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Elizabeth Weintraub
Can a Sacramento Short Sale Agent Give Legal Advice?
Not only am a top producer who sells Sacramento real estate, but I also have a second job. I just returned from an About.com conference in San Francisco over the weekend. Some of you may not know that I write for About.com as its Guide to Home Buying, and I’ve been building and maintaining that website for 6 1/2 years. Whenever About.com hosts a conference west of the Mississippi, I try to attend. I always learn something new. One of the new things I learned at the About.com conference is Google no longer rewards SEO efforts in the same manner that it used to. Now, rankings are based more closely on authority. Which is excellent news for me. I’m not a big keyword stuffer.
But I am consistent. I write every day no matter what. I write about real estate in Sacramento and mostly about short sale transactions because short sales are what’s selling in Sacramento. I rank in the top 1% of agents at Lyon Real Estate, which is the largest independently owned real estate company in Sacramento. If I lose a ranking spot in Google to, say, HUD, it’s not that important to me. I am still found in the top 10 results on page 1 for hundreds and hundreds of real estate searches and real estate questions. To my readers, that makes me a real estate authority.
The problem with this is I am easily locatable. Thousands of people across the United States annually write to me and ask questions about short sales and real estate. I am a Sacramento real estate broker, so my phone number and email is in plain view. However, I am not a lawyer. I don’t practice law. I don’t give legal advice. Even if I know the answer, I can’t tell anybody. I sell real estate. I am paid a commission to sell houses, one by one. If I am selling a short sale, I am still paid a commission from the proceeds of sale. The law is very clear about what a real estate agent can and cannot do, and we can’t talk about legal matters with authority.
When I explain this to clients, they nod, say they understand, and then they ask me a legal question. Hypothetically speaking, you understand. Nope, still can’t answer it. If you need legal advice about a real estate matter, you absolutely, positively, without question, need to obtain that advice from an entity capable of giving it to you. That entity is not a Sacramento REALTOR. That entity is a real estate lawyer.
Will the bank release me from liability? Legal question. Does this short sale approval letter contain verbiage that protects me from a deficiency judgment? Legal question. Will doing a short sale stop the foreclosure process; how does SB 458 apply to me? Legal questions. If you don’t know the answers, you need a lawyer, not a REALTOR.
When I go to a client’s house, it’s to put that home on the market. I shoot professional photographs. I prepare my agent visual inspection. If there are ways to improve the showing condition, I share those thoughts with the sellers. Perhaps we want to do a bit of home staging or prepping. I generally find a good spot for the lockbox. We sign listing paperwork. We don’t discuss the legal aspects of the real estate transaction because I am not a lawyer. I suggest to all clients that they obtain legal and tax advice. Do they need it? I dunno. Maybe, maybe not. That’s for each client to determine.
If they need a terrific Sacramento real estate agent, they’ve come to the right place. I’ll get that home sold, and I guarantee my performance. Have over 30 years in the business. But I do not give legal advice. No reputable real estate agent would ever try to perform a service that she is not licensed to perform.
Personal Property is Not Free for the Taking in a Short Sale
A client described what it felt like to show his home in Sacramento as a short sale to buyers. It wasn’t pretty. He said he felt like he was standing up, trying to balance in a canoe, as he beat circling buyers with an oar to stop them from climbing into the boat. On the one hand, it’s nice that somebody wants to buy his home. On the other, it’s like a feeding frenzy.
For some sellers, it is painful to sell their home as a short sale. It’s not always a choice they come to make easily. After years of struggling, some reach the end of their rope and realize it’s a necessity. These sellers have often struggled through failed loan modifications, struggled with other family members and even struggled with their own conscience because a short sale doesn’t always feel “right” to everybody. When they finally make the decision to give up their home — and giving it up can feel like personal failure to some homeowners — they don’t need a buyer to come along and kick them in the gut.
What am I talking about? These are the buyers who feel it’s OK to ask the seller to leave behind personal items. Things like the refrigerator or washer and dryer, which are not fixtures. Maybe they want the dining room table or bedroom furniture. The sellers personal belongings are not part of the short sale. Non-fixtures do not remain with the home. If you spot a 1965 Mustang in the garage, don’t wet your lips and demand the keys. Don’t assume the sellers are vulnerable and will cave in to unreasonable demands. A Sacramento short sale is not a flea market. Everything you can see with a naked eye is not negotiable. Personal property is not free for the taking in a short sale.
A Twist in the Sacramento Real Estate Market
I’ve noticed a slight difference in the Sacramento real estate market this week. It’s a sign, I believe, that the market is struggling to head north instead of south. I wouldn’t say we are headed for full-blown appreciation by any stretch of the imagination but it is a positive signal that we might be pulling out of this real estate slump in Sacramento. It’s the piece of evidence I’ve been watching to emerge and have not yet witnessed until this week. We’ve monitored small median price change increases in year-over-year monthly stats, but not this.
I prepare offer tracking sheets for each of my listings. That way, if I need to know years from now about the offers I had received for any particular real estate listing, I’ve got that information at my fingertips. Each of these sheets give me an overview of what happened. For the first time since 2005, I’m receiving over-market offers from investors who are paying cash. That’s the sign I’ve been waiting for. I disregard the first-time home buyers. It’s the investors I watch.
For months now, multiple offers in Sacramento have been the norm. That’s due to low inventory, low interest rates and high demand. It’s cheaper to buy in the buy or rent scenario. When it’s cheaper to buy than to rent, it also means investors will get positive cash flow even if they finance a home. So, investors and first-time home buyers have been competing, often for the same home.
Here is something to understand about first-time home buyers. When a first-time home buyer bids over list price for a home, that home buyer is not taking extra money out of her pocket. She is rolling the excess into her mortgage. So, it’s not really costing her a lot of extra money to make a purchase offer over the seller’s asking price. If she offers an extra $5,000, her mortgage payment changes by about $30. That’s peanuts. Using that formula, at 3.5% interest, she can bid $15,000 over list price and still not change her mortgage payment by more than a hundred bucks. Of course, it might not appraise at that amount, and therein lies the major problem with first-time home buyers overbidding.
If there are no comparable sales available at that price, the appraiser won’t submit a value at the purchase contract price. If the buyer gets a low appraisal, her only solution to move forward is to pay the $15,000 difference out of pocket, in cash. Most don’t have that kind of cash and, if they did, they wouldn’t pay over market with it. Not just for the opportunity to buy a home, nope. Unless they would. Unless they were that desperate to buy a home.
Not only am I seeing owner occupants who are willing to play all loosey-goosey with cash, but now investors are, too. Investors are no longer guarding their cash like a precious commodity. They are willing to pay above market value, because that’s the last thing to give in negotiations. It’s no longer enough to pay cash. Now, it’s got to be over market. That’s what it takes to make prices go up. An investor who is willing to pay more than the going rate. Investors who pay over market result in higher comparable sales. Higher comparable sales pave the road for higher appraisals, which opens the flood gates for first-time home buyers.
The kink in all of this is sellers don’t seem to be aware of this new twist. When I tell sellers about the market, they look at me like I just landed here from Mars. Do I have spinach in my teeth?
I predict a very strong 4th quarter for 2012. I believe when we look back at the numbers in the spring, our Sacramento real estate market will blow your socks off. This is a fabulous time to be a seller or a listing agent in Sacramento.
Taxes for that Sacramento Short Sale
Time is running out to avoid paying taxes on a Sacramento short sale. The 2007 Mortgage Forgiveness Debt Relief Act expires on December 31, 2012. This is the law that exempts a short sale seller from paying taxes on forgiven debt for a personal residence. Will the law be extended? Most likely, if the past is any indication and the future continues to be as uncertain as it is. You know how they say history repeats itself. That’s because it does. And we have an election year. It’s in the 2013 budget.
Some of you may not recall what happened last go-around with this short sale tax issue. When it expired, it was not renewed right away for the following year. Sellers were closing short sales fearing the worst: that not only did they lose their home, but now the government would be sticking outs its hand and taxing them on the short fall difference. We had California taxes to deal with at the same time. It was a scary problem. Congress dinged around on the short sale taxation extension and finally granted the extension. Then our California exemption came through, too. Just in time for taxes. And it was made retroactive. We were all biting our fingernails.
I am working on a Bank of America HAFA short sale. Yeah, I know, I’m a sucker for punishment. I have a few of them. You can read all the government rules for HAFA about the timeframes to process a HAFA short sale, and they are pretty much meaningless. It takes Bank of America a good 4 months, on average, to approve a HAFA short sale. If you’re teamed up with a Green Tree mortgage in second position, God help you. Green Tree closes files after 90 days. So, you can see the problem. Not only that, but after 6 months, Green Tree sends its loans to charge off. It’s better not to have a short sale charge off if you can avoid it.
This particular seller is very concerned that she won’t close this year. I believe she will. It’s been 9 months already. You can get pregnant and give birth in that period of time. Bring a tiny new life form into being. But that HAFA short sale at Bank of America can’t close within a reasonable timeframe.
Your safest bet is to close your short sale escrow within the confines of the 2012 calendar year. That way there is no question. But if you have to rollover into 2013, do so knowing it’s a risk. Although, a calculated risk. Do you think the government will hang all of these short sellers out to dry? This Sacramento short sale agent says probably not. Not if history repeats itself.
Elizabeth Weintraub Earns Top Agent at Lyon Real Estate
The managing broker of Lyon’s downtown office called me yesterday to report the Elizabeth Weintraub Team is #1 in the company for August. That makes me the top agent at Lyon Real Estate, number one. I can’t believe it. She says my production is over $5.3 million for last month. That’s a lot for 30 days of work. That’s especially a lot when my average sales price is less than $300,000. Sometimes, I sell condos for $50,000. I can’t verify that number because, to be honest, I’m too busy and it’s not a top priority. Who has time to count pennies?
I figure August must be a good month for everybody in Sacramento real estate. I know August is the month that all the agents at Lyon Real Estate have to pay for Errors and Omissions insurance, plus legal representation, and those fees are pretty hefty. So, if I was the head of Lyon Real Estate — which I need to point out I am not — I would probably charge agent’s statements in the month that agents are likely to have the most closings. That would ensure a more likely payment.
Squeezing money out of agents is probably harder than it sounds, knowing agents like I know real estate agents. So, that would mean the month of August is probably the biggest month of production for most agents in Sacramento.
If that’s the case, then it’s pretty cool to earn status as the top agent at Lyon Real Estate for August. I don’t know how many agents work at Lyon. I’d guess it’s around 1,000. I have to give the credit to my Elizabeth Weintraub Team members, though, and I’m not just saying that because that’s what you’re supposed to say. The truth is I could not do what I do without Barbara Dow, Linda Swanson and Shaundra Bradley. Not to mention, my escrow officer, Dawn Herlache and her assistant Jennifer Baranoff, at Placer Title. And of course the guy who closes mortgages for our buyers, Dan Tharp, at Comstock Mortgage, is incredible, and I often receive glowing reviews of him. There are also behind-the-scenes players, the office assistants and managers who cover my butt every single day. I suspect they also take care of crap that I never even hear about.
Funny thing yesterday an agent whose offer was accepted on one of my Sacramento short sales called me the No Drama Agent. That’s his nickname for me. We closed a transaction a few years ago, and I guess my demeanor struck a chord with him. I don’t have any respect for drama, and drama is unproductive and a stupid waste of time. Maybe that will be my new motto: the No Drama Agent.?
