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Lauren Schenke

Your Partner in Real Estate

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MLS

Sacramento Real Estate Market Seeing Changes

Since spring of this year, the Sacramento Real Estate market has started seeing trends that makes me wonder what the next year will bring. Last year and the first few months of 2013 were for lack of words, frantic. There were dozens of offers on each listing, prices were increasing by the hour, and buyers needingĀ  financing found it tough to get into escrow on a home.

Then Spring and early summer came along and interest rates increased a point in reaction to fiscal news of an improving economy and possible decrease in stimulus funds. The interest rate increase just about killed profits for investors putting 20% down on properties and financing the rest. Other cash investors moved on to markets outside of Sacramento where prices hadn’t increased 30+ percent over the last year. I read not long ago that Stockton is now the new hot spot realizing high increases…just a few months delay behind Sacramento and they will be right where we are now.

In my opinion, the once frenzied real estate market has somewhat normalized over the past few months. Listings that go on the market at atrocious prices aren’t getting showings….or offers. Open house agents are reporting crickets when their sellers want to start out at too high of a price. Not too long ago, listing your home at a high price was “normal”…and you would even get offers above list price, with buyers removing their appraisal contingencies and willing to pay the difference between appraised value and offered price! Today, the days on market counts on MLS are increasing, sellers are finding themselves reducing their list prices to compete with nearby listings, and buyers have once again started asking for home warranties and pest clearances…those “extras” that we never asked for before when there were 12 offers on the table.

I personally think this is good for the local real estate market in Sacramento. If we had continued to increase at 30+ percent appreciation in values per year over a long period of time, I think there would have been the possibility of another dreaded bubble. Today, I think we hopefully flushed the frenzied activity out of our system and have plateaued at a normal growth level that we can hopefully sustain over time. Local trend graphs are showing changes in the market over the past few months, with a large increase in inventory of homes coming on the market, sellers reacting to competition coming on the market around the corner, and buyers having more power in their pockets. I for one look forward to normalcy when two hours on the market doesn’t mean the home is already sold to a cash buyer. The buyers that need to sustain our market and our economy are not those that have cash…they are those that need financing.

I’ll continue to keep you posted as more changes happen in the local market. Send me any questions/thoughts!

inventory 101413prices oct 13

What exactly IS the status “Short Sale Contingent”?

I often get asked, “What exactly does ‘short sale contingent’ mean in MLS?” Great question.

First of all, let’s start with answering the question of what a short sale is. A short sale is where a homeowner is under water in their loan(s), or in other words, their loan(s) total MORE than what their home is currently worth. This homeowner is attempting to sell their home at a LOSS to the bank. For this short sale to be accepted, it is completely up to the bank as to whether or not they will agree to accept the loss and sell the home.

One of the main qualifiers of an approved short sale is that the homeowner must have a valid hardship. A valid hardship would be something tangible that affected the homeowners’ income. It could be a job loss, an expensive medical issue, a death, a divorce, or something along these lines that the bank would approve as a valid reason why the homeowner could no longer pay their mortgage anymore. I can see you thinking right now….but so and so did a short sale and they didn’t have any of those reasons! Yes, everyone knows someone who had their short sale approved and didn’t have a hardship, but my response would be that this is a rare situation, and/or perhaps you are unaware of a hardship that exists for the seller. Many of these reasons are very personal.

Now, what is a home that is short sale contingent? This is a home that is attempting a short sale that was listed in MLS and now has an offer on it. This offer has been accepted by the seller – ie, the homeowner – and has been submitted to the bank for acceptance. Since the bank is taking a loss on the property, it is up to the bank to accept the offer in the end. This is limbo land. This is an unknown period of time where the bank is reviewing the seller’s short sale package, determining market value, negotiating with any second or third loans on the property, and determining their decision. This process may be as short as a few weeks, to several months, with an average time being 90 days or so.

During this time period, the listing agent of the short sale will likely only submit one offer to the bank, however, the bank may have specifically requested to see ALL offers on the home. If you are interested in a short sale contingent property, have your agent call the listing agent of the property and check in on the status of the home. Have your agent ask the listing agent if the offer looks solid, or if the buyer looks like he/she may walk. Ask for your offer to be put in “back up” position in case the first offer walks. Buyers walk for all sorts of reasons – such as not wanting to wait any longer, not agreeing to a bank’s counter offer, not being able to obtain financing, or not liking inspection results. It’s not always a horrible thing to be put in back up position…you can keep looking for other homes while having a home you like in your back pocket.

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