were driving together to view a property, before the days of GPS. The only instrument we could use to find our way was to carry a Thomas Guide under our car seat, and those books weren’t always up to date. Especially concerning new subdivisions. Which means we often got lost. And that particular day, we were lost. Albert, who also had the distinction of being one of my many husbands, made a U-turn right in the middle of crossing the railroad tracks.
Soon as we spun around, a police appeared out of nowhere. Albert rolled down the window and said, “Officer, I am a real estate agent, and I am lost. I did not mean to make a U-Turn and I will never do it again.” And the officer gave him a brief lecture and let us go. Albert smirked: See, I told you, we are immune. Realtor magic protects us. Albert is not around anymore. He died a few years ago.
I thought of this yesterday as I was driving through Rancho Cordova to visit a a seller. She’s moving to Las Vegas shortly and needs to paint a few brightly colored bedrooms before we can put her home on the market. Her street came up abruptly, faster than I had expected. I began to turn the wheel with my left hand. With clipboard in my right hand, I glanced down at the house number. When I looked up again, oh, my gosh.
Whoa! There was a police car approaching, right in my lane! What the heck. On a quiet residential street. Oh, no, wait, this wasn’t my lane, it was his lane, and I was on the wrong side of the street because I had turned too wide. Oopsies. Oh, well. At least I avoided hitting the police car. You know, it’s not so much what you do wrong but how it doesn’t go as wrongly as it could, particularly if you sidestep disaster, and everything is OK, right?
Why didn’t people paint house numbers on the curbs on this street? I glanced in my rear view mirror and sure enough, the police car had turned around and the lights were flashing. Back in the 1970s, I might have been concerned about being pulled over, but now ha. I am old and, let’s not forget, a Sacramento Realtor! As such, I am protected from getting tickets. It’s that Realtor magic.
Oh, hello Officer! I smile brightly. He was pretty gruff. License, proof of insurance and registration, please. I handed over two of those documents. Surely he was not about to demand I dig up my registration card, and I was right, he didn’t. He studied the documents, looked at me, back at the documents. He seemed rather angry. You made me slam on my brakes, he raised his voice. I did no such thing. If he slammed on his brakes it’s because he probably wasn’t watching the road. Maybe he was playing with his police radio. Did I slam on my brakes? No.
At that point, I suppose he lectured me about traffic safety or maybe he was talking about something else, I don’t know, I wasn’t really paying attention. I’m like that Labrador cartoon about the dog getting scolded by his owner, and all the dog hears is blah, blah, blah. The cop wasn’t about to haul an old woman from Land Park off to jail.
“I’m a Realtor, Officer,” I offered, “I’m sorry, I was looking at house numbers. I’ll never do this again.” Hey, I’m an old person. I look like a Realtor. I’m driving a new foreign car. My iPad is on the seat with my Google map print out.
He didn’t write me a ticket. He let me go. And there, once more, is the proof of the Realtor magic when getting pulled over by a police officer. I sensed Albert rolling over in his grave with a thumbs up.
