back up offers
A scenario we are seeing as of late, buyers hesitate to write offers in a timely manner, consequences? Well, yes, in a spring Sacramento market, homes sell faster than in the winter. A listing located in Midtown Sacramento we already put in escrow. Of course, now another couple who had seen it 4 times didn’t write soon enough. They submitted an offer a little too late, and are trying to get into back up offer position.
Another listing in Natomas, the buyer wrote three consecutive offers; however, the first two were not viable. Of course, another offer comes in! Now, they are competing in a multiple-offer situation. If the first buyer had written a substantial offer instead of writing lower offers, they would have been in contract long before today.
First off, a Sacramento Realtor cannot predict a solid purchase offer. No way, no how. Yet that does not stop eager buyer’s agents from calling about pending sales to ask: how firm is that purchase offer? It’s not a question I can really answer. Do I know the buyer personally? No, I do not. Do I represent the buyer? No, I do not. Much of the time, I don’t know the buyer’s agent, either. We have 5,000 agents in our Board. Turnover is high. Many agents aren’t in the business long enough to renew their licenses, which is at the four-year mark.
On top of this, the buyer’s agent might not know the buyer, either. The buyer could be some dude who plucked an agent out of the blue because the agent advertised on a website that contains property listings, like Zillow, for example. Strangers working with strangers working with strangers . . ..
Basically, we have two types of purchase offers. The kind that close and the kind that do not. Both of these look exactly identical to each other. They each contain a strong preapproval letter, and the buyers have coughed up an earnest money deposit by wiring or writing a check to escrow. They have scratched a signature on an offer and are contractually bound.
Which is a solid purchase offer?
You won’t know until closing.
In our hot 2017 real estate market in Sacramento, most of the obviously flakey buyers do not make it into escrow. Given a choice between a badly written purchase offer, submitted without a preapproval letter and an offer that adheres to standards, sellers will take the offer that meets requirements and ignore the screwed up messes.
We received 9 offers the other day for a property and only 7 were viable. Of the 7, most likely one of those might not close. Is it our present escrow or is it one of the offers we did not accept? There is no way to discern. After 40+ years in the real estate business, I can spot a crummy offer a mile away, but I cannot determine which viable offer is a solid purchase offer. It is impossible.
I don’t care if the buyer’s agent promises us the moon. They can say their buyer strolled by this home every day as a child and fell in love, dreaming about the day it would be available for sale; implying they would give up their first born to buy this home, and they can cling to the mailbox, refusing to budge until closing, proclaiming their love by screaming into a forhorn for all the neighbors to hear, and I don’t care.
It doesn’t mean they will close escrow.
If your buyer wants to write a backup offer, just do it. But please don’t call me to ask if we have a solid purchase offer.
Far as I’m concerned, watering a lawn is going above and beyond the call of duty for this buyer’s agent. That’s a job for the seller, and it’s the seller’s responsibility to maintain the lawn during escrow. Even if the seller vacates the property, it doesn’t mean the seller is no longer responsible for the home. But this buyer’s agent offered to do it, and the seller accepted. I suspect the agent didn’t want to take a chance on her buyers’ dissatisfaction with the condition at closing. That’s a really smart real estate agent.
Here, I was in the middle of kicking back in my air-conditioned home reading Tina Fey’s Bossypants yesterday when my cell rang. I made the mistake of answering it. The caller was a buyer’s agent, and he was pretty irate. He demanded to know whether this particular short sale in Carmichael was available. Well, it’s listed as “active short contingent” in MLS, which means the seller has accepted an offer. I explained that to the agent, adding that we recently received approval from the first lender and are waiting for approval from the second.
He screamed at me: Why did the seller tell me he had moved out and it was OK to show it? I don’t know why this guy didn’t call the listing agent first. That’s what I would have done in his shoes. But agents don’t always do what I would do. I didn’t know what to say to him because as a practice I don’t show Active Short Contingent listings to prospective buyers. It’s generally pointless. But every real estate agent is different. So, I said the only thing I could think of that moment, which was, “I guess the seller thought it was OK for you to show his home.” How do I know what the seller thought? I imagine that the seller was as astonished as I that an agent would want to show an active short contingent home.
Was it the heat? It was almost 100 yesterday in Sacramento. The agent slammed down the phone. Then a few minutes later, the buyer’s agent (who was over at the home watering the lawn) called. She said this particular agent left all the doors open, the windows open and had stormed up to her as she was putting away the garden hose to berate her in front of his client. Turns out this buyer’s agent is from San Francisco. Different MLS, different systems. Still, the agent is required to know the meaning of ASC.
Unfortunately, it’s about to get more complicated in Sacramento with short sales, too. Our MetroList, which is the MLS for our four-county area, is changing the status for short sales with offers. These listings will no longer automatically be placed into Active Short Contingent status come July 31. We will now implement a new status called Pending Short Lender Approval (PSLA). This status change will mean an offer has been accepted by the seller and the seller no longer desires showings.
If a seller is willing to accept a backup offer, then the status can revert to Active Short Contingent. Agents who put a listing into Active Short Contingent status when the seller is no longer willing to show nor receive backups offers will be fined $200 or $250 per day, I guess they haven’t yet worked this part out.
Will this solve the problem we are experiencing in Sacramento? Well, it will if agents read MLS. But, seriously guys, how likely is that?
On the other hand, this upcoming MLS change will remove from inventory on certain online websites all the active short contingent listings. We will drop to less than 30 days of inventory. It will present a true picture of how little real estate is for sale in Sacramento. The Sacramento real estate market is in jeopardy until we bump up that inventory. As a Sacramento real estate agent, I’m doing my part. Watch for new listings this week on my website.
Photo: Elizabeth Weintraub