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Home Buying and Selling at the Same Time in Sacramento
For the past 8 years, the market has been so depressed in Sacramento that it was fairly uncommon to find anyone buying and selling a home at the same time. That’s because many sellers were doing a short sale or had walked away from their homes due to the falling market, while other sellers didn’t have the equity they desired. It was actually the perfect time to sell a home and move up because the move-up price was so much lower back then but people feel uneasy during challenging times and tend to do nothing.
Now that we have a somewhat stabilized market and prices have increased over the past several years, in some areas as much as 40%, there is more movement. Much of it, surprisingly, is in downsizing. Sellers are taking their equity and moving it into a smaller home. But they still need have a plan for home buying and selling at the same time if they don’t want to move twice.
There are many ways to accomplish this task, but the most common way to buy a home contingent on selling an existing home is to use a Contingency of Purchase addendum to the purchase contract. Agents would be wise to thoroughly read and familiarize themselves with this particular document because it has changed, and I’m not kidding you, it is complicated. It is so complicated that recently Sacramento real estate agents argued over its contingency period because it appeared unclear.
The COP by default will allow the seller to keep her home on the market during the contingency period of 17 days. It gives the buyer 17 days to get her home into escrow. If during this time period of 17 days, the seller receives, say, a non-contingent offer, the seller is free to ask the existing buyer to remove the contingency to sell. If the buyer refuses, the seller can give the buyer 3 days and then cancel the buyer so the seller can accept the new offer. It’s a first right of refusal clause for a buyer.
Confused yet? It’s almost an art to engage in home buying and selling at the same time.
Of course, it’s easier for a buyer to first sell her home, put it into escrow, and then look for a home to buy, contingent on her home closing escrow. Or, a buyer can sell her home, close it and rent back for a while as she looks for a new home to buy. Or, a buyer can enter into a long escrow period, say 60 days, to give her plenty of time to buy another home.
However, with limited inventory on the market, the buyers with an existing home who will have the easiest time are those with cash in hand after closing or a loan preapproval letter and no home to sell (or a home she doesn’t need to sell to buy). Yet, it’s not impossible to project a successful outcome for home buying and selling at the same time. You just need to hire a real estate agent who knows how to do it for you. You can call Elizabeth Weintraub at 916.233.6759. I answer my phone.
Why Do Sacramento Homes Come Back on the Market?
Just because you spot a home in the Sacramento MetroList MLS with a “back on market” status does not mean there was something wrong with the property; yet, that assumption is the first premise that some buyer’s agents and their buyers attach themselves to. The problem with many back-on-market listings is the buyers (or the buyer’s agents) did not understand what they were doing when they wrote the purchase offer. It’s like they embarked on a wild bender and woke up face down in puke. OMG, what did I do, they wonder, I bought a house.
I try to follow the rules of MLS, and unlike some agents, I actually read the MLS manual. MLS rules state we listing agents have 3 days to change the status in MLS from Active to Pending. However, there is also the real world, and the real world says if I’ve got buyer’s agents showing my pending listing for 3 days straight when I knew it was pending and did not inform them, my name in the real estate community would turn to mud. It’s unethical to purposely not change the status in MLS and to misrepresent what’s going on.
The problem that arises is we might be led to believe that the buyer is steadfast and then we discover, no, there is a problem with the buyer. Meanwhile, the listing is sitting in pending status. When we put back the listing on the market, now everybody wants to know why, what went wrong — when it was the messed-up buyer or agent that was the problem.
In one instance, we moved a perfectly beautiful home in Elk Grove from its fresh active status to pending when an Elk Grove buyer with a criminal record hoodwinked the seller into accepting an offer. The buyer’s agent was absolutely steadfast that the buyer could perform until it turned out that the buyer, oops, had no money, no car and no job. Yet this home went back on the market, and it’s not the same.
In another instance, the buyers, with the buyer’s agent’s permission, wrote multiple offers to buy a home and ended up in contract on two homes at the same time. The buyer’s agent did not immediately notify the listing agent. Meanwhile, status changed from active to pending in MLS. A few days went by before the buyers bothered to decided which home they wanted to buy (ultimately the answer was neither). That buyer’s agent learned a hard lesson, but still, the seller’s home ended up in back-on-market status.
Recently, a seller accepted a contingent offer, meaning the buyer had a home to sell, and the buyer asked for, let’s say, 7 days to sell her home. Her agent noted the home was on the market and should quickly sell. Before advising my seller to accept the contingency to sell a home from the buyer, this Sacramento real estate agent checked the accuracy of the listed price, and it seemed very reasonable. The seller accepted the offer. We changed the status in MLS to pending.
Then, the buyer’s agent did a double take when when we asked for the contingency release within the specified time period. Turns out she did not correctly write the Contingency of Purchase. She made a huge mistake. She had meant to ask for a much longer time period, consisting of a few months. I guess now I have to add to my repertoire of insulting questions to ask buyer’s agents: Does your buyer understand what she signed?
This Sacramento spring market seems so squirrelly. It’s bad enough that I have to personally call banking institutions to verify funds on deposit (because the loan officers and buyer’s agents don’t always give a hoot), and interrogate the buyer’s agents as to whether the buyer wrote two offers. I don’t mean to insult anybody. But this back-on the-market business is damaging to sellers, and I have to look out for my seller’s interests. I might also change my policy now to leaving the status modifier in ACTIVE for a few days, just to make sure everybody is on the same page. If buyer’s agents want to know whether we have any offers, they’ll just have to find out the old-fashioned way.
Three New Home Listings in Sacramento Metro
As a Sacramento real estate agent who lists a lot of homes, I’ve got to replenish inventory that closes with more homes for sale. It’s the same with anything in life. If I run low on milk, for example, I might have to stop by the store on the way home and pick up another carton. I apply the same principle to items in my own home. If I buy a new piece of furniture or article of clothing, something else must go out the door. It’s a system of checks and balances. It also means after a few homes close escrow, more homes had better go on the market or this agent would soon run out of homes to sell.
Fortunately, the replenish system has been working well for me. I love to sell homes, even if I have to sell homes twice. You’d kind of expect that to happen in a short sale but not in a regular real estate transaction. Two homes that should have closed escrow last month did not, and they canceled. Both were traditional sales involving buyers who could not get a loan at the very last minute. The files sat in underwriting and were spit out. Denied.
Both sellers were understandably distressed and dismayed. I get their pain. In one situation, I told the seller that I was confident we would put the home back on the market, sell it for more money, and he’d look back at this particular cancellation and say it’s the best thing that could have happened. That was my intuition talking.
I love it when my intuition is right. It generally is, and I can rely on it. That’s exactly what happened, too. The next buyer paid cash, no appraisal. In the other sale, the replacement buyer had written a contingent offer. Sellers are often wary of contingent offers, but they can also be used as a benefit. And the contingent offer buyer removed the contingency within a couple of weeks and closed as well. Both of these escrows closed on Friday.
I’ve replaced these two sales with three more listings: An energy-efficient home in West Sacramento near the river at $240,000. An Elk Grove home, updated kitchen with granite counters, new appliances and wood floors, featuring 4-5 bedrooms, more than 2,700 square feet, turn-key ready at $395,000. These homes are open for viewing this afternoon. And last, but not least, a short sale home in Sacramento near Calvine, offering allergy-free floors, 3 bedrooms, formal living room with a brick fireplace and cozy family room at $225,000. Check out my new listings:
142 4th Street, West Sacramento, CA 95605
Selling a Home and Buying at the Same Time in Sacramento
I stopped by yesterday to visit with a nice couple who are thinking about selling and buying at the same time. They want to sell their pool home in Citrus Heights and buy another home. Their challenge is similar to other sellers in Sacramento. Because it’s a seller market, undoubtedly their home will immediately sell. The problem is buying a new home. There are more home buyers in Sacramento than homes for sale right now. So while you can easily sell, it might be a bit of struggle to buy. For some, selling a home and buying at the same time isn’t gonna happen.
To give you an example, just 5 short years ago, we had more than 10,000 homes for sale in the entire county of Sacramento. Today, we have fewer than 1,800 homes for sale. The numbers work out to about an 82% percent drop in inventory. That’s an astounding number. Not only that, but with interest rates below 4%, buying a home means a buyer will most likely pay less than it would cost to rent a home. Since investors can now receive positive cash flow, those guys have thrown their hats in the ring, too, and it’s like a war zone out there.
I tell you this, if you’re in escrow right now, stay there. Don’t get fancy schmancy ideas about asking a seller to fix a leaky sink or think about trying to renegotiate a sales price. If you’re lucky enough to have a home to buy, count your lucky stars. Kiss the ground you’re walking on. And thank your Sacramento REALTOR, who probably had something to do with it.
One of my Sacramento home sellers found a home to buy over the weekend. She was in an excellent position because her buyer had removed contingencies. So, it was a contingent offer without much of a contingency. Sometimes, agents get a little testy when we ask for a Contingency Release but it’s extremely important. It means the buyer is committed. We ask for a Contingency Release for every transaction, whether the seller has equity or it is a short sale, it makes no difference. The buyer must release contingencies or the seller just might cancel the buyer.
This seller had no trouble selling a home and buying at the same time. She was able to sell her home in Sacramento and buy another home in the Pocket. Plus, she was up against multiple offers. Her offer won because she was represented by the Elizabeth Weintraub Team. I sold her home, and my team helped her to buy a new home. Was it easy? For her family, it was. But that must be why we make the big bucks.
