CITI Almost Thwarts Short Sale of East Sacramento Home

Do you know how hard it is to keep up a seller’s spirits in an East Sacramento short sale? I try very hard to make sure the first buyer we go into escrow with is the buyer we will close escrow with the first time around. I never want to say to a seller: “Look, we’ve got approval twice already, I am confident that buyer #3 will close this time.” Because sellers get exhausted when short sales drag on and on due to buyer cancellations. Not every seller has the wherewithal to hang in there. Some just give up. Throw in the towel. Walk away.

That’s why it’s important to close escrow with the first and only home buyer. It’s how we closed escrow yesterday on another East Sacramento home. This was a buyer who really fell in love with the home. Almost every agent says her buyer loves the home when the offer is presented, but buyers and agents tend to change their tune as the short sale progresses. The engagement process is often all fun and sparkly but some lose enthusiasm along the way. Not this buyer. She was a real trooper. She waited 6 months for this short sale to close. Homes in East Sacramento are worth the wait.

First, the bank decided it wanted a higher sales price. It’s the bank’s prerogative. Often when a home doesn’t move for whatever reason and we end up reducing the price, the banks put the price back where it was in the first place or close enough to it. That’s why it’s extremely important not to price an East Sacramento home too high when you’re deciding on a short sale price. But you don’t want to be too low because you might attract a buyer who can’t afford to increase her price if the bank demands it. It’s like Goldilocks: for homes in East Sacramento you want to be priced just right.

Then, when the buyer’s appraiser did her appraisal, she did not read the purchase contract. The buyer’s agent gave her a copy of the purchase contract and the price increase, but the appraiser was either too busy or she simply ignored the information. Pricing homes in East Sacramento is an art. Not every appraiser is up to snuff. Her appraisal came in at the list price and not the appraised price. It was $15,000 too low. This held up the closing while we scrambled to assemble comparable sales and push the buyer’s lender to reassess.

The second lender, Citimortgage, now One Main Financial, demanded an excessive amount to settle. Wells Fargo met most of the demand except for the last $1,200. It always seems to come down to $500 or $1,000 when we come to a standstill at the OK Corral. You gotta wonder what is wrong with these corporations that they would let a deal blow up over a few dollars, but they do and they will. I guess if you looked at $1,000 x 10,000 deals, that’s $10 million. But the buyer agreed to pay it out-of-pocket. Bless her sweet little heart.

Citimortgage had refused to extend this escrow. Because the appraisal review delayed the closing, we were past our approval letter date. By all accounts, the short sale had expired. We begged and pleaded but CITI denied our requests. They’d only given us 2 weeks in the first place, which is virtually impossible unless the buyer had moved forward on the loan as I had suggested and she, thank goodness, had complied. In the end CITI relented and gave us an extra 24 hours, which we managed to meet.

I like to examine my closings afterward to figure out what this Sacramento short sale agent can do to improve future closings. After 35-some years in the business, I still try to learn. Nothing is ever perfect. In this East Sacramento short sale, if I had changed the listed price in MLS, I could have prevented a clueless appraiser from making a mistake. I am reluctant to change a list price in the middle of an escrow just in case it falls out, but now that we have a seller’s market in Sacramento, there is really very little risk to increasing the sales price during escrow. And it just might avoid a future problem when the next appraiser screws up. It’s smart to be one step ahead at all times. That’s what I strive for.