Elizabeth Weintraub
Tenants and Selling the Sacramento Short Sale
Dealing with tenants in a short sale can be tricky. The first problem that often pops up is when the tenant learns that the home is on the market as a short sale, sometimes the tenant will stop paying rent, which is a big no-no. Tenants in a short sale are required to pay rent whether the home is a short sale or a regular transaction, it makes no difference. It also makes no difference whether the seller is current on the mortgage payments. No place in the rental agreement does it state that the seller is required to pay the mortgage lender. But tell that to the guy who answers the door at noon: a burly dude with wild hair who looks like you just woke him up, straddling the threshold by hanging on the door jamb with one arm and scratching his belly with the other, showcasing a pack of cigarettes rolled up in his t-shirt cuff.
With a wistful sigh, I’m sad to report that the days are gone when you could threaten to take a tenant for a walk in the river in cement shoes or haul him out back by his shirt collar and break his knee caps. Today, even the loser tenants have rights. Which I suppose is necessary for us to continue functioning and living in a somewhat peaceful society.
Tenants in a short sale also don’t like to cooperate with showings to potential buyers. They’ll often try to thwart the deal if they can be creative enough or they’ll just bolt the inside door when agents show up. I’ve seen some put signs on the door that say a pit bull lives there. Pit bulls are generally sweet little dogs, unlike some tenants. The tenants’ reasoning is there’s nothing in for them. In fact, if somebody buys the house, the new owner might increase the rent or, worse, evict them for non-payment of rent.
Then, you can throw rental deposits and rental prorations into the mix. But when it’s a short sale, the seller is prevented from contributing to a short sale. Moreover, if there is any money deposited into escrow, the bank will typically want it. It’s generally much easier if such matters are not complicating the short sale and clarified upfront.
Sellers can ask tenants to cooperate with a short sale by giving the tenants what they want most:
- money
- reassurance
- little inconvenience
This can be accomplished by letting the tenant use the security deposit as the next month’s rent, for example. Now, there is no security deposit to worry about transferring in escrow. Sellers can also offer tenants a rent reduction in exchange for cooperation. Showings can be set up to happen on a particular day of the week at a certain time, to lessen the intrusion of personal space. You need to work with the tenants in a short sale because they are your tenants. Either that, or kick ’em out and put the home on the market as a vacant home. But then you might worry about security and vandalism.
The point is you should work with your tenants if you’re going to do a short sale. Just don’t spring it on them and expect them to cooperate and play nice, because they might not. Tenants could create a barrier between you and your short sale approval.
A Cactus Garden in Land Park
I met with a really sweet seller in Fair Oaks yesterday and, with any luck, we’ll be putting his home on the market next week. It has a to-die for backyard with a park-like view. It could be anything you wanted it to be in your imagination. A woodsy forest, like Sherwood Forest. A redwood retreat along the ocean just beyond the bluff. A plantation in the South, like Tara in the spring. I can’t wait to show you this home next week.
Until then, take a look at my cactus garden in Land Park. The spring blossoms are here. The pear cactus won’t have blooms until next month because the blooms are just beginning to form, but everything else in the garden is breaking out into song. Wait, I can hear Mary Poppins. Hope she doesn’t land in the cactus garden because the wind blew her the wrong way or she’ll have little spines and thorns up her skirt.
I also closed another home in Sacramento yesterday — that managed to drag on much longer than necessary. The mortgage brokers could not figure how to find the loss payable clause for the insurance policy, so they sent an email over and over to a person who hasn’t been in the office during our entire transaction! When I discovered this, they had already been sitting on their thumbs for several days. Some escrows close easily, and others you’ve got to kick and curse to get to the Recorder’s Office.
This particular escrow was a home in the pocket of homes just east of Broadway and south of 4th Street. It’s not Oak Park, and the homes are generally bigger and newer than those found in that part of Oak Park, but sometimes people confuse the two neighborhoods. This pocket of homes off Redding is so small that often there are no comps. The last comp in this area sold around $180,000. So when the seller asked me how much I thought he could get, I wet my finger, stuck it in the air and declared, maybe $200,000, maybe more.
We listed it at $200,000 and received several offers immediately. It sold at $211,000. Then the appraisal came in and, you guessed it, the appraisal was $200,000. Too low. We contested, no such luck. The buyer didn’t have the money to bridge the gap, as many buyers in this price range have limited funds. The seller could have canceled the transaction and sold to another buyer, possibly for all cash so it would not require an appraisal, but the seller was happy enough with the $200,000 price. Not to mention, he has a soft place in his heart for first-time home buyers. He was a first-time home buyer once himself.
It closed at $200,000, and a new family is very excited. It’s very hard to find a nice home in the $200,000 price range that is close to downtown and in an established neighborhood where the neighbors all know each other. Another happy ending for this Sacramento real estate agent and all involved.
Hope you like the cactus flowers! Welcome to Spring in Land Park.
Digital Communication Key to Home Sale in Elk Grove
Communication. Communication is a tricky thing. My husband says, “Turn right at this corner, go down to the next corner and turn right again, then get into the left lane because you’ll be turning left at the next corner.” Me, to make sure I have understood him correctly, says, “OK, you want me to turn right after my right here and then go left?” He, completely certain that I have misconstrued his explicit directions, says, “No, that’s not what I said. I said . . . “ and he repeats exactly what he said.
That’s because he speaks Chicawgoan, and I speak English. We often misunderstand each other. The upside to that is we often understand each other when we speak Vulcan, for example. Or, when walking past the hotel lobby bar after listening to Leo Kottke perform at Yoshi’s, I ask, in my best New-Riders-of-the-Purple-Sage-voice, “Can I buy ya a drink?” He gets the reference to Dim Lights, Thick Smoke and Loud, Loud Music. I don’t have to illustrate for him. And, after all of these years of marriage, I have learned not to argue over whose driving directions are more clear. Besides, he is edgy enough on the road, which gets worse when his wife is driving.
It’s communication. You see, being a Sacramento real estate agent, I have have had to learn how to communicate with all kinds of people, even though I speak only English — and a little Vulcan and Pig Latin, but not one of those languages has ever come in handy. That’s because Sacramento is one of the most diverse cities in the United States. People come from all over the world to live in Sacramento, although I have no idea why. There are better places to live. San Francisco, for example. OK, it’s much less expensive to live in Sacramento.
One such person called me last month to ask if I would stop by her home in Elk Grove and tell her how much it was worth. I could barely make out what she was asking me to do, but then again, this woman speaks two languages and I barely speak one. I was just getting out of my car at another listing appointment in Elk Grove, so I asked if she would wait for me, and that I could be there in two hours. When I showed up, she was sitting in her car, and I felt terrible. Here, I thought she lived in the home and was waiting in air conditioned comfort, maybe watching TV. Not sitting in her car, in front of a dismantled for rent sign, staring at her cell phone.
I have a home listed down the street from her rental home, which is where she got my name. Plus, she said she’s seen my name on signs around the neighborhood. Probably because I do list and sell a lot of homes in Elk Grove. I told her that her value was probably around $240,000, but I’d have to run the comps.
The next day I emailed her the comps, which substantiated a price of $240,000. The problem with examining the comparable sales for a home sale in Elk Grove is they don’t really mean very much in this market. Homes are selling too quickly and way over list price, so if list prices are based on the comps, the comps are worthless when trying to determine market value. You can’t really base them on the pending sales either, since we don’t know what all of them are and some agents refuse to disclose. Pricing a home in Elk Grove is almost like throwing darts at a board blindfolded.
The seller emailed that she wanted at least $280,000. She had paid almost $400,000 in cash for this home 8 years ago. OK, we list at $285,000. I found a couple more comps outside of our half-mile radius that would hold up in an appraisal.
Our complete communication between the two of us consisted of email and text messages. We had no further phone or in-person communication. That’s because I do not know any Chinese dialect. Chinese, in itself, you know, is not really a language. Although, tell that to my late mother who took Chinese as her language course at the University of Minnesota in the 1960s. She walked around the house, talking into a tape recorder in a sing-songy voice. But I never learned any of it, and now I regret it.
But, hey, we have email. I shot photos, tweaked them in PhotoShop, uploaded them to MLS and other websites, along with my marketing description. It looked pretty good! Within 2 days, we received a full-price offer, and another offer for $300,000, both with financing contingencies. My seller accepted the offer for $300,000. Less than four weeks later, we closed at $300,000. That’s over a $60,000 jump from the comps from four weeks ago. It equates to a 25% increase.
Granted, my client had owned a highly desirable home. It featured four bedrooms, a single story, beautiful Grapia wood flooring and an open floor plan, in the popular Marchado Dairy subdivision. This combination is covetable in Elk Grove. We could get away with being a little wild in the pricing.
After it closed yesterday, my client sent me an email to thank me for my “great job” and to say she will send me referrals and was “glad I called you a month ago.” I don’t think she was glad to have sat in her car for two hours waiting for me, though. I still feel awful about that. But at least we had email to communicate and we reached a successful conclusion to our transaction. If you need an Elk Grove agent, especially to get you to your home sale in Elk Grove sold quickly and efficiently, please call Elizabeth Weintraub at 916.233.6759.
Some Agents Are Dealing With Offer Rejection
A frustrated home buyer in Orange County called to ask why I thought that her offers weren’t being accepted and often, in many cases, were unacknowledged. I don’t know why she called an agent in northern California. Now, I don’t know the Orange County market because I haven’t worked in that area since the 1980s. I primarily sell real estate in Sacramento. But if that market is anything like Sacramento, entry-level housing is hot, hot, hot. Which means multiple offers. This buyer is trying to buy a short sale.
I asked the buyer if her agent had any experience working with short sales. The answer was no. I pointed out that some agents refer their clients to an agent with experience in exchange for a referral fee.
“But,” she moaned, “We’ve been writing offers since January; that’s when we moved in with our parents.”
Four months is a long time to be hitting a block wall. “If you don’t talk to your agent about this,” I answered, “You’ll still be living with your parents in September.”
That’s all the help I could offer because I cannot advise nor interfere with another agent’s transaction. It’s against the Code of Ethics.
I also received an offer from an agent on a Sacramento short sale listing after disclosing that multiple offers were coming. The agent offered list price and asked for the following:
- 3% concession to the buyer
- home protection plan
- pest report and completion certificate
- 2-year roof certification (which may require repairs)
- seller to comply with FHA requirements
I asked the agent why would she include all these things that the bank is unlikely to pay for? On top of which, with multiple offers, I can pretty much guarantee that every other offer will exceed list price by thousands, if not tens of thousands. Once the bank receives the estimated HUD-1 — even if every offer was identical in price — this agent’s offer would fall to the bottom of the pile because that net will be much lower than all the others.
The agent responded rather curtly, “Because we expect to negotiate those things with the bank.”
It’s not my place to tell another agent how to conduct her business, so I refrain from offering suggestions under these circumstances. The point is the bank will never negotiate with her buyers because those types of offers are rejected by the seller. Who wants to sit in escrow for 8 weeks with a buyer whose offer will be rejected or renegotiated? We want an offer that will be accepted first go around.
Magnificent Remodeled Home is Open Today
You might have never considered moving into this neighborhood until you come to see this home at our open house in Sacramento. I promise, once you step foot inside this magnificent remodeled home, you will want to own it, every inch of it. You will squeeze yourself every morning when you wake up because you will not be able to believe that you actually were able to afford such a beautiful home — that’s how gorgeous this home is, not to mention, it is very affordable!
It’s a 3-bedroom, 2-bath with a one-car garage and an extra bonus with a carriage house in the back yard. The carriage house is ready for overnight guests or it could be a retreat or a children’s playhouse. Next to it, is a peaceful, bubbling water fountain. Often, you will find water features in a yard to disguise noise, but this is fairly quiet location.
Most of the floors in this home are Brazilian cherrywood. They glisten! The kitchen and baths have beautiful porcelain. You’ll also find limestone and travertine and tumbled stone finishes on walls and counters. The light fixtures are glamorous. There is also an extra room between the bath and the garage that can be used as a den. I’m telling you, and I don’t steer you wrong, you will love this open house in Sacramento.
You’ll find granite counters in the kitchen, and all of the appliances stay. Stainless steel sink with a crystal light fixture overhead. The chandelier over the dining room table is so unique, I can’t decide if it’s made up of commas and semi-colons or musical notes. There is something special in every room, and all of the baths feature vessel sinks.
Come see this home today, Sunday, April 14, 2013. This open house in Sacramento is held from 2 PM to 4 PM.
6800 Bismarck Drive, North Highlands, CA 95660, offered at $215,000, by your Sacramento Real Estate Agent, Elizabeth Weintraub, 916.233.6759. Lyon RE.