Email ElizabethSelling 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.
A Bank of America Short Sale Counter Offer
Before I talk about a Bank of America short sale counter offer, let’s address this Lady Gaga thing. I mention it only because if I received an engraved invitation, I would decline to attend an event to watch Lady Gaga in a bottle strip to her undies and get a tattoo. I would not go even if I was invited through a last-minute text message. Surely, there are better things to do, no? Like, take out the garbage before your house starts to stink or get a pedicure. But this Lady Gaga thing was a huge black-tie event attended by celebrities as a debut perfume launch. It hurts my eyes to even read about it.
But maybe that’s why I am a Sacramento short sale agent and not running around with the likes of Jason Wu, Paris Hilton or Lindsay Lohan. I have many more exciting things to do like talk to third-party vendors at Bank of America about counter offers. What is a Bank of America counter offer? Well, for starters, it is not exactly a counter offer, which confuses a lot of Sacramento sellers. I try not to use jargon when talking with my clients, but sometimes it slips out, and for that I am truly sorry. I am not sorry that I didn’t go to the Lady Gaga event.
A short sale counter offer is issued by Bank of America or a third-party vendor representing Bank of America through Equator. It is a formal response to all of the fees noted on the HUD and submitted to Equator by this Sacramento short sale agent. See, if the bank can reduce some of the fees, that will increase the bottom-line net to the bank. Plus, investor guidelines state acceptable and non-acceptable fees. Some of the fees often contested are miscellaneous title services such as doc prep, courier, notary and some don’t want to authorize payment for recording of the deed. Sometimes they reduce the escrow fee.
In Sacramento, it is customary for the seller to pay the escrow fee. But in other parts of the country and California, the escrow fee is often split 50 / 50 between seller and buyer. It is not unusual for the bank to place a maximum cap on the amount it will authorize. In many instances, that amount is $750.
There are also negotiators at the bank who do not read the net sheets we send them. They instead read the HUD, and the HUD is very confusing to many people. Ever since the RESPA change a few years ago, we’ve been fighting battles with bank negotiators who insist that credits to the buyer are not allowed — when the credits shown on the HUD are not really a credit to the buyer at all. Sound confusing? Imagine how the bank negotiators feel.
Yesterday I spotted a city transfer tax fee of almost $600 that the negotiator had removed from the HUD. When fees are removed, it means the buyer has to pay them. Because of SB 458, the seller cannot pay fees the bank refuses to authorize. So, I questioned the negotiator. I asked her why it was removed because it was a standard and customary fee paid by the seller in Sacramento. This fee is based on .275% of 1% of the sales price. It can amount to a lot of money, in this case: six hundred bucks.
Turns out the negotiator thought it was a buyer credit on the HUD. After I explained that there were no credits at all on the HUD, the negotiator put that number back into the list of authorized fees and approved it. I wonder if she would like a bottle of Lady Gaga’s new perfume?
Photo: used with permission bigstockphoto
Tweet the Bank of America Social Media Team
The Bank of America social media team gets 2 thumbs up — and 10 toes, too. Is your short sale stuck in a big black hole? These guys are lifesavers. It was a brilliant move by Bank of America to put a social team out there to help short sale agents because God knows we need the help. If you ask employees at Bank of America, they will tell you in more ways than one. It depends on who you’re talking to and on which side of the fence you stand.
Just yesterday I was talking with a Bank of America third-party vendor at Service Link about a Cooperative Short Sale. She asked me why the seller did not want to do a HAFA short sale. I could hear she was writing down the answer because she repeated back to herself each word I spoke very slowly: Rather Poke Out Eyes.
The Twitter team for Bank of America is my ace in the hole. I hate to wear out my welcome mat but it seems that I end up sending a Tweet to them at least once a week or so. I imagine they have a super tough job, so I try to be especially nice. After all, by the time a short sale agent sends a Tweet to Bank of America, that agent is probably pretty frustrated. I suspect the social media team is specifically trained to listen to rants, screams, tantrums, and that’s just at hello. I bet they get beat up a lot. Resilient bunch. Bank of America, you should give those guys a raise.
There is only so much the social media team can do. What they can’t do is get a short sale approved. They can’t fix a mistake made by a negotiator, and there are plenty of those to go around. What they can do is get the negotiator to call this Sacramento short sale agent.
A few days ago I needed the BPO for a Cooperative Short Sale. I knew the BPO had been completed the first week of August, but this is where Bank of America falls down on the job for these Cooperatives. That BPO needs to be communicated to the listing agent so we can put the home on the market at the preapproved price. But Bank of America vendors tend to withhold that information until they get darned good and ready, if ever, to send out the valuation letter. Trying to get it out of them is difficult at best. That’s the last piece of data I need to put a Cooperative Short Sale up for sale.
After I sent a Tweet to the social media team and spoke to them, the negotiator called but I was on the other line. She left me a voice mail with her phone number. I immediately called her back and waited a few hours. No response. See, I know how this goes. The negotiator won’t respond for another 48 hours, if she responds at all. But the Bank of America social media team follows up. My guy called back to see if I had connected. Now, if I had told him that the negotiator called and left a message, he would have checked off the box on his list and said his job was finished. Instead, I said I had not spoken to the negotiator. That was the truth.
My social media guy looked up the records. It says right here that she called you and left you a voice mail, says he. Yes, that is true, but the negotiator did not tell me the amount of the BPO, which is the question I asked. I needed to know the BPO amount. I asked: Can you please get me that BPO amount? Because I have been waiting more than 30 days to get this information and I cannot proceed with this short sale until I obtain it.
Ten minutes later the negotiator from DTS called with the BPO amount. Eureka! I love these guys! Got a problem with your Bank of America short sale? Send a Tweet to BofA_Help through Twitter.com.
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