Email ElizabethYour Home Inspection Won’t Uncover a Devils Postpile
Little is worse in a Sacramento short sale than hearing from the buyer’s agent that the buyer is canceling the purchase contract. Well, I guess it beats having a buyer ask for repairs, because at least this buyer had the good sense not to even try. I find my silver linings where I can these days. In this particular short sale, the buyer canceled because her home inspection revealed defects. No joke, all home inspections uncover defects.
Home buyers often cancel because they don’t want to fix things. They get upset over a broken window or because the AC isn’t working. I question whether these buyers should be homeowners, because stuff breaks and stuff stops working after escrow closes, too. It’s called home maintenance. You deal with it.
This buyer needed a 4-bedroom home for her three recently acquired kids. She needed the home in this particular neighborhood in Sacramento. It had to be priced around $160,000. Not to mention, this short sale is a preapproved Bank of America Cooperative Short Sale, so there is no maybe about this escrow — seller, property and price is preapproved. In this market in Sacramento, this buyer is probably not buying a home now. There is very little inventory. The odds of her finding another home like this are almost nil. We had many offers for this home, and the seller personally selected the buyer among dozens vying for the home. It’s sad and unfortunate that a few problems uncovered in a home inspection are causing this buyer to lose out on home ownership. Her three children will most likely grow up not knowing what it’s like to own your own home.
A home inspection is a report for the buyer’s edification. It is meant to uncover and disclose things a buyer might not be able to see simply by looking at the home herself. It gives a buyer a clear picture of what she might want to do to improve the home. It exposes the unknown.
Talk about a discovery. If you want to see something truly magnificent that was uncovered, take a trip one day to Mammoth Lakes and visit the National Monument Devils Postpile.
Many years ago, this area was a hot lava bed. As the lava cooled in the lava lake, cracks formed. These cracks ran vertical and formed columns of basalt. Usually you don’t see this because it’s underground. At Devils Postpile, the area of basalt columns was exposed after the glaciers excavated and then polished the formation. Devils Postpile was established in 1911 a National Monument.
Photo: Devils Postpile by Elizabeth Weintraub
Sacramento Home Buyers Can Learn a Lesson From Mono Lake
Just as we returned from a hard day of running amuck at Mammoth Mountain yesterday, a buyer’s agent called. She was breathless because she believed her buyer was writing an offer on one of my very few listings that are still available in this hot, hot, Sacramento seller’s market. There is such a huge demand for property right now, it’s almost a little daunting to put a home on the market.
It’s kind of like throwing raw meat into a pond of alligators. You don’t want to get too close to the action, if you know what I mean. Home buyers can bite off your fingers, they are so hungry to buy a home. However, just as I was pondering whether it was too late in the day to call my seller, the buyer’s agent emailed to say her buyer had a change of heart. She no longer wanted to make a purchase offer. It’s better she make her mistake upfront than to get into escrow before she discovered she had cold feet. It makes everybody miserable when a buyer cancels a purchase contract.
You don’t have to undo a mistake if you are committed when you make an offer to buy a home. If you cancel a purchase contract, you may or may not be within your contingency period. If a buyer has released all of her contingencies, she might place her deposit at risk. There are consequences to actions.
Take a look at the consequences of stupid actions at Mono Lake. This is an alkaline lake that contains its own unusual ecosystem. The water is slippery because it contains chloride (salt) and baking soda (bicarbonates), which form these unusual underwater structures called tufa. It’s very salty, almost 3 times the salt content of the ocean. Many streams and tributaries feed the lake. In 1941, Mono Lake covered more than 4 million acres. Today, it’s less than half that size. Why? Because the LA Department of Power and Water diverted the streams that flowed into Mono Lake. They drained half the water out of Mono Lake!
Mono Lake is home to the second largest gull population in North America. There are thrashers, towhees, warblers and shorebirds such as grebes and phalaropes, more than 118 species of birds breed at Mono Lake. The lake provides a home to brine shrimp and alkali flies, which in turn provides food for the birds. It also supports an abundance of natural habitation and vegetation. When you take away the water, all of this dies. The system collapses.
After years of long legal battles, the LADPW was ordered to restore the lake. But it will take many years to build the water level back to anywhere close to its 1941 levels. There are consequences for bad decisions. Rather than restore, it’s better to not mess it up in the first place.
Photo: Mono Lake, by Elizabeth Weintraub
Tuolumne Meadows and a Rocklin Short Sale
One of the things about hiking in the wilderness is it gives one time to reflect. With me, though, I tend to think about my Sacramento short sales. Other people might reflect on the purpose of life, why we are here, where we are going. But I think about why so many people seem to believe that discharging mortgage debt in bankruptcy makes that debt go away, because it doesn’t. It’s secured debt. This must happen because some bankruptcy lawyers don’t fully explain to clients how real estate works. Or, maybe these lawyers don’t understand real estate?
In the case of a Rocklin short sale that just closed, I think the lawyers were betting on a foreclosure. When a foreclosure takes place, title is involuntarily transferred. But if the bank doesn’t foreclose, title will stay in the borrower’s name. Not to mention, the other twist, if a second mortgage is discharged through bankruptcy, only the liability is discharged; the debt remains until it is released. Enter the short sale solution.
Try explaining to an energetic and knows-he-is-right borrower that his debt is still there. It’s hard to say yes, your debt was discharged, but your obligation still exists. Those are words coming out of an agent’s mouth that make no sense to them. Because, gosh darn it, their lawyer said it was discharged. You know what? I am not a lawyer. I’m just a Sacramento short sale agent who will do your short sale for you if you want to do it.
That Rocklin short sale was a Bank of America Cooperative Short Sale. The bank had called the borrower, and it was the bank who explained to the borrowers that foreclosure had never taken place. Yeah, 3 years later; they still owned that home in Rocklin. The bank did not want to do a deed-in-lieu, either. It wanted the sellers to do the short sale, and it would pay the sellers to do it. The sellers found this Sacramento short sale agent. I’ve closed a lot of Cooperative Short Sales through Bank of America, and I knew exactly what to do.
We faced a few challenges. There was that slight problem of the water being shut off. Oh, and no other utilities, either. Did you know that Placer County will place a temporary water meter on the property for $300? A temporary water meter will allow a home buyer to do a home inspection. The sellers chose a VA buyer. Buyers who obtain VA loans often get the short end of the stick when trying to buy a home because sellers and some agents tend to believe that VA loans are nothing but trouble when just the reverse is true. Why is that? Why do we say we honor our veterans and then do the opposite thing by rejecting their purchase offers?
That’s what I was thinking about yesterday as we hiked to Elizabeth Lake in the Tuolumne Meadows at Yosemite National Park. It was straight up for 2.3 miles. Totally silent. You could pause on the trail to catch your breath — it’s over 8,000 feet in elevation — and hear a sound in the distance. It is a low hum, and sounds a little bit like freeway traffic, but you know there are no roads nor freeways nearby. Then you realize it is the sound of the wind through the tree tops. If you stand still for a few more minutes, the gust of wind heading your direction will arrive and blow through your hair. You’re connected to nature. There are no cellphones, no computers, no bank negotiators, no short sales.
Then, an older fellow comes bounding down the path, wearing a button-down shirt, shorts and hiking boots. He’s talking on his cellphone about his prostate. Discussing his doctor’s diagnosis and at least acknowledges the existence of other people within earshot by telling the person on the other end of the phone that complete strangers are now privy to his medical condition. My first thought was you can’t get away from them. My second thought was who was his carrier? Why does he have service and I do not?
Photo: Elizabeth Weintraub, Elizabeth Lake, Tuolumne Meadows
The Joe Cocker Short Sale in Rancho Cordova
Sometimes, I get a short sale to sell that throws me a curve ball. Especially when it’s a tenant-occupied short sale and the tenant won’t cooperate. Oh, they will promise to cooperate, and they’ll even give this Sacramento short sale agent a key for the lockbox and let me publish in MLS a cell phone number, but they have no intention of cooperating with showings. What is it? My smiling face? They can’t say “no” to my face? But behind my back they are thinking forget her and the horse she road in on?
I put this Rancho Cordova short sale on the market more than a year ago, and for the first 3 or 4 months, I couldn’t show it because the tenant refused to let agents inside. He stuck a big sign on the door: PITBULLS INSIDE, and refused to answer the door. I was very relieved when the seller finally booted the guy to the curb. Unfortunately, my lockbox vanished with the tenant.
The seller is in the military. Stationed overseas. He had been fighting his investor Freddie Mac for several years, trying to deal with his underwater home. There are several bright spots in this, actually. First, the military gets special treatment in a short sale. Foreclosure is generally not gonna happen. Not to mention, if one hasn’t made a mortgage payment in several years, one’s odds of getting a short sale granted by the bank are very high.
While I waited for the seller’s family member to mail me a key, I began receiving phone calls from eager buyer’s agents who were very anxious to show the home. Their options were a) crawl in through the bathroom window or b) wait for me to put a lockbox on it. The lock was broken on the bathroom window. One agent crawled through the bathroom window and called back to report that squatters were living in the house. Nope, that’s just the way it looks. Another agent yelled at me that she was most certainly NOT crawling in through the bathroom window and hung up on me.
Well, I guess she’s not selling that home then. Short sales present different levels of difficulty and challenges. Ordinarily, I would never ask an agent to crawl through a bathroom window, but this was the least of the problems inherent with this particular home. An agent who would not or could not navigate a small obstacle such as an access barrier probably would not survive dealing with the upfront repairs a lender would require just to get the loan funded, nor be willing to deal with a 203K for the roof and other repair issues. This was a fixer short sale in Rancho Cordova, which are not the easiest short sales to sell.
Finally received a key, I gained access, attached a lockbox and secured the back window. But by then we were in escrow. We were in escrow with the agent and the buyer who were willing to crawl in through the bathroom window. Obtaining short sale approval from IndyMac, now One West, and Freddie Mac was relatively fast, given that particular combination of servicer and investor. We received approval in fewer than 30 days! But that was at the end of April. We didn’t close escrow until the end of August. It took that buyer 4 months to fund and record a 203K.
Unfreakin’ believable. If this had been any other bank and any other situation, this short sale would have started over. Our negotiator at One West was such a nice guy. I don’t ordinarily use the words “nice guy” and “bank negotiator” in the same sentence. But this fellow was accommodating. Which was a good thing because the guy at the Franchise Tax Board was a far cry from a nice guy or even a guy whom I’d call a public servant, although our taxes pay his salary. He was more the male version of Lily Tomlin’s phone operator, one ringy dingy. He made us send him HUD after HUD after HUD and came up with a bunch of idiotic reasons why he would not issue the partial tax release.
But in the end, patience and teamwork won. Just like always. Just like every short sale I close in Sacramento. I think I had 6 days before my listing expired. Many happy parties. In this particular Rancho Cordova short sale, it took an army to close it. And some of us, still can’t get that Joe Cocker tune out of our heads this morning.
CITI Almost Thwarts Short Sale of East Sacramento Home
Do you know how hard it is to keep up a seller’s spirits in an East Sacramento short sale? I try very hard to make sure the first buyer we go into escrow with is the buyer we will close escrow with the first time around. I never want to say to a seller: “Look, we’ve got approval twice already, I am confident that buyer #3 will close this time.” Because sellers get exhausted when short sales drag on and on due to buyer cancellations. Not every seller has the wherewithal to hang in there. Some just give up. Throw in the towel. Walk away.
That’s why it’s important to close escrow with the first and only home buyer. It’s how we closed escrow yesterday on another East Sacramento home. This was a buyer who really fell in love with the home. Almost every agent says her buyer loves the home when the offer is presented, but buyers and agents tend to change their tune as the short sale progresses. The engagement process is often all fun and sparkly but some lose enthusiasm along the way. Not this buyer. She was a real trooper. She waited 6 months for this short sale to close. Homes in East Sacramento are worth the wait.
First, the bank decided it wanted a higher sales price. It’s the bank’s prerogative. Often when a home doesn’t move for whatever reason and we end up reducing the price, the banks put the price back where it was in the first place or close enough to it. That’s why it’s extremely important not to price an East Sacramento home too high when you’re deciding on a short sale price. But you don’t want to be too low because you might attract a buyer who can’t afford to increase her price if the bank demands it. It’s like Goldilocks: for homes in East Sacramento you want to be priced just right.
Then, when the buyer’s appraiser did her appraisal, she did not read the purchase contract. The buyer’s agent gave her a copy of the purchase contract and the price increase, but the appraiser was either too busy or she simply ignored the information. Pricing homes in East Sacramento is an art. Not every appraiser is up to snuff. Her appraisal came in at the list price and not the appraised price. It was $15,000 too low. This held up the closing while we scrambled to assemble comparable sales and push the buyer’s lender to reassess.
The second lender, Citimortgage, now One Main Financial, demanded an excessive amount to settle. Wells Fargo met most of the demand except for the last $1,200. It always seems to come down to $500 or $1,000 when we come to a standstill at the OK Corral. You gotta wonder what is wrong with these corporations that they would let a deal blow up over a few dollars, but they do and they will. I guess if you looked at $1,000 x 10,000 deals, that’s $10 million. But the buyer agreed to pay it out-of-pocket. Bless her sweet little heart.
Citimortgage had refused to extend this escrow. Because the appraisal review delayed the closing, we were past our approval letter date. By all accounts, the short sale had expired. We begged and pleaded but CITI denied our requests. They’d only given us 2 weeks in the first place, which is virtually impossible unless the buyer had moved forward on the loan as I had suggested and she, thank goodness, had complied. In the end CITI relented and gave us an extra 24 hours, which we managed to meet.
I like to examine my closings afterward to figure out what this Sacramento short sale agent can do to improve future closings. After 35-some years in the business, I still try to learn. Nothing is ever perfect. In this East Sacramento short sale, if I had changed the listed price in MLS, I could have prevented a clueless appraiser from making a mistake. I am reluctant to change a list price in the middle of an escrow just in case it falls out, but now that we have a seller’s market in Sacramento, there is really very little risk to increasing the sales price during escrow. And it just might avoid a future problem when the next appraiser screws up. It’s smart to be one step ahead at all times. That’s what I strive for.
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