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Elizabeth Weintraub
Adding Short Sale Buyers to the Deed After Approval
Requests to add or subtract individuals to a deed should never happen after short sale approval, yet it pops up more frequently than you might imagine. If you’re a short sale buyer, this advice is for you. People think because an idea occurred to them, they can make it happen at the last minute, and short sales are rarely in a position to accommodate these sudden changes. I know that short sale buyers don’t see the big deal. But it’s a huge deal. They don’t realize that the short sale bank probably approved only the individual(s) who signed the purchase contract with the seller. Do not try to add short sale buyers to the deed after approval.
The reason is if a short sale buyer wants to change the way she holds title on the deed, it’s almost impossible to do and still close within the required timeframe provided for in the short sale approval letter. One can’t just change from a corporation to husband and wife as joint tenants or from a couple to a sole individual without the short sale bank’s blessing. I had a short sale last month in which originally a husband and wife were holding title, then title changed to the wife as her sole and separate property and, after approval, financing restrictions required we revert. This was a Bank of America short sale and I suspect since the husband was originally noted on the paperwork, the bank was able to approve an additional name at closing without further ado. But this doesn’t happen very often. That was kind of a fluke.
Most of the time the approval letters contain the name of the buyers and, if the those names are altered, the short sale requires a new approval. Some banks make this Sacramento short sale agent start the process over. From the beginning. Because the bank did not approve John and Mary. The bank might have approved only Mary. It’s not as simple as you might think and short sales are not always logical. Not to mention, there is no guarantee that because a short sale was approved first time around that it will be approved a second time around or that the same lender will still be servicing the loan.
There are other complications to adding more short sale buyers to the deed at the last minute. It is possible that the buyer’s lender might not allow it. If Mary is taking title as her sole and separate property while obtaining a new first mortgage, her lender most likely will not let her add her son and daughter to the title without including them on the loan, which may mean they need to financially qualify. If she adds them to the loan after the transaction closes, she could be guilty of alienating title, which could be cause for acceleration: calling the loan due and payable. Moreover, the arms-length agreement Mary signs for the short sale lender might prohibit transfers within a certain numbers of days after closing.
For all of these reasons and more, the time to think about how you want to hold title when buying a short sale is when you sign the purchase contract. Don’t wait for short sale approval before you make up your mind or change it at the last minute because you could be asking for trouble. If you’re gonna do it, write up an addendum before approval is received and submit it with a new HUD during the short sale negotiation process. Please don’t try to add short sale buyers to the deed at the last minute.
Paperwork to Submit a Short Sale Offer
It’s not easy to get a short sale offer accepted in Sacramento. It’s the competition. Because the problem with changing MLS status from Active Short Sale to Active Short Contingent or Pending Short Lender Approval is a Sacramento short sale agent has one supremely ecstatic home buyer and probably 20+ or so disappointed and / or angry rejected buyers. People get mad when their offer is rejected. It’s not like your average home buyer in Sacramento is used to rejection, not like a real estate agent who deals with rejection as part of the job: like doors slammed in faces or buyer’s snorting, “I don’t want to talk to an agent; I was just looking,” click.
It occurred to me this morning that perhaps some buyers could increase their chances of short sale offer acceptance if all of the correct paperwork would be submitted with an offer. There are times I receive offers without the right documents, and sometimes I get offers with too much paperwork, and agents might toss in the kitchen sink with it.
Many agents have never written a short sale offer. I try to point agents in the right direction but not everybody appreciates my assistance for what it is, which is to try to help. I guess when faced with a made-up question such as is the listing agent helping us or trying to sabotage us, it’s easier to believe sabotage, but that’s the wrong default because the menu options are incorrect. There is no reason on God’s green earth for anybody to try to sabotage a buyer’s agent. None, whatsoever. If people think somebody is out to get them, I suggest they look in the mirror.
Here are the documents a buyer needs to submit with a short sale offer:
- The 10-page Residential Purchase Agreement, which includes the Buyer’s Inspection Advisory.
- The Short Sale Addendum. Without the short sale addendum, your offer is not a short sale offer.
- Agency disclosure.
- Proof of funds.
- Preapproval letter from lender.
- Copy of earnest money deposit.
You can squeeze by with items 1 to 3 and send items 4 to 6 at a later time, but it increases your odds of acceptance with all six items at inception. It is also helpful to send all documents in one PDF, not six separate files.
Paperwork we do not need at offer presentation are the disclosures. This includes the buyer and seller statewide advisory, lead-based paint, water-heater, and any of the other disclosures. Let’s save some trees. Let’s save a file to download, too. Some PDF files are so large they do not email. How would you feel if your agent sent all of that paperwork and it never arrived because the file was too big to transfer? I’d like to grab a megaphone and yell from the tallest hill here in Sacramento, where would that be, maybe out in Elk Grove? Stop sending these 95-page files, please.
Paying More Than Asking Price for the House
Before I talk about overpriced offers, let’s consider overpriced listings. Some home buyers in Sacramento complain about overpriced listings and wonder if they’ll offend the seller by submitting a lower offer, so they don’t even try. I tell buyers that if you’re not getting an offer accepted, maybe it’s because you’re an FHA buyer or a VA buyer and not conventional or cash, and you’re barking up the wrong trees. It’s the conventional and cash buyers that are sucking up much of the limited inventory in Sacramento. But another reason why buyers are not getting their offers accepted might be because they’re chasing after the wrong properties. They want what everybody else wants: those immaculate 3-bedroom, 2-bath, affordable homes. Maybe they should be looking at overpriced homes where there is no competition!
On the flip side, some buyers are writing overpriced offers. These buyers are desperate. Overpriced offers are almost as frustrating as an overpriced listing but few agents are talking about overpriced offers. That’s because buyers are sometimes short-sighted. They don’t know what else to do but offer a higher price, yet a higher price is actually working against them in most cases. You don’t know how many offers I receive in which I try to help buyer’s agents by explaining their offer appears too high. Why should those words have to come out of my mouth?
An overpriced offer is especially a huge problem on a Sacramento short sale. Let me illustrate for you. Say, a home is listed at $200,000, and the comparable sales over the past 3 months justify a price of $195,000. With the way the seller’s market is moving in Sacramento, $200,000 is a reasonable price 60 to 90 days later when the approval is likely to be received. Along comes Mary Home Buyer who offers $220,000. If the seller accepts that offer, it’s a long shot that it will appraise by Mary’s lender.
So, down the road, we get the approval letter from the bank at $220,000. Mary’s lender’s appraiser comes in at $200,000. We then go back to the bank, and maybe there are two lenders so now we have to ask 2 banks to adjust their approval letter. The primary lender refuses. Nope, that bank wants $220,000. The bank might feel we can put it back on the market and find a cash buyer for $220,000, some cash buyer who won’t rely on an appraisal. The deal blows up.
Thanks, Mary.
No other cash buyers step forward at that price and then the home goes to foreclosure. Because we’ve established the bank’s expectations at $220,000, we’re hosed. The seller is hosed, the agents are hosed and future buyers are hosed. Some buyer’s agents will say: But wait, my buyer will bridge the gap in the event of a low appraisal. They will pay the difference, if any, in cash. That’s all well and fine until push comes to shove and the buyer realizes she can cancel under the 17-day inspection contingency even without the appraisal contingency. Which makes a no-appraisal contingency pretty much worthless. Think about it.
On top of this, regardless of how this Sacramento short sale agent tries to nail buyers to the front door and, believe me, I have my methods, the odds are almost 3-to-1 that the buyer who goes into escrow on a short sale will somehow manage not to close escrow. And those are the good odds, the odds that an agent who knows how and has closed hundreds, gets. Buyers will lose their job, somebody will die, their FICOs will change, they find repairs they can’t afford, they blew the down payment on an emergency, the lender didn’t qualify them properly in the first place — there are dozens of reasons why buyers mess up. Once we start the short sale approval process, we can often easily slip in another buyer, but that offer needs to be at similar terms and sales price.
This means the first offer accepted will set the precedent for the second offer, should the first offer fail. And a smart Sacramento short sale agent realizes this and will advise her sellers to reject overpriced offers. There are so many ways a short sale can fail, let’s not increase the odds by encouraging buyers to submit overpriced offers, because that’s just sabotaging the buyer’s chances of buying a home.
Elizabeth Weintraub Can Sell Even This Home in Sacramento
People have asked this Sacramento real estate agent why her clients are so ecstatic about her to write such fabulous and expressive reviews after escrow closes. They ask how do I generate such positive feedback when I’m so busy? I generally don’t get the usual type of reviews that just say I did a good job and the clients would recommend me, and then they could go about their normal business and forget my name. Clients instead tend to say that the Elizabeth Weintraub Team does the supernatural and performs impossible feats, and they would pretty much strew rose petals everywhere we walked if they could afford it. Why do they say these things when all we really do is close that sale for them? I bet some people think we bribe them, but my clients are not the kind of people to accept a bribe or we might have tried it.
Here is an example of a remarkable short sale that closed against all odds in Sacramento. I started to work on this in July of last year. The seller did not have a key and the home was tenant occupied. I prefer that tenants move out because some are uncooperative and, even if they initially appear cooperative, soon as they learn it’s a short sale, many stop answering the phone or the door. Even though it’s against the law, they often stop paying rent, stop letting buyers see the home and all-in-all become a general nuisance. The seller hoped for the best.
I was my charming self, though, because Elizabeth Weintraub can sell, and persuaded the tenant to let us show the home on Friday afternoons. We quickly went into contract with a cash buyer. This was a buyer with whom we had closed another short sale in Antelope. He was a real estate agent. We asked him to produce updated proof of funds because his proof of funds was dated several months ago. Banks want docs dated within 30 days. He couldn’t or wouldn’t do it. So, after issuing a Notice to Perform and he failed to perform, the seller canceled this particular buyer.
The tenants were getting a bit testy by this time, but they cooperated and we went into escrow with another buyer, short sale buyer #2. Finally, the credit union issued a verbal counter offer. These responses are rarely in writing. The credit union demanded a higher price. They dinged around with this short sale for so long that the prices had gone up. I proposed the higher price to the buyer, but the buyer balked and elected to cancel, which in my book was a pretty stupid move because what kind of home would that buyer be able to purchase now? In a seller’s market when almost every property has a handful of offers? Not for me to worry about. Thank goodness I was not his agent.
We sold the home again to a new buyer in December: buyer #3 for this short sale. After battling the credit union for months, we secured short sale approval rather quickly this time. The buyer completed the home inspection and was getting ready to close escrow. The seller gave notice to the tenants and one of them moved out. The other tenant at the 11th hour refused. He told the seller that he wasn’t moving until the sheriff threw him out. The buyer’s agent called me to say the buyer was canceling because the buyer could not move into the home.
The purchase contract stated the seller would deliver the property without a tenant in it at closing. The seller could not deliver on the promise because one of the tenants refused to vacate.
My idea was to pay the tenant to move. That’s what he was angling for, cash for keys. It was cheaper than evicting him, and much safer than dragging him out in the back alley and whomping the living daylights out of him, which is what I suspect crossed some people’s minds at that point. But the buyer instead asked to cancel the escrow.
When it rains on your parade, you parade in the rain. I’ve learned that lesson in life. We put the home back on the market, pending rescission. In the confidential agent remarks, we wrote that:
- Potential buyers could not view the home
- Potential buyers could not view the home ever
- Potential buyers must purchase the home without ever seeing the inside of the home
- Potential buyers must purchase the home with a hostile tenant living inside.
- Potential buyers must pay about $25,000 more than our original list price
- The potential buyer’s agent would receive a severely discounted commission, an amount so low that most agents would refuse to even write an offer.
We received about a half-dozen full-price offers at those terms and conditions. Believe it. Because it happened. Because the real estate market in Sacramento is so insane and wild that a buyer would purchase a home they could not see with a tenant who would not move at the top of market value. Did I mention it needed to be all cash?
The existing buyer changed his mind about canceling and closed escrow last week.
Moreover, when a buyer’s agent told me last week that his buyer, who was purchasing a stripped out and vandalized home I had listed in north Sacramento, decided to try to renegotiate the agreed-upon sales price, the answer was no, followed by hell no.
If you’ve got a home to sell in Sacramento, call Elizabeth Weintraub at 916.233.6759. I’m more than happy to do it, and I guarantee you’ll be thrilled with my performance.
It’s the Going Not the Getting There for a Sacramento Agent
As a Sacramento real estate agent who works with a lot of sellers in the Sacramento area, I do basically 3 things during the week, besides brush my teeth twice a day.
- Take new listings
- Scrutinize and negotiate offers, and
- Manage existing escrows to the point of closing.
The one thing I really don’t do is spend a lot of time looking for new business. I don’t hunt for it because I get a lot of new business from the Internet and from referrals. Potential clients searching for a Sacramento real estate agent read my reviews and client testimonials, maybe they read about my extensive background and then decide to talk with me. Others might ask their friends or relatives for a referral and, since I’ve been fortunate to close hundreds of homes, I have many previous clients every year with good experiences to share.
Not having to spend any time scouring for new business lets me take that chunk of time — those 30% of hours another agent would spend prospecting — and put those hours into servicing my existing clients. That’s a lot of time to look for new clients — a third of your life. I bet if you asked a seller if he or she minds if a Sacramento agent uses their listing to advertise herself, a seller would object, but that’s what most agents do. There’s nothing really wrong with it because it brings the agent more business and it promotes the seller’s house, but it’s not an approach I employ.
I’m not the kind of Sacramento agent who says look at this house I listed, I can list yours, too. Because sellers don’t want a home listed. They want a home sold. They want a home sold for the most money they can get and not a lot of drama. Clean and efficient and professional. I will custom tailor a listing plan for my sellers because every seller and situation is different. I don’t have any qualms about grilling a buyer’s agent before my sellers accept an offer to discuss potential pitfalls and lay out expectations to see if a buyer is a good fit. How many agents do that for their clients?
Engaging in these types of conversations and providing quality service for my sellers is part of what my clients get with an agent who has almost 40 years of experience in the business. My experience is not one year times 40. I am constantly learning and trying to improve because I don’t care how good you are, there is always room for improvement. My career as a Sacramento real estate agent is a journey, not a destination. Like Harry Chapin said in Greyhound: it’s the going, not the getting there.
