Email ElizabethHow Many Short Sale Offers Go To The Bank?
Short sale agents and yes, even lawyers, sometimes struggle with proper protocol regarding the handling of short sale offers. If you’re new to the short sale arena, you might not even know who is a party to a short sale. You might think the bank is a party to the short sale. I’ve yet to see a spot in the purchase agreement for a short sale bank to sign. Banks are a component as a contingency but the short sale bank is not a party to the short sale.
Even sellers get confused. I’ve had sellers ask over and over if the bank is paying the costs of the sale. It can be argued that the costs of sale are reducing the net proceeds to the bank, and that part is true. But the bank does not own the property. This is the thing people forget. The seller owns the property, and therefore the seller is paying the costs of sale. The bank is interested and approves the costs of sale only because if costs can be reduced, the bank’s check goes up.
The short sale is contingent on bank approval, but the bank does not sign the short sale offer. The bank approves the purchase offer agreed to between the buyer and seller. Unless the Sacramento short sale agent signs an agreement with the bank to get the bank the highest price possible, the parties to satisfy are the seller and the buyer. Of course, a wise short sale agent knows the bank will base, in part, the decision to approve the short sale on the BPO. This means the agent submits an executed purchase contract that will meet market value.
It’s a major mistake to believe that the short sale banks expect to receive every offer submitted to the seller. The bank wants to see the offer that is sufficient to net the bank an acceptable amount. The bank wants to see the offer that the seller and buyer have accepted. The bank wants to see the offer from the buyer who is qualified, committed and dedicated to closing the transaction. If a short sale agent sends a bunch of offers to the bank, it signals the agent is clueless, and the bank will most likely reject all of the offers.
Death Qualifies for a Short Sale
I suspect you’ve landed on my blog with the thought she is NOT going to talk about death and a short sale. But you would be incorrect or maybe you just don’t know me very well yet. I’ll talk about anything I darn well feel like on my blog. If you’re not interested in matters surrounding death, all I’ve got to say is you are going to be very surprised one day. That old grim reaper is hanging around and not just around us old people. You can’t escape it. One day you’re laughing and joking with friends, and the next day, bam, somebody is dead.
You just hope it’s not you.
I haven’t seen very many dead people myself. Once, driving along the Biz 80 freeway in Sacramento, I saw an upside-down Corvette. The windows were open. The driver was still in the car, shirt unbuttoned and this huge stomach was bloated and bare for all the world traveling by to see. I guess it took paramedics a long time to get there. They were probably stuck in a traffic jam on the other side of the road. Because even people on the other side of the road were slowing down to gawk. You don’t want to look but you do. It’s kind of human nature. I felt sorrow and horror for this dead person in the Corvette.
If this guy in the Corvette had a home that was upside down, the same as he was, his joint tenancy partner or tenants in common partner could sell that home as a short sale. Because death qualifies for a short sale. Even if his heirs were not on title to the property, they can use death as a qualifying factor to get rid of the house. Doesn’t matter if it’s Fannie Mae or Freddie Mac or which bank is servicing the loan. There is no getting around it, death qualifies for a short sale.
To do a short sale involving a dead person, you need a recorded copy of the death certificate. It might take a while to get the death certificate, especially in Sacramento. I guess it depends on where the person kicked the bucket. If a person died in the hospital, I hear you get a death certificate a lot faster than if you came home and found your ex-husband dead in bed. That’s what clients tell me. I don’t have any first-hand experience myself.
But I do have a lot of first-hand experience selling short sales in Sacramento. I’m a competent and veteran Sacramento real estate agent. I am, in fact, working on two separate short sales this week involving spouses who have passed on. These are different than a strategic short sale or a short sale involving loss of income, for example. There is a lot of grief and bereavement. Pain. People need to talk. I listen. I’m not just in the real estate business. I’m a person, too. If somebody has died in your family and you need to sell that Sacramento home as a short sale, call Elizabeth Weintraub at 916 233 6759. I know what to do. Remember, death qualifies for a short sale.
Bank of America FHA Short Sale Approved
Wow, a Bank of America FHA short sale started in December of last year finally closed escrow in November. It took 11 months to close the sale of this Rancho Cordova home. And this was an escrow in which the seller hired and paid a lawyer to negotiate. They did this before they called me. I was hired solely to sell the short sale, not to negotiate, which is a little odd but OK. I do whatever my clients want.
A representative from the Sacramento law firm called the Bank of America negotiator at one point almost every single day. It’s not just a Sacramento short sale agent who struggles with the B of A FHA Short sale processes. Lawyers can fare even worse.
I’ll tell you who has the hardest job in all of this. It’s the buyer’s agent. It’s that Sacramento buyer’s agent who is saddled with the job of having to call that potential homeowner every week or so to explain what’s going on. These agents have to give plausible reasons for the delay yet continue to build hope in their client’s heart. It’s not an easy job by any stretch. Half the time the buyer’s agents don’t know what’s going on because nobody tells them anything. They are not allowed to talk to the short sale bank.
I understand how difficult that job is, and that’s one of the reasons I post my updates online. Yeah, right on my website, you can read Sacramento short sale updates. Buyer’s agents and their buyers can access daily updates. Each property is identified by the street name without the house number. No personal information of either the seller nor the buyer is divulged. It’s mostly actions committed by and requested by the bank so all parties to the transaction can monitor the movement. My Sacramento short sales do not fall into a black hole. Anybody and their Uncle Joe can see that I am constantly on top of my short sales. I am held accountable for my actions.
Which is more than one can say about Bank of America and its FHA short sales. Unfortunately.
You see, there is nothing that I can really do about a Bank of America FHA short sale. Especially when I am not negotiating it. I am not an agent who farms out her negotiations to another short sale negotiator. I care about my clients too much to do that. (Although, sometimes it is necessary to bring in a lawyer, but that’s rare.) I do my own work. I am hands on. As a result, I have learned that I can lessen the damage, the heartbreak, the disappointments by not putting that short sale on the market until we have the Approval to Participate from FHA. That’s the only way I have found to shorten the 8- to 12-month wait for approval on an FHA short sale at Bank of America. After receiving the Approval to Participate, that wait is only 4 to 6 months, and that’s not half as bad.
A Home Buyer Almost Lost Her Rosemont Home
I just closed escrow on Friday for an incredible couple of sellers of a Rosemont home who had moved to Florida. They had owned a rental property in which the tenant had vacated and it was now time to sell. An agent in Florida referred this couple to me. I think the agent found me through one of my blogs and noted that I sell homes all over the Sacramento area. Because I sell so many homes (100+ /yr), odds are I probably sell a lot in any one area, and Rosemont is one of those neighborhoods for me. I know it pretty well. And I knew this particular home might pick up comparable sales from a nearby subdivision, which has a higher per median square-foot-cost than the surrounding neighborhood. Which meant if we positioned this correctly, the sellers could probably get a bit more for this home than they would otherwise.
I look to maximize profit for my sellers. That’s because I really enjoy what I do. It makes my sellers happy as well. I feel like I’ve done my job above and beyond when sellers walk away with a lot more money in their pocket than they thought was possible. Being a Sacramento real estate agent is one of the greatest jobs in the world. Being a top producer is even more fun, if you can imagine that.
The sellers had finished painting, making a few repairs, and buying a new microwave. The home in Rosemont looked great. Even the door knobs glistened. A bunch of offers arrived. One of them was all cash from an out-of-state investor (warning bells), but the buyer’s agent swore up and down the investor would perform. Easy peasy guy is what he said. Exact words. Except the investor was anything but easy peasy and the agent failed to respond to requests for documents. My recommendation to the seller was to drop the buyer. Fast. Like a hot potato. Because the Sacramento real estate market is too danged hot in itself. It’s a seller’s market right now, which means there are a lot of buyers competing for limited inventory.
Sure enough, we went back into escrow immediately with a new buyer. She wasn’t cash, though. She needed an FHA loan. And the appraisal came in a little bit lower than the asking price. That’s the problem with buyers who use financing. They must rely on a Sacramento appraisal. If they don’t have the cash to bridge the gap between the appraised value and the sales price, they risk losing the home. The difference wasn’t that great, though, and it was still more than the seller had hoped to receive, so the seller elected to move forward at the new sales price.
See, that’s the problem with an appraisal. Appraisals are not chiseled in stone. An appraisal is just somebody’s opinion of value. Could be a person of great integrity and intelligence who prepares the appraisal or it could be a lame-ass doofus who couldn’t find his way home with 3 maps and 2 flashlights. You just don’t know who you’ll get.
After we moved forward with the appraisal, the buyer’s lender simply could not close. It’s like an epidemic sweeping Sacramento: lenders who can’t close. Not on time anyway. They might say whose time frame are you looking at — is it the purchase contract that gives us only 30 days, which isn’t enough time to brush our teeth much less brush our hair? Or, is it our time frame, which is somewhere south of the border, west of the International Date Line and in another century?
The escrow dragged on and on and on. The buyer’s agent submitted an extension. Then another extension. The sellers questioned whether they should sign it. At this point, it might make more sense to just rent out the home in Rosemont, put it on the market next spring and deal with the new influx of buyers. Or, not. It was enough to give the buyer a heart attack. See, this is the importance of selecting a mortgage lender who can perform and not some group that can’t close on time. Because, as a buyer, you could run out of time and the seller could cancel the purchase contract, hand back your earnest money deposit and say nice to know ya; don’t let the door hit ya in the butt.
But these sellers elected to close escrow and extended. It made no difference to me because a commission now versus a commission next spring doesn’t matter; besides, I want what is best for the seller. Who it mattered to was the buyer. The buyer was a first-time home buyer. My agent who picks up my lockboxes after closing said the buyer was very grateful when he stopped by yesterday. It’s nice to have a happy ending. Happy sellers, happy buyer, happy buyer’s agent. What else could you want? How about a happy referring agent in Florida? Yeah!
Maybe Your Roseville Home is Worth More?
Of my four closings yesterday, two of those homes were regular transactions and not short sales. I hope this is a trend that continues. Fewer short sales, more equity sales. Because for the past 7 years, most of my business in the Sacramento four-county area has been short sales. That’s why they call me a Sacramento short sale agent. But before short sales, I enjoyed a long career selling regular homes. People tend to forget about that. But I don’t because my job is to help sellers sell their home, regardless of what it is.
One of those closings was a home in Roseville. It was owned by a spunky 82-year-old woman whom everybody adored. I mean everybody: the title company, the escrow officer, the buyer, the buyer’s agent, and especially me. This woman is incredible. Funny, sweet and smart. I could not believe that her family dumped her at the last minute. The home was hers alone, but a while ago her family members decided to join her in title. I’m not sure exactly why but I’m betting they felt she had equity, and they wanted a piece of it. When she told them she was interested in selling, they convinced her that she would have to do a short sale. If she was to short sale, they wanted to bail because they did not want to participate in a short sale. No money to them and nothing but a hassle.
See, the thing is a short sale lender will want everybody to participate in the short sale process, even if the parties are not on the mortgage. If they are on title, they need to fill out all of the paperwork, just like the mortgagors, and apply for the short sale. This seller’s family members were so sure she had to sell as a short sale that they deeded the home back to her and recorded that deed! I always check out title before I take a listing. Three decades ago I used to work at First American Title. This seller definitely had clear title to the home. A home with equity!
She was also very shocked when I told her she did not have to do a short sale. She had plenty of equity. This Roseville seller had enough equity to sell her home for top dollar, pay a commission, all of her closing costs and back taxes, and still have a lot of money leftover. Do you know how good that feels as a real estate agent to share with a seller that kind of good news? Or, as a seller to hear it? To find out that instead of a short sale, you can protect your credit and stash, say, $20,000 in the bank. When you’re on a fixed income, $20,000 could be a year’s income or more.
It beats the alternative. I had to inform a Land Park seller last year that her Land Park home had slipped into short sale territory and that she needed to sell as a short sale. We tried to sell as an equity sale but it hadn’t been working. She exploded to the point that I had to cancel the listing. Just blew up at me. I always try to tell people the hard truth but not everybody can handle an agent who is direct. Some prefer agents who sugar-coat, beat around the bush, and that’s not me. Eventually, that Land Park seller put her home back on the market as a short sale with another agent. That was too bad. Because I would have done a good job for her. You can trust that I will always try to do what is best for the seller.
But before jumping to the conclusion that your home is underwater, you should ask a real estate agent for her opinion of value. You might be pleasantly surprised. Some of us do a bang-up job at pricing a home and figuring out market value.
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