Sacramento Real Estate Views

The Good Deals in Sacramento Real Estate

The “Value Train” Pulled Into the Station in Sacramento in 2008

I was asked a couple of good questions yesterday and thought I share my answers here.  These questions are common and I hope they help you understand what’s going on in our market.

“Where Are All The Good Deals in Sacramento?”

I thought a lot about this question before I answered it.  Normally it’s easy to say, “buy and fixer, do most of the work yourself and you’ll get the best deal” and to some extent this is true now.  However after reflection, my answer got more refined.  Some may find it typical Realtor/salesaman speak but it’s true if you look at all things combined.  Where are the good deals in Sacramento?

The entire market is a good deal.

Here’s why:

Over the summer of 2008 we had a “feeding frenzy” here.  There were multiple offers on a high percentage of listings, sometimes up to 25 to 30 offers per property.  The value in the market returned and buyers were showing up in droves to get the best deals of any major metro area of California.   This has died down as the economy has deteriorated and financing has been harder to obtain but there is still competition out there for homes.  I submitted an offer for a client today and the listing agent emailed me back saying that there were 4 other offers and only one had been countered.  It wasn’t mine!  Oh, well, NEXT!

The point here is that anytime you’ve got multiple parties competing for the same house, and this is happening marketwide, there is value in the marketplace.  Want to get the best deal?  Pick a home you like and write it 1% to 2% over asking with good terms and in most cases, you’ll have success.  Especially if you’re financing your purchase.  It’s typical for homes in some of the better regions of Sacramento to sell in excess of 100% of the listing price.  The lowest I’ve seen recently is 95% listing to sold price for a given area of homes.  The value is going to get better going forward.

“Do the Banks Give Buyers a Chance to Up the Offer?”

Here’s the scenario:

You find a home you really like.  You want to write an offer on it.  You decide to offer the list price as that’s the most you’ll pay, you can afford more but that’s the most you’ll pay for this house.  Your thought is that they will counter back as your offer is close to list price. Your agent writes the offer with a credit back for closing costs because you’ve got a government backed loan.  (this nets the seller less than the listed price for the home)

Because this is a nice home, there are other interested parties and multiple offers.  You find out later that your offer has been rejected without counter as there were at least 2 offers higher than yours that they chose to work against each other to attempt to get the highest price and net the most money from the sale.

Will the bank come back to you and give you a second chance to compete for the home or up your offer?

Unless you’re offer is one of the 2 best, no they won’t.

There is a phrase that I’ve grown to dislike immensely that comes along with this market and that is “Give us your HIGHEST and BEST offer.”  Unfortunately, there is so much competition for homes if you don’t come in with your highest and best offer, it is likely you’ll be out of the running without a chance to “up” the offer.

Unless you’re in the top 2 or maybe 3 offers, your offer will be rejected without counter. The bank selects the top 2 offers and counters them back to see who comes in with the best offer. The bank instructs the listing agent, their representative, that this is how they want it. The rest of the offers are either not submitted or, if they are,  in a backup position and not reviewed unless the top 2 fall out. Normally, by that time, the buyers who submitted offers 3, 4 and 5 have moved onto other homes and they just put the home back in active status and do it all over again.

With the amount of offers they have coming in at any given time, that’s all the banks can handle. In a competitive market like ours, where many offers are being submitted on the nice properties, they have their “pick of the litter”, so to speak.

My advice is always to come in with your best offer if the house is something you truly want.  The best offer on the nice homes can be 1% to 2% higher than the listed price and if you’ve got government financing with mandatory credit backs, you’ve got to cover that in your offer.  It’s good advice to offer more if the house is truly one you want.

It can be frustrating out there.  Accept it and things will go much smoother.  It’s not a seller’s market or a buyer’s market.  It’s a bankers market!

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Tags: sacramento homes for sale

This entry was posted on Wednesday, January 7th, 2009 at 5:49 pm and is filed under Real Estate Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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