sellers market sacramento
Our seller’s market is still here. For the fourth straight consecutive month, the pending sales are on the rise, confirming that Sacramento Real Estate is a continuing seller’s market. The first quarter shows closed sales increasing every month.
What does this mean for the Sacramento housing market? Does it mean Sacramento real estate is a continuing seller’s market? We are experiencing continuing price increases, based on high demand and housing shortages. Each neighborhood can be a bit different as this is the greater Sacramento county averages.
Because I’m in full blown spring mode dealing with Sacramento home selling myths at the moment, I’ve noticed that I get asked somewhat the same questions from many sellers. At first I wondered where are they getting these ideas? But then I decided there isn’t any one place, and much of it is arrived at within their own minds. It makes sense to them. Even if it doesn’t make a lot of sense to me, those beliefs, so I try to be even more patient and understanding.
One of the most common Sacramento home selling myths I hear repeated: seeing as how we have to pay commissions and closing costs, can we raise the price? The reason we listing agents get that question? Because sellers temporarily forget how we determined the sales price. And they honestly did not think about paying costs of sale. Raising the price seems entirely rational and normal to ask. When you think about it this way, you can see how a seller could come to that conclusion.
But it is a bad idea. You do not want to be overpriced or priced so high you won’t even get one offer much less the multiple offers sellers crave. When more than one buyer fights for the home, that alone can raise the price. The costs of sale also have no bearing on the sales price. The costs are whatever the costs are. The standard real estate commission in my neck of the woods that top producers charge makes perfect sense because we tend to negotiate better than inexperienced agents who charge less. We also tend to get higher sales price ratios and we eliminate more hassles for our clients.
A second common Sacramento home selling myth: oh, geez, my ceiling fans are so gorgeous and I love my Tiffany light fixtures; can I take them with me? Even if they seem incompatible with the seller’s new home, sellers believe someday they will use them again. Perhaps the fixtures have been part of the seller’s life for years. An emotional reaction. However, they are fixtures: a legal thing. They are also the things that makes the sellers’ home so beautiful. Without the gorgeous ceiling fans and Tiffany light fixtures, the home could lose some of its luster and appeal. It won’t be so pretty anymore.
Fixtures, basically anything attached in a permanent manner, should remain with the home. Buyers do not want to buy stripped-out homes with builder-grade low-end fixtures when they pay a premium price.
The third common Sacramento home selling myth: Must my house be 100% perfect to be for sale? Must all the appliances be brand new? Should we paint the interior and exterior? In our super hot seller’s market, the single most important thing a seller can do is clean the house and get rid of trash. Make it presentable and liveable and loveable. That does not mean sellers need to repaint in contemporary colors or fix minor defects that nobody will notice. Call your Sacramento Realtor today and get that home ready for sale. Spring awaits!
A seller’s market persists in Sacramento. See my Sacramento Housing Market Report for February 2018. We’ve been in the midst of a seller’s market for a long time now. We have very few homes for sale. High demand. Remember your high school classes about the laws of supply and demand? When supply is low, demand goes up. When supply is high, demand goes down. Supply = house for sale. Demand = qualified, ready, willing and able home buyers.
For example, to help to determine how much to offer to buy a home in Sacramento, you should first look at our local real estate market. Today, for instance, we have 1,822 residential listings in Sacramento (versus over 10,000 homes from the height of 2005). We have 1,501 pending listings. A tight market exists. Many listings receive multiple offers. The starting point for most purchase offers in Sacramento happens to be list price.
Interestingly, more than 72% of all listings sold within the first 30 days in Sacramento (over the 30 days). The list-price-to-sales-price average ratio for all of these listings? 100.55%. Obviously, the more desirable the home, the higher over list price a buyer needs to go. Swamped open houses and many buyers ooh-ing and ah-ing tends to result in a lot of offers bubbling up on the horizon.
Unfortunately, comparable sales won’t help much in our seller’s market. You need to rely on your agent’s advice now more than ever, especially if you do not have access to accurate information about the local market. Zillow can’t really help you, either. I’ve seen it incorrectly tag certain neighborhoods as buyer’s markets.
So, to figure out an offer price for a Sacramento home today, especially newer listings, buyers may need to begin at list price. Then, determine the number of competing offers and plan accordingly.
The way I see it, the problem with Sacramento home buyers who offer less than list price is it’s often a case of the blind leading the blind. I’m sorry, there is just no other way to say it. You’ve got buyers who have probably never bought a home in their lives trying to figure out how much to pay. And you’ve got a buyer’s agent who probably doesn’t sell very many homes. The agent most likely has had little, if any, training about appraising a home.
Often, these are buyers who offer less than list price because they saw an HGTV show. In those mythical fairy tales, buyers are always offering less than the amount the seller asks. Talk about overly generalized. We have a Sacramento sellers market, which means sellers can hold out for and will get list price. Very few homes for sale, high demand, hello?
Further, many agents struggle with deciphering comparable sales. They might notice a comparable sale in the neighborhood that sold for a higher price and try to compare it to the the home their buyer wants to buy. The difference might be a slight variance in the lot size. But they don’t know enough to figure out that maybe the back yard of that larger lot is filled with high tension power lines. So a smaller lot size does not equate to a lower sales price for the home in question. It is very likely they also don’t realize an appraiser might give only an extra $5,000 for a slightly larger lot. For many reasons, they hand out bad advice to a buyer.
Bottom line is most buyers who offer less than list price don’t get the home. The buyers wrongly blame the seller for being stubborn when they should be looking elsewhere for answers. These guys should be examining their own inadequacies. Coupled with the skills lacking in the agent they hired. Because that’s what caused them to lose the house.
Also, take a moment to realize that comps are not the only way to figure out the value of a property. Sometimes it really does boil down to the amount the seller will accept and the sum a qualified buyer will pay. That is the true definition of market value.
In closing, if a buyer is so certain a home is not worth the asking price, why not make a full price offer anyway? If it doesn’t appraise, the seller is likely to renegotiate. But the buyer will never get to that spot if the buyer doesn’t go into escrow. When it does appraise at the sales price, just close escrow. Get on with your life. Arguing gets you nowhere. Five years from now it will make no difference whatsoever.
Some of the conversations I’ve been having lately with buyer’s agents in Sacramento seem as bizarre as the actual weirdness of quantum entanglement. For those of you who haven’t spent much time pondering quantum entanglement, this is an instant thing that happens in the universe. No, I’m not talking about the life-on-a-blade-of-grass theory, derived from dropping acid in the ’60s; this is not that foo-foo stuff. This is science. It’s a real phenomenon.
It’s what happens when two particles mirror each other after an interaction. You’ve got this one particle, which could be a Sacramento buyer’s agent, and another particle, which could be, say, a San Diego buyer’s agent. These two agents meet and become entangled to the extent that if the Sacramento buyer’s agent skins her knee, the agent in San Diego feels the burn. You think this sounds like craziness, a movie plot, but it’s real.
Even Einstein pooh-poohed this as a paradox and said it was impossible, which was the version I heard when in school. But along the way, scientists in the physics community managed to prove that entangled particles truly exists. Regardless of the distance between the two, when change happens to one particle, it happens to both. I read about quantum entanglement in the news a few days ago and it blew me away. I bring this up now because my husband picked up a book at the library for me about quantum entanglement, which I’m very excited to begin reading.
Further, I should point out that although quantum entanglement might be old news to some of you, it’s not to me. Even though I’m an old person now, my inquisitiveness remains in full force.
While I am really not saying that agents share any sort of quantum entanglement, sometimes the similarities between agents amaze me. Over the weekend I received several offers that contained the requirement for a security deposit to be paid on a free rent back by the seller. That’s a new one on me, too. It’s fairly insulting, don’t you agree? To tell a seller she needs to pay a security deposit to the buyer on her own home, a place where she’s been living for years without destroying the property.
I know what the real problem is. The real problem is the buyer’s agent is not spending enough time educating the buyer. This is probably a situation that requires face-to-face dialogue and in-depth discussions to get buyers over that fact that many sellers expect a little break in today’s HOT HOT HOT Sacramento real estate market. That little break is to give them a week or more to move out without demanding rent or deposits. It speaks volumes to the seller. It tells the seller the buyer is completely serious about buying the home and isn’t planning to nickel and dime us to death.
It can be what entices a seller pluck that one offer out of multiples. If you’re thinking about selling a home in Sacramento, call Elizabeth Weintraub at 916.233.6759, and put 40 years of experience to work for you.