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Elizabeth Weintraub
No Short Sale After Buying New Home
Some agents never met a listing they didn’t like. Even though there might not be a chance in hell or high water that a listing will ever sell, there are real estate agents in Sacramento who will list those kinds of homes. That’s because agents can get residual value from those types of listings. Not to mention, some agents are ignorant. Some are overly optimistic. There are all kinds of reasons why an agent would take a listing that will never sell, but the most hopeless kind of listing is that which is a short sale when the seller has just bought a new home. It’s a waste of everyone’s time.
Listing a home as a short sale when the seller has bought a new home is pointless. I will never, as a successful Sacramento short sale agent, knowingly take a listing like that. Been there, done that. Because I’ve learned the hard way over the past 7 years of selling short sales that it’s idiotic to do it. There are ways you can do a short sale and then buy another home but you cannot, read my lips, buy a home and then do a short sale. Not in your own name. You can buy a home in somebody else’s name and then short sale your former home, but you can’t buy a home in your name and then short sale.
If you don’t believe me, call your bank and ask. Be upfront. Say, hey, I just bought a new home. Will you do a short sale for me? Don’t get mad at me if they think it’s a prank call and hang up. I don’t write the short sale rules. Banks have a word for it. It’s called Buy and Bail. Goodbye short sale, hello foreclosure.
There are too many short sale sellers who are genuinely hurting and struggling with underwater homes. Banks know if a seller has bought another home that the seller can afford to own two homes. They don’t grant short sales for people who can afford to own both homes. A seller either deliberately goes to foreclosure, works out a deed-in-lieu arrangement (which is pretty much just as bad) or hires a lawyer to sue the short sale bank for some kind of fraudulent past mistake. But you don’t short sale. Sorry. There is no short after buying new home.
Canceled Sacramento Home Listings
Nobody loves Sacramento home listings so much as when you take your home off the market. This is sort of the dirty little secret and underbelly of real estate. Almost the minute your home listing is canceled in MLS by your real estate agent, your phone will start to ring. It’s a fact, jack. And it’s not the fault of your Sacramento real estate agent. So, don’t blame her. She will have already removed your telephone number and your name from MLS, but there are ways for others to find it.
You might wonder, wow, how did my home become so danged popular all of a sudden! And why didn’t I know about all of these top-notch real estate professionals who can sell my home in record time for top dollar? Where have these real estate agents been hiding? They sound so wonderful and competent and aggressive. Why, they say my former Sacramento real estate agent was a lazy-ass jerk who didn’t do jack-crap, which is why my home did not sell and why I was forced to hang my head in shame. But if list my home with them, I will be showered in gold and riches beyond my wildest dreams. Holy toledo!
I know it might be tough for you, dear reader, to realize that some real estate agents might prey on sellers of canceled Sacramento home listings. It’s how they make a living. And there’s nothing wrong with it; it’s the approach that many sellers object to. These agents figure at least a canceled seller wanted to sell once so they should call them when the listing either expires or is withdrawn or canceled from MLS. In fact, there is an entire industry built around canceled listings. Real estate agents can attend seminars and take special training on how to approach a seller of a canceled listing.
When these agents call sellers of expired or canceled Sacramento home listings, often they have a prepared script in front of them. The agents are doing telemarketing calls and reading the script to you. It’s persuasive, and it works or these agents wouldn’t do it. They are focused on one thing. Talking you into listing with them. They may or may not have any experience, as you get both experienced and brand new agents making telemarketing calls to sellers of canceled listings.
My advice to you is to realize these chasers of expired listings are likely to do exactly what your agent already tried to do — they aren’t offering you anything new or revolutionary. If you like your agent, list again with your real estate agent. If you don’t like your agent, call another agent who has been referred to you, but don’t fall victim to empty words.
Practical Tips for Completing Seller Disclosures
This helpful Sacramento real estate agent is about to provide you with simple proof that the seller disclosures — which are required for a seller to complete to sell a home in Sacramento — are not as complicated and horrendous to complete as most sellers believe. Seller disclosures are definitely worse than that. They are filled with trick questions and big, unfamiliar words, but what do you expect from forms designed by a team of lawyers? See, one lawyer is OK. Two lawyers are permissible. But when you get more than two lawyers in a room, especially those who serve on a committee and must come up with a mutual agreement by noon or no Big Mac for you, well, all holy hell tends to break loose, and you get what we have in California: a transfer disclosure statement and a seller property questionnaire that very few sellers can fill out without guidance from their Sacramento real estate agent.
But that’s what I’m here for. To carefully guide my clients through the complicated process. We affectionally call the seller property questionnaire the SPQ. That’s because we speak in acronyms to annoy everybody around us and to disguise the swear words we can’t say out loud in public. You think we real estate agents are really talking about one thing when it’s totally something else unprintable. But that’s why you can’t tell us apart from the homeless people who wander around Midtown and mutter. Homeless guy or agent with a Bluetooth device? See, you don’t know, and it’s OK.
The second thing you need to know about seller disclosures is don’t ever worry about what you write on them. You can say anything to a buyer, and the buyer will still buy the home. Don’t believe me? I have 3 words for you: snake infested house. In Idaho. True story, those first-time home buyers bought it anyway.
Some of the questions on the SPQ can confuse a seller. For example, you might not know if you have received an order from the government that identified your home as being contaminated by methamphetamine. Is your home a meth lab? Well, I dunno. Maybe you weren’t home when the government showed up? Hey, you have to go to work, you’re not home all the time, tapping your toes, just waiting to see if some government official is gonna drop by to inspect your home for meth and hand you an order. I mean, let’s get real. We all have stuff to do.
What about that question about a death in the home? What is an occupant? Are they referring to an occupant who is a human being or could it be an animal like a dog or a cat? What about bugs? Actually, bugs are covered elsewhere in the SPQ. Section F asks whether a homeowner has encountered any problems with cows or pigs, swooping cranes or flamingos or those nasty little ants from Argentina, don’t cry for me. But if a person has died in the house over the last 3 years, a seller needs to disclose. That’s a long time. Regardless, nobody needs to hear all of the gory details, how you snuck up on your husband while he was sleeping and stabbed him in the head with an ice pick over and over, unless of course you can tell us all where to buy an ice pick these days. And don’t tell me on the internet.
Probably the most difficult question most sellers struggle with is whether to answer yes or no. I realize it is very tempting to answer with both. That’s why the lawyers who designed the seller disclosures realized it was necessary to explain under the “seller awareness” section that the questions should be answered by checking either yes or no. You would think this doesn’t need an explanation, but I am fully confident that it does. Because yes can mean no, and no can mean yes. And there is no I don’t know, and there should be because sometimes, let’s face it, maybe you just don’t know. Is your pet a dog or a cat? Hard to tell. Could be both. Your kid found it in the street. It’s not your critter.
This is when you should call your Sacramento real estate agent. Don’t ask the guy down the street or your mail carrier because they are hiding out from the guys who work for the government. Those meth labs are everywhere these days. Can’t swing a dead cat without hitting one.
How the Short Sale Arm’s Length Can Backfire on a Seller
Some Sacramento short sale sellers could be headed for a big surprise down the road after signing an arm’s length. I know this because I’ve talked with a Sacramento short sale agent here and there who see nothing wrong with letting the parties to a short sale make agreements outside of the closing. They can agree to all sorts of things that are against the law and without the bank’s knowledge, but a common happenstance is over possession. Sellers sometimes have a hard time moving so they want to rent back, but most of the short sale arm’s length agreements prevent a rent back. Therein lies the problem.
Now, you can ask the bank for an extension but a short sale extension is not always possible. Especially if the bank has already issued an extension. A bank is not always eager nor willing to issue a second extension. I’ve had banks say they would close the file and start the short sale over. In some instances, that solution would be OK with a seller because not every seller is in a rush to move — especially if the seller isn’t making a mortgage payment. Free rent doesn’t come along every day.
I can tell my sellers we are closing on a certain day but that doesn’t necessarily mean they understand that they have to move out. Doing a short sale is an overwhelming process for many people. Each is different and can be convoluted, so it’s sometimes difficult to predict what a seller may or may not understand. But one thing is for certain. If a seller violates an arm’s length agreement and works out some kind of rent-back with the buyer, it might seem innocent but it can cost the seller big-time. If the parties agree to a lease back, for example, and the arm’s length prohibits such a lease back, it’s possible the bank could rescind the deficiency waiver.
There is a little clause in CA Civil Code 580e that says the deficiency waiver does not apply in the event of mortgage fraud. If a seller intentionally defrauds the bank, the bank might demand that all of that forgiven debt be repaid. Apart from the ethical implications, there could be legal ramifications and consequences to violating the arm’s length. My advice is just don’t do it. Don’t go through the headache and heartache of a short sale just to end up with the deficiency back in your lap.
It’s in a seller’s best interest to plan to move out on or before closing in a short sale. The agents don’t set the closing date, the banks do. And right now, because of the expiration of the mortgage debt relief act, many approval letters are coming in with fewer than 30 days to close. Everybody and their uncles are trying to hit that December 31 closing date.
Beware of the Short Sale Service Release
When writing to another agent today about short sale service releases, it made me realize how little the average consumer knows about this practice. A service release happens when a bank sells the servicing rights for a loan to another bank. Some banks are the actual investor, the entities that own the note, but many banks are nothing more than a collection agent for the loan. The bank takes the money from the borrower, pockets a fee for its services, and then distributes the rest to the investors. It has other duties outlined in the PSA such as handling the foreclosure, which pays the bank even more money. That’s one of the reasons why some banks can prefer foreclosure to short sale.
Bank of America seems to be in the middle of a big sell off. It is selling servicing rights to other banks. At first I thought maybe it was Fannie Mae who fired Bank of America, but it seems to be the other way around. In one such Sacramento short sale, we had put a pre-approved Bank of America Cooperative Short Sale into escrow. The seller had signed the Borrower Acknowledgement of Interest — known in short sale lingo as the BAI. This is not a commitment on the part of Bank of America but most people take it as such.
The short sale progressed smoothly, as most Cooperative Short Sales do these days. We received the counter in Equator, which removed a few miscellaneous fees from the purchase contract that Fannie Mae would not allow. Usually, when we approve the counter offer, we get the short sale approval letter anywhere from 24 hours to 10 days later. Instead of receiving the approval letter, though, we received a decline of short sale because the bank had sold the servicing rights to Seterus. Our old friend, IBM.
Seterus does not Cooperative Short Sales. Seterus does traditional short sales. Long story short, Seterus rejected the short sale. The seller did not receive her $3,000 relocation incentive. The buyer did not buy the home. The entire transaction blew up, and there was nothing we could do about it. The home went to foreclosure. If you don’t think service releases produce horrific results, here is one for the record.
