Email ElizabethMultiple Offers: Does it Matter Who Buys Your House?
Depending on to whom you speak, my position as a top Sacramento real estate agent could be enviable or unfortunate when it comes to giving my sellers intelligent advice about multiple offers and helping them to decide who should buy the house. After all, it is the sellers’ decision. It doesn’t matter if the home is a short sale or a regular equity sale, who buys the house is still the sellers’ decision. The seller owns the home and the seller is in control, making all decisions. I’m just that yappy little Yorkie in their corner trying to help them to make the right decision — which is the decision that is best for the seller.
As such, I sometimes slip on my sellers’ shoes, although I don’t walk very far in them. Like those Lady Gaga shoes. I’d probably break my neck trying to walk down the front steps in 7-inch heels. I step into my sellers’ shoes at times because I want to make sure they consider all of the information they need to make an informed decision and not just pluck a number out of the basket of multiple purchase offers.
You might be thinking, what’s the deal? The seller should take the highest offer, end of story. However, please hang on and bear with me; I propose there is more to the story. Whomever buys the house is the person who will take care of that house after escrow closes. After the agents collect their commissions, the seller pockets that big fat check, the keys tossed into a kitchen drawer and, lights out, everybody goes home happy as little clams, who bought the house might matter.
Was it an investor or an owner occupant? Why do you care? Does it matter who buys your house?
You care because it’s your neighborhood you are leaving behind. Your neighbors and probably your friends, the community in which you served, built memories and forged lasting relationships. Some of us believe we have a responsibility to leave the world in a better place after we touch it. One by one we can make a difference in our communities. We can help to transform and improve or we can help to destroy.
Sometimes, it’s as easy as deciding between what you would want for yourself if you were the person left behind. Or, what would you like to see in the neighborhood where you move? Do you want to move into a neighborhood as a homeowner in which half or more of the homes that were once owner-occupied have been converted into rental properties?
There are large groups of non-local investors buying up huge chunks of Sacramento for rentals and they are changing the face of Sacramento. These corporate investors are paying cash and do not always offer market value, either. Lately, I’ve been receiving lowball offers from these groups. Some are brash. I see unreasonable demands. And they are turning our neighborhoods in Sacramento, block by block, into rentals, away from owner-occupied homes, which once reflected our pride of ownership. Do first-time home buyers stand a chance against these cash-rich bullies? Who is helping the little guy to succeed?
Before you sign that purchase offer, think about does it matter who buys your house. You might have a choice. Consider what your mother might say. Then do the right thing.
Fannie Mae Short Sale Valuation Issues
If you have a Fannie Mae short sale in Sacramento — or just about anywhere else in the country — odds are pretty much two-to-one that you will have a problem with the Fannie Mae estimate of value. The BPO is probably fine. Don’t blame the BPO agent. It’s Fannie Mae, not the agent, setting values. Fannie Mae seems to ignore the BPO. It’s the amount that Fannie Mae may decide it wants to approve the short sale that is the problem. You may be aware of the changes to Fannie Mae implemented last November, which were touted as a streamlined approach but as usual seems to be more smoke and mirrors than anything else — a way to make it look like they are doing something proactive when it’s the opposite.
You may ask how do I know these things? After all, I am just a Sacramento short sale agent, plugging along closing short sale after short sale, and that’s one of the ways I know what’s going on. Because I see it with my very own two sparkling eyeballs nestled above my honkin’ nose, that’s how. And I talk to other short sale agents across the country. I read press releases, announcements and news stories. I’ve been working on Fannie Mae short sales for years. I’m one of the few agents in this country who have probably read from beginning to end every single Fannie Mae supplement issued, not only to the regular GSE short sale processes but also the HAFA short sales through Fannie Mae.
I know what you’re about to read may sound like a conspiracy. That alone might make it seem unreal or fabricated, but I assure you it is very real. I can also assure you that I am not one of those whack jobs who sports an aluminum foil hat and scribbles pages of dribble to newspaper reporters. I also have no idea why the valuation problems are happening except to draw to conclusion that Fannie Mae wants homes to go to foreclosure so they can try to pawn them off on unsuspecting first-time homebuyers at inflated prices through its HomePath financing program, which requires no appraisal and is almost always way above market value.
I apologize for the fact it has taken me 3 paragraphs to set up my point. My point is Fannie Mae is routinely rejecting short sales by demanding prices that are higher than the market will support. It doesn’t come right out and reject the short sale as that would be too easy. Fannie Mae inflates values. If a home is worth, let’s say $200,000, Fannie Mae will demand, let’s say $260,000. It’s happened to me. I called the BPO agent and asked her how much she estimated for the BPO. She told me $240,000. Yet, Bank of America said Fannie Mae wanted $260,000. We presented an offer of let’s say $240,000 all cash and Fannie Mae rejected it.
Next, the months trudged on. Five months later we try again, only now the offers are only $220,000. This particular home has no updates and it needs work. I requested a reevaluation at Bank of America the day before Christmas. The day after Christmas, the REDC representative told me the value had to stay at $260,000. She did not escalate this or ask for a new valuation or even request documents from me.
I went directly to Fannie Mae next and asked Fannie Mae itself to reevaluate. The new BPO was conducted and that BPO agent called me to say the value she estimated was, let’s say, $210,000.
At that point, Bank of America closed the file. I have opened the file again.
There is a petition started by our friends at Short Sale Superstars, which agents and the public can sign to protest Fannie Mae’s behavior. It needs 100,000 signatures by February 25th. We are short today 97,493 signatures. Will you please sign the White House petition to force Fannie Mae to behave responsibly and ethically and to stop Fannie Mae from rejecting short sales in favor of foreclosure?
Fannie Mae is a government-sponsored entity under the protection of the Federal Finance Housing Agency. It’s your tax dollars supporting the beast. Don’t be part of the problem; be part of the solution!
The Butterfly Effect on a Sacramento Short Sale
I received approval yesterday on a short sale in Roseville, and it was a long time coming. This was one of those deals in which the bank refused to believe that the seller had a hardship and we had to approach it from a different direction. This attitude is what separates this particular Sacramento short sale agent from other short sale agents in Sacramento, among other characteristics. When I believe in a transaction, I will fight it to the death, and I’m not talking about my demise or my sellers’.
See, I realize that the seller is typically right. If the seller has a hardship, the seller has a hardship. If the bank doesn’t agree, it’s because the information has not been either received by the bank or was interpreted incorrectly by the bank. Sometimes, it’s as Paul Newman put it: a failure to communicate. Just because the bank said no is no reason to give up. Especially if the seller has a case, and a documented case at that. Sometimes, you can change one little thing and it alters the entire outcome.
Now, you may not be a fan of Ray Bradbury, but a science fiction story he published on the day I was born pops into my head. The story is A Sound of Thunder, and over the years it’s been referred to as the Butterfly Effect — about a guy who goes back in time to kill a beast and royally screws up. The hunter is warned not to step foot off the path lest he change history. As these stories go, the hunter did indeed step off the path and he squashed a butterfly, which explained why history was altered upon his return. It was a different world. Some words had vanished, people behaved oddly and there was some new guy in office at the White House.
And that’s what can happen in a short sale. The Butterfly Effect. You’re not going to take Fox News off the air, but you can go back in time and rewrite a hardship letter or submit missing documents, and you can start over. You can change the outcome by fixing a mistake. You do not, I should point out, “start over again,” as that would be redundant. You only start over. If you say start over again to me I will want to whack your head with a ruler and scream at you about whether your slept through your English classes, but I will refrain. Because I know you did.
However, if you’re a seller in the Sacramento area who needs to do a short sale, call this Sacramento short sale agent, and I will do my best to close it for you. I am not agent who simply lists short sales. I am a Sacramento short sale agent who is hell bent on closing short sales.
The CalHFA Short Sale and CalHFA Financing
We are fortunate in Sacramento to have a wealth of information at our fingertips by our sheer location as the state of California’s capital. There are also a lot of really excellent real estate agents in Sacramento whom this agent over the last 10 years has had the distinct pleasure of working with, as well as your usual run-of-the-mill whack jobs. We won’t talk about the latter because they don’t deserve chatter, except to acknowledge the occasional irritant will pop up in this business and it’s best to just step over them and get on with the business of buying and selling homes in Sacramento. Keep a positive attitude, that’s my motto!
One of the highlights of lending in Sacramento is the California Housing and Finance Agency, aka CalHFA. They assist first-time home buyers buy a home by securing a small second loan to the home. For a brief time last week CalHFA had pulled all funding and threw the homebuying market into a further panic. But then something happened and suddenly I received a notice that the funding was restored. Not that it will help buyers in most markets because those buyers are finding they are getting clobbered by the cash and conventional buyers.
There is another problem some homeowners in Sacramento are facing with CalHFA, though. The problem that arises is when a seller needs to do a short sale and discovers that CalHFA loan that they forget about. Those CalHFA loans need to be paid or a small portion needs to be paid in order for the short sale to be approved. With CalHFA being a government agency, it involves red tape and the agency is backlogged. It cannot possibly deal with the number of short sales it is trying to approve within a reasonable time frame.
You basically have two choices nowadays with a CalHFA short sale. You either wait the 90 or so days for CalHFA to respond to your request for a short sale — at which point the first lender might close the file on you — or you pay it off. Last winter, I closed a CalHFA short sale in Natomas under unusual circumstances.
I told the buyer it would be at least a 90-day wait for CalHFA. The second loan was pretty small, less than $10,000. The way prices are moving in Sacramento, 90 days could mean the home would sell for another $10,000. It might be smarter just to offer to pay off the second, providing the first lender will allow it, and close. That’s exactly what the buyer did. Paid off CalHFA. Makes you wonder if the delay for this processing is meant to induce payoffs, but I doubt CalHFA is that together. I don’t give a government agency that much intelligence.
But on another CalHFA short sale, we’ve been waiting since the first week in November for short sale approval from CalHFA. Since yesterday marked the 90-day point that is allowed before escalation, I asked CalHFA to escalate. The first is Bank of America, which said it will not extend past the end of February. Low and behold a miracle happened. I heard goldfinches singing in the yard. The sun came out from behind the clouds. My cats stopped puking. Was that the first robin of spring hopping about?
The negotiator at CalHFA picked up the file and asked for a few documents. Be still, my heart. I’ll get right on that. I like to take care of requests immediately. So do most of my short sale sellers. The seller emailed the documents the negotiator asked for, I put together the reports needed and sent her the package. Within an hour, the short sale was approved. In one day! CalHFA approved it, and we’re closing in 2 weeks. This is the fastest turnaround ever. And naysayers believe a positive attitude doesn’t pay off. Spittooey.
A Private Group Showing is Not an Open House
If the idea just occurred to you that now is a good time for buying a home in Sacramento, you need to talk to a Sacramento real estate agent pronto. I’m not gonna say this is not a good time because I am a real estate agent, and in my playbook it’s always a good time to buy, but it’s not an easy time to buy a home. It’s difficult. Exceedingly difficult. When your real estate agent tells you there will be multiple offers, let me tell you, there will be multiple offers, and some of them will undoubtedly be crazy, wild offers.
Our inventory is very low. There are not a lot of homes to choose from in certain neighborhoods. Even the number of homes in Land Park, for example, are about half the normal. But in neighborhoods like Natomas and Elk Grove, I might run a half-mile to one-mile radius to pull comparable sales and find nothing for sale whatsoever. Everything is pending or active short contingent.
In most situations, we might want to give a wide berth of exposure to try to attract the largest number of offers and the highest number of offers. Ordinarily, an offer is good for 72 hours, unless the buyer changes the time for acceptance. This means if a seller does not respond to an offer within 3 days, the offer expires. It’s no longer on the table. So, what’s a seller to do who wants to maximize exposure? Keep it on the market with instructions to review all offers on a certain day in the future.
In short sale situations, the approach might be different. It all depends on who the seller is and whether the seller is in an emotional state to handle the volume of traffic generated by this type of seller’s market in Sacramento. In some areas, it can be brutal. Buyer’s agents calling at all hours of the night, showing up without calling, parking on the lawn, barging in without an appointment when an appointment is required, this Sacramento real estate agent has heard it all. These are desperate times, but they do not call for desperate measures nor for losing one’s professionalism.
In a short sale, we need one offer at market value. An offer that will appraise as well. An offer from a committed and dedicated buyer. We don’t need 55 offers. Just one that will close. If it’s cash and the buyer is serious, that’s a good sign, too, but it doesn’t mean that a cash offer will win out over a financed offer. Cash buyers can sometimes be distracted by shiny new things. Owner occupants, buyers who want to buy a home to live in, tend to be more committed.
The approach to marketing a home and receiving / presenting offers differs with each situation and is tailor-made for the individual seller. There is no one-size-fits-all. Now, more than ever, the confidential agent remarks in MLS are crucial for a buyer’s agent to read prior to submitting an offer.
We’ve had situations in the past in which the confidential remarks stated showings would be held on a certain day for a two-hour period. Buyer’s agents need to accompany their buyers on a showing. That’s how the real estate business works. Buyer’s agents cannot simply send their buyer over to the property because the buyer’s agent is unavailable on that day. No buyers will be admitted to a seller’s home if the buyer is unaccompanied by an agent. This is not an open house.
My sellers are instructed not to let strangers inside their home. A buyer’s agent needs to produce a business card at the door. If the buyer’s agent sends over an unescorted buyer, we can certainly arrange for another agent to represent an unrepresented buyer or we can send the buyer back home to get her agent. After all, buyers don’t have access to the confidential remarks in MLS. Moreover, it’s important to understand that a private group showing is not an open house.
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