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Elizabeth Weintraub
Let’s Talk Like a Pirate About Sacramento Short Sales
What do you say to a biker whose motorcycle is blocking your car? Probably the same thing you’d say to a short sale negotiator, but then I’m not Myrl Jeffcoat. And Myrl Jeffcoat would most likely not be talking to a short sale negotiator regardless of how great of a Sacramento REALTOR Mryl might be because Myrl doesn’t particularly want to do short sales. Myrl is not a Sacramento short sale agent like insane REALTOR Elizabeth Weintraub, but that doesn’t mean she can’t appreciate the horror stories.
Since it was International Talk Like a Pirate Day yesterday, Myrl and I went to lunch in Land Park to celebrate. We parked in front of The Golden1 over on Broadway. The security guard made me re-park my car more efficiently because it was his job to stand in front of The Golden1 to ensure that there are at least 3 parking spaces at all times in front of The Golden1. I suppose he’s also there to shoot the little old ladies from Target who might try to rob the credit union. I hear that bank robberies by women are on the rise, and I’ve got to say you’ve come a long way, baby. Or, maybe men just want things done more efficiently. Hard to say. I’m not gonna argue with a security guard who gives me a free parking spot in front of The Golden1. I deal with short sale negotiators day in and day out, and you just give them what they want. You don’t argue.
Although, yesterday, a negotiator at AMS called; she was a bit flustered. AMS is a third-party vendor for Bank of America, which is my favorite, favorite, short sale bank. Oh, say what you will about B of A, maybe it’s simply the devil I know, but I love doing Bank of America short sales. This negotiator had asked previously for the seller agency. It had not been uploaded to Equator because there was no task for it. She had opened tasks for 2 other things but not the seller agency.
I thought this for a minute, and it dawned on me that this negotiator most likely had no idea what a seller agency was, so why did she want it? I asked her. She wanted it because the buyer’s agent had sent an extra copy with the offer, and the extra copy was not signed. Her job is to get signatures. I took the time to explain agency disclosures. How they work. Why we sign them. And asked if the seller had signed agency disclosure on a document with the buyer and the buyer’s agent. Yup, they had. So we were good, and she did not need another document. Once the negotiator understood this, she withdrew her request. This short sale was submitted for approval.
On the other hand, after lunch at The China Buffet, Myrl and I started to walk back toward my car. Myrl stopped at the bar, adjacent to The China Buffet. She stuck her head in the open door and announced that the owner of a motorcycle was blocking a vehicle in the parking lot. She demanded they remove it. At first, I wondered why Myrl cared about somebody else’s car. It seemed like she was about to provoke a biker who was drinking at noon inside a bar. Myrl is a lot smarter than that. I looked again at the vehicle. It was a Mercedes. I used to drive a Mercedes but I bought a new car last year; although German, it is not a Mercedes.
Oh, wait.
Well, I pondered the situation and decided I did not know Myrl. Nope, I believe this woman is a complete stranger to me, and I would keep right on walking. Yes, I believe I will walk across the street and stand on the sidewalk to see how this plays out. You know, she watched me park in front of The Golden1. She watched me walk back to my car and move it to a spot that made the security guard very happy. And now she was yelling at a biker in a bar. Perhaps she should talk like a pirate about Sacramento short sales and that will get her out of that bar alive.
This is one of the reasons I really enjoy hanging out with Myrl Jeffcoat. There is never a dull moment. Unlike this other short sale with Bank of America. It’s an FHA short sale, so it’s not in Equator and is a whole other animal. We’ve been working on it since February. Let’s just say the HUD procedures at B of A are a tad flawed but they can’t be the king of all short sales. I’m grateful for the traditional and the Cooperative Short Sales. The FHA short sales are the price to pay for those. It’s a tradeoff.
Our negotiator at Bank of America promised after all of these months she would approve the short sale on Wednesday. Said as soon as we got her the extension from Citimortgage (there is a second loan who approved months ago), she would issue the approval. We were so excited. We emailed her to remind her of her promise to send the approval letter. In exchange, we received this email (I kid you not):
I will be out of the office starting 09/19/12 for an undetermined amount of time. If you have any questions or concerns, please contact New Negotiator assigned to the file. Customer Service phone # 866.880.1232.
I can see that it’s time to Tweet the Bank of America Social Media Team. Arrr, me mateys and drunken sailors. Yes, let’s talk like a pirate about Sacramento short sales.
How to Buy a Pending Home in Sacramento
Sometimes, a Sacramento home buyer is in the right place at the right time. Or, better put, sometimes their Sacramento REALTOR is in the right place at the right time, and that means having her finger on the pulse of MLS. You’d be amazed at how few times during the day any given real estate agent gazes upon MLS, but that’s where one will find all of the action. Ya gotta cruise the news. If you think you can’t buy a pending home in Sacramento, think again.
Say, for example, that you are a Sacramento listing agent, and you’ve got a buyer who isn’t exactly cooperating. You might think: oh, who would do that in a seller’s market? A person like that would have to have a screw loose. But you would be surprised. Maybe it’s the buyer’s agent who has stopped responding to emails or phone calls. You might be astonished at how many agents struggle with communication issues or simply ignore attempts to reach them. There might be a contractual obligation that needs discussing such as putting an earnest money deposit into escrow, and maybe that hasn’t happened. That’s a warning sign a contract is about to be canceled and you might be able to buy a pending home in Sacramento. Or, maybe the buyer needs to release contingencies, and his 17 days has come and gone. Another warning sign. If you’re that listing agent, how would you get the word out to buyers that a listing might be coming back on the market soon?
Personally, I favor those big lights in the sky myself. Those honkin’ beams. Our days in Sacramento are getting shorter. Maybe with a bat insignia, like Batman. But I don’t have any of those. Can’t remotely run a scroll across the bottom of anybody’s iPhone like a CNN ticker tape. So the next thing that’s available is to do two things:
- If the purchase offer was more than the list price, raise the price in MLS and
- Slip “bring backups” next to the pending status in MLS.
It’s like going fishing. (Increased sales prices tend to gather more attention in MLS than a price decrease.) Minutes after that’s done, low and behold, this Sacramento REALTOR got a bite. I received an email from an inquiring buyer’s agent. She had shown a particular home in Sacramento to the buyer, and the buyer was very disappointed when it suddenly went into pending status, like they’re all doing right now. The buyer wrote an offer as a backup offer. Tip: To write a backup offer a seller can legally sign, one needs to submit a document that puts the offer into backup.
The seller signed the backup offer and issued a Notice to Perform to the buyer’s agent. The buyer failed to perform, so strings were cut and the new buyer slipped into place without this home ever going back on the market. So, if you are a Sacramento home buyer you might ask your buyer’s agent to glance over at MLS inventory several times during the day to see if there are any homes in pending status in which the seller wants a backup offer. This just might be your lucky day to buy a pending home in Sacramento.
Selling a Home and Buying at the Same Time in Sacramento
I stopped by yesterday to visit with a nice couple who are thinking about selling and buying at the same time. They want to sell their pool home in Citrus Heights and buy another home. Their challenge is similar to other sellers in Sacramento. Because it’s a seller market, undoubtedly their home will immediately sell. The problem is buying a new home. There are more home buyers in Sacramento than homes for sale right now. So while you can easily sell, it might be a bit of struggle to buy. For some, selling a home and buying at the same time isn’t gonna happen.
To give you an example, just 5 short years ago, we had more than 10,000 homes for sale in the entire county of Sacramento. Today, we have fewer than 1,800 homes for sale. The numbers work out to about an 82% percent drop in inventory. That’s an astounding number. Not only that, but with interest rates below 4%, buying a home means a buyer will most likely pay less than it would cost to rent a home. Since investors can now receive positive cash flow, those guys have thrown their hats in the ring, too, and it’s like a war zone out there.
I tell you this, if you’re in escrow right now, stay there. Don’t get fancy schmancy ideas about asking a seller to fix a leaky sink or think about trying to renegotiate a sales price. If you’re lucky enough to have a home to buy, count your lucky stars. Kiss the ground you’re walking on. And thank your Sacramento REALTOR, who probably had something to do with it.
One of my Sacramento home sellers found a home to buy over the weekend. She was in an excellent position because her buyer had removed contingencies. So, it was a contingent offer without much of a contingency. Sometimes, agents get a little testy when we ask for a Contingency Release but it’s extremely important. It means the buyer is committed. We ask for a Contingency Release for every transaction, whether the seller has equity or it is a short sale, it makes no difference. The buyer must release contingencies or the seller just might cancel the buyer.
This seller had no trouble selling a home and buying at the same time. She was able to sell her home in Sacramento and buy another home in the Pocket. Plus, she was up against multiple offers. Her offer won because she was represented by the Elizabeth Weintraub Team. I sold her home, and my team helped her to buy a new home. Was it easy? For her family, it was. But that must be why we make the big bucks.
Closing Costs for a Sacramento Short Sale
Let’s start with who pays the closing costs in a Sacramento short sale? Is it the bank or the seller? If we’re talking about the seller’s closing costs, then the answer is it’s the seller. Surprise you? It shouldn’t when you stop to think about it because it’s the seller who owns the home. People often get confused when it’s a short sale, and they tend to think the bank pays the closing costs and, in a way, the bank sorta does, but not really. Because the bank is not the seller — a short sale is not a foreclosure, not an REO. It’s a voluntary sale by the seller that is authorized by the bank.
One of the reasons the bank authorizes the short sale sale is to mitigate losses. Another is to make sure that home in Sacramento won’t sell for a higher price through foreclosure. This is the formula for short sale: Short sale price less closing costs and commissions equals net to the bank: SP$ – CC+C = payoff to bank. If the bank can reduce the closing costs, the bank gets a bigger check.
Then, along comes a buyer who often wants her closing costs paid, too. Buyers often ask will the bank pay closing costs for a buyer on a short sale? If you don’t have to ask, then don’t ask. I’ll tell you why. Because if the seller receives an offer from Buyer Angie who needs 3% of the sales price to be credited to her as closing costs and an offer from Buyer Andy who can pay his own closing costs, which offer will the seller take?
Now, you might wonder why it makes any difference to the seller since none of the proceeds will land in the seller’s pocket. But it does make a difference to the seller of that Sacramento short sale. It makes a difference because if after waiting 60, 90 or 120 days for short sale approval, the buyer might walk away if the bank refuses to approve payment of closing costs for the buyer. Does the seller want to wait 60, 90 or 120 days only to go through the process again with a new buyer who can pay his own closing costs? No, the seller wants to close with the first buyer.
Which buyer has better odds of closing? Angie or Andy? Of course, it’s Andy. In a multiple-offer situation — and yes, even Sacramento short sales are receiving multiple offers — a buyer who can’t close without a closing cost credit is likely to lose.
Photo: Elizabeth Weintraub, McClatchy Library, Midtown Sacramento
Selecting a Land Park Agent as a Dual Agent
When a Sacramento home buyer says she wants only to talk to the listing agent, that is generally not good news. I often ask: Why? Is the house on fire? Because I’m telling you, if the house is not on fire, telling the listing agent that one wants to deal only with her is absolutely insulting. It’s insulting, it’s irritating and it’s idiotic. There, you have three I-words to describe that kind of thinking. It’s implying that the listing agent is unethical at best and establishes an adversarial relationship at worst.
True story — some years ago, my neighbor decided to buy a home in Land Park. Because I am a Land Park agent who lives in Land Park, she asked me to show her homes in Land Park. We worked together for several months. She said her reason for selecting me was due to the fact that Lyon Real Estate is the market leader in Land Park. She figured our buyers hear about new listings first, they get an edge, and they do. Then, all of a sudden, her enthusiasm vanished. She said she no longer wanted to buy a new home. I guess she figured I would never find out what she did, but there are no secrets in real estate. Certainly not in Land Park real estate.
Despite the fact that she had signed a buyer’s broker agreement with me, she went directly to the listing agent at a competing brokerage and bought a home. When I asked her why, she became very sheepish and apologetic. She said she asked that Land Park agent to represent her because she believed if she did not, she would not have been the lucky buyer to buy the home. There were multiple offers at that time. She truly felt that she had to make sure the listing agent would be paid both the listing commission and the selling commission in order for her to have a shot at home ownership. In other words, she wanted an agent who would throw her grandmother under the bus. She evidently found one of those.
There are Land Park agents in Sacramento and elsewhere who will give priority to their own buyers with their own listings, I’m sorry to say. That kind of practice is unethical, but they do it anyway. Who’s to prove it? That’s the nasty underbelly side of real estate. Everybody suspects it exists but nobody talks about it.
The implication when home buyers want to buy only from a listing agent is that the listing agent will do whatever it takes to put the deal together. It’s saying we agents are motivated solely by greed. It’s saying maybe we will push the seller and persuade the seller to take a buyer’s lowball offer because we’ll get paid more money for a lowball offer than we would to suggest the seller take a higher offer from a buyer represented by a different agent. I know very few agents like that. But buyers seem to think these kinds of agents are a dime a dozen. A few bad apples give all of us a bad name.
This particular buyer called me again many years later. She noted that I am a prominent listing agent now, having worked my way up the ranks. I am a top producer. I list more than a 100 homes a year. She asked me to work with her. She is still working with a Land Park agent but asked for first shot at my listings, too. Now, she wants to buy investments.
I don’t throw my sellers under the bus. I don’t play favorites. I don’t give priority to anybody but to the seller whom I directly represent. That investor is barking up the wrong tree. If I personally represent a home buyer, my agency and duty is to that buyer. If I personally represent a home seller, my agency and duty is to that seller. I don’t want to mix the two through direct dual representation. It makes people uncomfortable, and it makes me uncomfortable. That’s not to say if a Team Member represents a buyer it won’t show up as dual agency at closing, but I prefer a little more arm’s length.
I never want to feel conflicted about fiduciary. Without saying, ethics is important. That’s one of the secrets to my longevity in real estate and why I’ve lasted more than 35 years in this business.
