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The Fixer Home in Citrus Heights That Sold AS IS
This is a story of a real estate closing that could happen to just about any seller in Citrus Heights, or anywhere in the Sacramento Valley for that matter, and how a first-time home buyer found her dream home. Sometimes, sellers find it difficult to believe that their Sacramento REALTOR is really looking out for them and trying to do what is best. In those instances, sellers tend to form their own thoughts about how they intend to sell a home, a strategy that can backfire.
A client contacted me in 2013 to inquire about selling another investment home, this time a home in Citrus Heights. I had previously sold a home for this couple in Roseville. They were very happy with me. I met with the tenants in Citrus Heights and prepared an agent visual inspection. My advice was to evict the tenants. The home was not presentable.
Sometimes, you can easily sell a home with tenants in it and sometimes you lose too much on the sale if you leave the tenants in the property. An experienced Sacramento REALTOR can spot the “trouble sales” a mile away and properly advise. In fact, I have one at the moment that I’ve been trying to sell for almost a year and the tenant is very uncooperative yet the seller won’t throw her out, so we had to wait. Because of the challenges, that particular seller is losing approximately $15,000 on the sale due to the tenant. Penny wise, pound foolish. Laugh, if you want, there are reasons behind these expressions.
My Citrus Heights seller, being a nice guy, decided to wait another year and then ask the tenants to move. At that point, he decided not to sell the property outright but to gift the property to a worthy charity and take the tax write-off, as long as the non-profit agreed to hire this Sacramento REALTOR to sell it. The head of the charity once sold real estate in another part of California. Usually I love working with real estate professionals, even if they are no longer in the business, but there is also a downside to it because people are the sum of their own reality. What works in Orange County doesn’t necessarily work in Sacramento, and our real estate market is very different. Plus, when years go by, things tend to change, so what was true 20 years ago is not true today.
We sold almost immediately to a first-time home buyer who was obtaining a conventional loan. As part of this buyer’s due diligence, she obtained a pest report, which reflected about $4,000 worth of work. Even though the home was sold AS IS, the buyer asked the seller to complete the pest work. The seller adamantly refused. The non-profit felt it could sell for cash in this market at top of market, a strategy that falls pretty flat in this market. Investors expect a profit margin and won’t pay top dollar. We reached a standstill, and the home went back on the market. Finally, the seller lowered the price but not enough to attract an investor who would pay cash.
We sold to a buyer who was obtaining an FHA loan and who agreed to pay for the pest work herself. Now, the problem with FHA is the 90-day flipping rule, which means title cannot transfer within that period. Our escrow was delayed by several months. The lender had its own issues and caused more delays as well. Ultimately, the home closed but the non-profit lost about $10,000 during this time period in order to save the initial $4,000 for the pest report — to sell AS IS.
The moral is sometimes it’s better to bend a little bit with a bird in hand. Sacramento REALTORS, the busy ones, spend a lot of time analyzing markets and movement. It’s professional advice a client can rely on.
Working With Tenants To Sell a Rental Home in Sacramento
Not every tenant ends up being a nightmare or terrible problem when selling a rental home in the Sacramento region. In fact, some tenants can be a huge blessing in disguise. I often prefer to have tenants in the home if at all possible for several reasons. First, I don’t worry nearly as much about vandalism when the when I’m selling a rental home is that occupied. Second, having furniture in the marketing photos makes the home seem more alive and it shows better.
Sure, you hear horror stories about tenants who refuse to move upon sale or those who believe the world revolves around them and the out-and-out jerks. These types can cause problems by lying about the condition of the home to prospective buyers, refusing to show the property at the times they promised and not picking up after themselves when buyers do come through. As a Sacramento real estate agent, I’ve dealt with uncooperative tenants of rental homes who bolted the door from the inside, turned the pit bulls loose and then slipped a note under the door threatening physical bodily harm if agents entered.
Fortunately, most of the tenants I work with are very accommodating. Part of that reason is because I treat them with respect. It might be my Sacramento listing and the seller’s property, but the house is the tenant’s home. I am grateful when a tenant grants me the privilege of entrance so I can take photographs of the interior, and I verbally share that sentiment. I say please and thank you. I acknowledge graciousness. And I go to great lengths to protect the tenant’s privacy.
See, I think when you deal with other people the way you would like to be treated, they generally respond in kind. If a real estate agent starts out on the wrong foot, making false assumptions and behaving as though she is at odds, on the opposite side of the fence, tenants might not want to cooperate. They might even retaliate.
I often ask sellers to give the tenants a small financial incentive to cooperate with showings. After all, what’s in it for the tenant? Tenants are generally inconvenienced, they don’t stand to make any profit when the home is sold, and let’s face it, some real estate agents can be very pushy. You know it and I know it. I try to save the tenants from that kind of obtrusive and sometimes abrasive invasion.
Just being nice to people can go a long ways. There is no reason, even in the face of adversity and unwarranted criticism, to act otherwise. If you want to sell a rental home in Sacramento, call Elizabeth Weintraub at 916.233.6759.
Selling a Rental Home With a Tenant
Selling a rental home with a tenant is often a PITA. It’s not that I am anti-tenant because many of my short sale clients in Sacramento have turned into temporary tenants. In fact, I myself, in my own crazy life, was many years ago, a tenant. It’s that I am pro-Sacramento real estate ownership. Which is not all that together surprising given the fact that I am a Sacramento real estate broker whose living depends on buying and selling homes, which are mostly occupied by owners. It’s why the National Association of REALTORS is so deadset against the banks bundling truckloads of once owner-occupied homes and selling them in bulk to investors. It dilutes home ownership in neighborhoods. When blocks of owner occupied homes turn into rentals, pride of ownership dissipates and property values tend to diminish.
Still, that doesn’t stop some tenants from behaving as though the home they occupy belongs to them and not to the landlord. I’ve got a Sacramento listing in which the tenants have pretty much trashed the home. It looks like a teenager lives there. Crap from one end to the other. They have also acquired a couple of pets, which are not allowed in their lease. See, this is yet another reason that I am not a landlord. I would hate to tell a person they could not enjoy the company of a pet if he or she wanted to adopt.
The seller is pretty close to closing escrow and we received short sale approval from the bank. This means it’s time for the buyer to do a home inspection. Somehow, the tenants believe they can choose the date and, because the home inspection time period falls outside of a time that the tenants deem to be convenient, that it is the tenant’s right to louse up the seller’s transaction. They don’t want to give the landlord access to the home. They are talking about changing the locks. They accused the owner of purposely putting the home on the market at the wrong time for the tenants. They say they do not trust the landlord to enter her own home. Wha? See? You can’t make this stuff up.
I offer yet another valid reason why many real estate agents are in favor of selling a rental home as a vacant home. The government, in its infinite wisdom, has offered the tenants $3,000 in this HAFA short sale to cooperate. That doesn’t ensure cooperation, though. The fact the new owner will become their landlord doesn’t seem to mean much, either.
Fortunately, not all tenants behave in this manner. I just closed a short sale in the Pocket that was occupied by one of the loveliest tenants I have ever had the pleasure to meet. Robin was polite and sweet. She kept the home immaculate, cooperated with showings and cleaned the home from top to bottom when she moved. Everybody in that transaction would have moved heaven and earth to accommodate Robin’s wishes.
Rest assured, however, that if you need to evict, your Sacramento real estate agent will wait for you. No future sale is that urgent. Think about this before you put your home on the market. If your future buyer will be an investor, selling a home with a tenant in place can be advantageous, but it’s not if the tenant is the tenant from hell. If your future buyer is an owner occupant — and remember that home owners tend to pay more than an investor will pay — a tenant in place is probably not your best move.
