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.