Today’s article and video below are about the decision to sell a house, what it cost to get a house ready, the pros and cons of selling to retail buyers that require financing, buyers inspections, repairs and appraisals. We’ll also compare that process to that of a cash home buyer in Sacramento and the alternatives that they can provide. In my articles, I try to explain how I deal with the same issues that all sellers face. I explain how I try to mitigate our risk of loss based on longer than normal sales cycles, holding cost, real estate commissions and of course the return on investment.
I do that, because I see a lot of homeowners chasing a top of market price by doing a lot of work in the hopes that they will recover those cost when they sell the house. Most homeowners approach a sale with very little experience in evaluating the pros and cons of some of the projects they embark upon. Most sellers rely on real estate agents and contractors to tell them what to fix and unfortunately they not experts in how all projects affect the bottom line. I explain how my cost are 30% less than most homeowners and sometimes it just makes sense to sell a house at Fair market Value minus the cost of repairs and updates.
I say this because most homeowners dont understand that each house has built in price limitations based on location, other houses that have sold nearby and course their own houses condition. I see homeowners allowing real estate agents and contractors, that are not in the business of buying, fixing and selling houses talk them into spending tens of thousands of dollars on cosmetic projects to get a higher price, but neglect other basic repairs and updates that are important to complete the sale. I am writing this article because I see that many homeowners never recoup what they invested and I know that I can help.
For most people, the decision to “sell my house” in Sacramento has life changing ramifications? There are so many things to consider that are directly tied to where you live. Family, whether young or old, have ties to home and neighborhoods. Whenever that changes there is bound to be stress and emotional turmoil. New schools, work and added time for commuting, etc. It is no wonder that the decision to “sell my house in Sacramento” is considered one of the most stressful events in our lives. I understand it and yet with well over 100 houses that I have bought or sold, I can attest that I have never embraced it and that the regardless of how it’s marketed, or who’s in charge of that process, selling of a house for anything but cash never gets any easier.
At that point it’s usually a rude awakening when we look at all of the things that are required to put that plan in motion. It only stands to reason, that selling a house regardless of its condition, or location is typically one of the most stressful times for most people.
As a cash home buyer in Sacramento, I’ve learned over the years, that the Buying and selling houses anywhere is simply two sides of the same coin. For an all cash sale all you need to do is align the buyer and the seller, come to an agreement on the price, any special the terms and deliver the paperwork to the title company. The transaction closes on the date the seller and buyer agree upon and the checks are deposited of the funds are wired. The title company handles all of the paperwork and completes the transaction after both parties sign off. It is really that simple.
So, if things are that easy, why is there so much anxiety and stress when we sell houses in Sacramento? Where does all of that stress emanate from? Why do we spend most of our time wringing our hands and worrying about every detail during the escrow period?
The truth be told, all of the hand wringing is because most transactions are not cash transactions and the unknowns are a direct result of an buyer requiring financing. Once you accept that offer, you are hitched to their lenders time frames and like them or not, selling your house in Sacramento is anything but a sure thing.
99% Percent of All Home Buyers Require Financing
Its a fact, 99% of of the people buying houses require financing and the financing comes with rules and regulations and and even restrictions on the types of houses that can be purchased and at anytime the process can be derailed.
So all of sudden the the decision to sell my house in Sacramento just got a lot more complicated. We are not only making decisions about the qualifications of the buyers but also the types of financing that each of the buyers require. With each decision we add another hurdle, another potential stopping point and another person’s presence in a very crowded real estate transaction. It is almost to the point that you have a multiple page checklist for all of the things that need to be cleared out of the way. And then there are the lender conditions. Some lenders are incredibly restrictive and others are a bit more liberal but there is no way to know that up front.
Forget real estate agent recommendations, because they dont know either. As the seller you get what you get in the form of offers and it’s usually not what it appears. Pre-qualified and pre-approved, each lender is different and up and until the three day “Closing Disclosure” is issued, you have no idea whether the transaction can or will ever close.
So what are a buyer and a seller to do? How can we simplify the selling of a home when financing is involved ? The simple answer is that YOU CAN’T DO ANYTHING, unless as the seller you assemble the best possible team in advance and dictate to the buyer the lender that they use and the type of financing that you will accept. There really is no other answer.
Of course, this all presupposes that you fix and update your house to the lenders requirements and then be as flexible as possible on what a potential buyer wants and of course within the timeframes of no one’s choosing.
A Little Bit of History
After the bubble burst in 2008 there was a mass exodus of real estate agents throughout the Sacramento, Stockton and Modesto real estate markets. People were not buying houses, because the banks were not lending and the only real sales occurring were with real estate investors with generally all cash transactions. There was not a huge need for an agent to get in between what the cash home buyer in Sacramento and seller were doing. Real Estate contracts for cash are very simple and sophisticated buyers understand the risk involved dont waste a lot of time with inspections, repairs and/or appraisals. In fact, we dont order them. Those are all fabrications for lenders to protect themselves under the auspice of protecting their customers from buying houses that may have so many issues, that the buyers stop making their payments. It really is that simple.
As a real estate investor in Sacramento, I have always embraced the buying side of the real estate purchase because it has always been the easiest. With a cash sale the process is simplified because 99% of the unknowns are removed from the equation and there is a finality with a sales price and the closing date. I know that because I pay cash, everything becomes easier and the process gets accelerated in so many ways. We don’t wait for Banks, appraisers, inspections or repairs or even disclosures in most instances. When I buy a house, the extent of my inspection is a visual as I walk through as I peak in each room. That is it. From there, the Buyer and seller agree on the terms and the price and it looks like this;
- The Seller and Buyer negotiate the sales price. The seller has final say.
- The seller picks the date of closing
- I order ZERO, NONE, ZIP Inspections
- I dont ask you to clean
- I dont ask you to haul anything away
- I dont want an appraisal
- There are no banks to approve or decline a loan
- I ask for no repairs
- I ask for no Home Warranty
- There are no real estate commissions
- I Pay All Of The Closing Cost and Title Company Fees
- You pick the date to close and you decide if you want a check or a wire transfer into your account
Likewise when I sell a house for cash, I negotiate the price with the buyer, I pick my closing date and I pick the Title Company. It is that simple, no unknowns, no anxiety.
So why do sellers willingly participate with Buyers that Need Financing?
So why would I ever sell a house to a non cash buyer that requires financing? Why would I subject myself to the additional stress and anxiety of all of the unknowns? The answer is very simple. By the numbers, there are very few cash buyers in the Sacramento market looking to buy fully upgraded and improved homes. So when comparing the two, I am not willing to lock out such a large segment of the home buyers in Sacramento especially when I have invested 5 or 6 figures into a home with the hopes of creating a whole new price point. When I sell these homes I am always at top of market.
As an investor I take risks with these houses because it is part of my business model and I am prepared to deal with an elongated sales time frame to accomodate the buyers that I want to attract. My business plan allow for delays and my cash flow is designed to sustain periods that may require the house to be re-listed on the MLS two or three times. I am not impervious to the market and yes I have experienced the absolute worst.
There are other reasons that I dont always sell all my houses for cash in Sacramento and it has to due with the inventory of houses, their comparative condition and ultimately my advantage with my cost structure. So there is a tradeoff, but I have a few built in advantages that most homeowners could never match. First, I am a general contractor (CSLB 1047535) and my cost of labor and materials is at least 30% less expensive than most homeowners can purchase. Second, I know what repairs and upgrades pay the dividends and I know what markets will pay that premium. (The video attached talks about that cost advantage and the decision to sell my house in Sacramento).
Why I Loathe Having to sell a house with Financing:
What I hate, no, loathe, is the process of selling a home conventionally. It creates all of the stress and the turmoil we talked about because there are just so many unknowns.
- Have I made all of the repairs that are needed
- Have I focused on the right upgrades
- Have I over paid for those improvements
- Have I priced it right
- Who will buy my house
- How long will it take to get an offer (Days on Market)
- Should I have open houses
- Will they want a FHA loan
- Will they want Down payment Assistance
- Seller Credits to Cover closing cost
- Home Warranties
- Will they want a VA Loan
- Will they want Down payment Assistance
- Will they want Seller Credits to Cover closing cost
- Will they Want Home Warranties
- Will they want a Conventional Loan
- Will the house appraise at sales price
- If not, am I willing to lower my price?
- How Many Inspections (95% of ALL Home Buyers require Inspections)
- The volumes of Real Estate Agent paperwork and disclosures to protect themselves
- Does the Buyer have Seasoned Funds for the Earnest Money Deposit
- Will they want repairs
- Will they want a home warranty
- Will they want more updates and upgrades
- How long will the lender take to close
- Real Estate Commissions
- Title Company Fees
Is it any wonder why the process creates so much turmoil? For me as soon as that sign is planted in the front yard and the listing goes active on MLS I am just like the rest of you. A Nervous Wreck!
I have to sit back and wait and pray that my house sells fast. I, like you, have something to lose. I have mortgages with interest payments, additional holding costs and as the seller we are the only ones with any risk whatsoever. We are the only one in the entire house selling process with any skin in the game. We are the only ones with anything at risk and if you understand the buying and selling process the way that I do, you, the seller, is the one whom everyone else feeds off of in a real estate transaction. Buyers dont pay commissions… Sellers do. You are the one that makes it all possible. You are the owner of the asset… the house, the property, the golden egg, the opportunity. Need I say more?
When I buy it is pure opportunity and when I sell its is pure risk and that risk is where all of the anxiety breeds the stress that you and I both feel when we think or utter the words “I Need to Sell My House in Sacramento”.
But I am different because buying and selling homes is what I do for a living and I invite the stress that I loath so much because every time I complete the rehab/remodel of a house it is what we do for a living. It doesn’t mean that I have never learned to like. I just deal with it. It means that I tolerate it because I can’t afford to own 100 homes. The decision to sell for me is always a necessity because when we rehab a house, it’s an investment made specifically for resale. Everything that we do is calculated based on the fair market value of the house that we purchased plus the repairs that we made. We dont own a lot of rental properties and if we did we would not be investing in them the way that we do when we get a house ready for resale. So my apprehension is never because of attachment or sentimental value. It’s about selling a house in Sacramento for the best price and of course the unknowns that accompany an often elongated and cumbersome sales process.
We all need to live somewhere and while our houses may not always be the prettiest on the block, they are ours and they serve a purpose for our families. In fact, most of us take for granted the houses that we live in. We drive up and we may notice some of the things that are wrong, but as in other aspects of our lives, we have trained ourselves to block out the things that we can’t or just dont want to deal with right now.
As I said earlier, when it’s time to sell some of the fixes may be so costly that it may be best to jest sell your house as is. Fair Market value minus the repairs. No real Estate Commissions, No Contractors and No Mistakes.
My name is Peter Westbrook and I am a real estate investor in Sacramento, Stockton and Modesto. I am the best at what I do because I work at it everyday. Certainly there are other cash home buyers in the area and some are even local. What sets me apart is my years of experience, my in depth knowledge of real estate issues and solutions and a firm belief that there is a unique solution to whatever real estate challenge you may have.
One call to me, and I think that you will be convinced that I should be on the shortlist of who you talk to. Please call me at (209)481-7780 and I will talk to you personally either way my service is free and my advice is backed by years of experience and it may be just what you need to finally resolve that house or other real estate problem that keeps you up at night.
Video Transcription
Peter Westbrook: Hello, my name is Peter Westbrook with Westbrook Real Estate Investments and today I’m standing out in front of a house in Sacramento. The reason I’m doing this video today is to talk about what your options are as a homeowner when you have a house that is in desperate need of repair, and needs so much work that you’ve really have got to make some decisions based on how you want to sell the property.
We all know that the prettiest houses on the block are going to fetch the highest dollar amount on the resale of a house. We also know that if houses need too much work, regular buyers aren’t going to buy, and there are a couple of reasons. In today’s world, most buyers want to move into a house that doesn’t require any work. What they want is somebody else to have already gone through that house and give them some assurances that the house is basically operating the way it should be, mechanical systems and everything else.
As a real estate investor and as a contractor, what I do is I buy these houses and then I do go through them. You’re going to see on the front of this house, this isn’t simply primer and caulking that you’re looking at. We’ve replaced all the windows, we’ve replaced all of the fascia, we’ve replaced all of the siding on the front of this house, so it’s all lap siding. And what you’re going to see when we’re done is going to be just a beautiful, beautiful house on the outside. Again, like I said, we redid the windows and when you’re talking about doing things like that, the cost alone just for the windows to replace around the house is around $8000.
Then you’re looking at replacing all of the siding on the front of this house, and when you look at how that needs to be done, it’s a labor intensive process because you’re cutting in between all of the fascia and trim. You’re also repairing everything that was there at the same time, making sure you’re taking care of all the underlying problems that house has. The cost on that, is right around $7500. Then we’ve had to patch around all of the stucco on this house. When you look at that, it’s more than just the patch, it’s also the caulking and everything else that goes in between. We’re replacing all the fascia on the house as well to make sure that there’s no more dry rot.
We are doing so much to alleviate the problems inside and out, and then when you walk in… so those problems, they’ll never show up again. As we walk in, we walk to a front door, you’ve got roughly an $800 door sitting here, and then we’ve got the inside of this house. We’ve skim coated all the walls, and this is a process, by hand, they have to be hand floated on all of this. Could you imagine living in a house and trying to do this? We’re going to complete this house in a matter of three two six weeks, and when we do that it’s going to be ready for the market again. You’re going to see that there still needs to be a lot of work done. We’ve pulled out every bit of cabinetry in this house.
But what we’re going to do when we’re done… it’s basically the island, things like that, but what we’re going to do when we’re done is have a showpiece, and you would not be able to do this in a house that you were living in, you’d have to move things out of the way, you wouldn’t be able to protect your clothing or anything else from the dust and everything else that occurs.
But my point is that when you’re undertaking a project like this, and rehabbing a house to the extent… and this is the front room, the bedroom that we were looking at from the outside of the new windows and the siding on the back of it. When you undertake to do something like this in a house, you’re looking at $70, $80 thousand dollars. If you had to go out and pay a general contractor to do what I do, you’re going to pay at least 30% more than I would. So all of a sudden to try and compete in putting together a house like I can, it’s almost impossible.
Again, my name is Peter Westbrook, I’m with Westbrook Real Estate Investments. My website is www.westbrookrei.com/webuyhousessacramento, or www.webuyhousessacramento.org, or ibuyhousesstockton.com. I’ve been a real estate investor in the Stockton, Sacramento and Modesto markets for the past ten years. I’ve helped hundreds of families, hundreds of houses, and when you look at the sheer number of transactions that that is between different families, and how we’ve helped people… save homes, or just sell homes, retain the equity in their houses, that’s what we do.
When we buy a house, we look at a house and we go and look at what fair market value in the area is or what houses are going for, and we subtract the cost of repairs and a small fee for holding costs and we buy the house. So if you have a house that you would like to sell, give me a call. Again, my number is 209-481-7780. I’m also a general contractor, if you’d like to remodel a bathroom, a kitchen or something else, give me a call. I’d love to give you a quote.
Again, my name is Peter Westbrook and I want to thank you for watching.