Email ElizabethThe Perfect Sacramento Short Sale Buyer
Is there such a thing as the perfect Sacramento short sale buyer? At the risk of sounding like I was raised where I was: you betcha! A seller asked yesterday — how do I know which offer to pick? She asked if she should read every offer she receives or if she should leave it up to me, her Sacramento short sale agent. First, let me say that decision always lies directly with the seller — never with the agent — but I do offer suggestions, and I do guide my sellers to help them to make the right decision. And yes, making the right decision involves reading every offer.
The right decision is choosing the buyer who will perform. What does it mean to perform? It means the buyer who will pay what the bank wants and will close escrow. That premise may sound on the surface overly simplified but those two things are the qualifications of the perfect Sacramento short sale buyer. Of course, there are other things that come into play but performance and adaptability are the most important.
I’ll tell you what you don’t do as a Sacramento short sale buyer. You don’t let your buyer’s agent become combative with the the seller. Because that kind of behavior is just stupid and it backfires. If your agent is ticked off about something, your agent should keep those feelings to himself. Nobody needs to hear it. Earth to buyer’s agent, hello . . . Sacramento is in the middle of a super hot seller’s market right now. You also don’t disclose to the seller that your buyers trespassed, walked around the property without permission and peeked in the windows of an owner-occupied property.
I just closed a short sale in a gated community in the Pocket. This home was situated on 2 parcels along the river. We had received several offers when it came on the market, but the offer the sellers selected was from the buyer who agreed in advance to step up to the plate, if it was required. This particular buyer was represented by an agent who had closed other short sales. Because of that experience, the agent prepared the buyer for the unexpected. Sure enough, the unexpected happened. As anticipated, the buyer performed.
A seller might think she is choosing the buyer who loves her home as much as she did when she first laid eyes on it, and that could very well be true. It’s nice if a seller likes the buyer and knows the buyer appreciates and values the same things in her home. But as her Sacramento short sale agent, who must put the seller’s interests first and foremost, I’m looking for the buyer who will close.
What’s Wrong With the California Homeowner Bill of Rights
How will the California Homeowner Bill of Rights affect short sale sellers in Sacramento? Despite all of the hoopla over it, not much. Probably the most important aspect of the Bill of Rights as it relates to short sales is the stopping of dual tracking — but that only goes into place after short sale approval, not prior to short sale approval, which is when a homeowner needs it.
Dual tracking happens when a foreclosure has been initiated. This means a Notice of Default has been filed in the public records despite a homeowner’s good faith effort to find a solution. Here’s the way it works before and after the California Homeowner Bill of Rights:
- Homeowner falls behind and stops making mortgage payments.
- Homeowner pursues a short sale.
- Lender files for foreclosure.
- Trustee’s Auction date is set.
- Despite a pending offer for a short sale, home can go to foreclosure.
I can only begin to imagine the trepidation felt by homeowners facing an impending trustee’s auction. The problem is most banks will refuse to review a request to postpone a trustee’s auction until the auction date is 3 to 7 days away. It’s not as simple as asking the bank to permanently stop foreclosure action. Certainly not a month or more in advance. Nope, the banks make homeowners chew on their fingernails wondering if the homeowners will be tossed into the street almost all the way to the 11th hour. It’s as though they get some kind of perverse pleasure out of this type of torture. Why can’t a bank postpone a trustee’s auction when it’s 30 or 60 days away? Why make homeowners wait?
One of the services I provide as a Sacramento short sale agent is requesting the postponement of a trustee’s auction. This service, far as I am concerned, falls outside of the scope of selling real estate and dangles dangerously into the realm of practicing law. Sometimes I can’t sleep at night, worrying if a sale will get postponed. A bank is not required to postpone an auction. In fact, if the investor for that loan is Fannie Mae, you can bet your bottom dollar the auction won’t get postponed. That’s why some short sale agents refuse to work on Fannie Mae short sales.
If the California legislature really wanted to pass a Homeowner Bill of Rights, they’d stop dual tracking after a short sale is initiated and verified. Not after short sale approval. Because after the short sale is approved, there is little reason for the bank to initiate a Notice of Default.
A Real Estate License Won’t Help You to Buy a Home in Sacramento
Some people in California think it’s a good idea to get a real estate license just in case they ever want to buy a home in Sacramento. Because if you have a real estate license, then you can collect a commission, which is reflected as a percentage amount of the sales price. All commissions are negotiable and generally paid by the listing broker to the selling broker, so while you might think this could amount to a lot of money, it’s generally not by the time it reaches the buyer’s agent pocket. Not in the overall scheme of things.
Yet, almost one in every 35 people in California has a real estate license. It’s hard to turn around at a party in Sacramento and not spill the drink of a Sacramento real estate agent. Snort as you may, not every person who holds a real estate license should be holding a cocktail much less trying to earn a living from said license, but that doesn’t stop them from getting drunk and / or practicing real estate.
On top of this, we’ve also got the agents who want to represent themselves to buy a home in Sacramento. Especially agents from the Bay Area. You know what they say about that, right? A fool for a client. I look at my own situation. I’ve been in the real estate business for more than 35 years, so I’m not exactly a rookie. I like to think I know what I’m doing. But if I were buying a home out of my area, I would hire a local expert. The few thousand I would earn (and I use the word “earn” loosely) to represent myself is not worth the tens of thousands, perhaps hundreds of thousands, I could lose.
Besides, my expectations are very high. I’m a high maintenance client. I would not want to work for myself. Some people might call me a pain in the ass. I expect exceptional service. Nope, I’d much rather hire a buyer’s agent and make unreasonable demands of her. That’s part of the service an exceptional real estate agent provides — client management.
Something else you might not know. If you’re trying to buy a short sale in Sacramento as a licensed real estate agent representing yourself, it’s highly likely that the bank will not allow you to collect a commission. That’s because you generally can’t have your cake and eat it, too. Even if it is a red velvet cake with a cream cheese filling and butter cream icing.
Who is Your Sacramento Short Sale Bank?
The seller’s mortgage lender is what will make or break the Sacramento short sale. Oh, sellers think it’s the value of their home or the dire circumstances detailed in the hardship letter, but none of that is as important as the short sale bank. Second to the Sacramento short sale bank is the investor. You can have a great short sale bank, for example, like Bank of America, but the investor can totally suck, like Fannie Mae.
When I talk to potential short sale sellers in the Sacramento area, the first question I ask is who is the lender. Generally, people don’t know if they have a Fannie Mae or a Freddie Mac loan. While they are busy vehemently denying their loan is held by Fannie Mae, I am busy running the address on my computer through Fannie Mae’s loan lookup site. By the time the seller finishes telling me how she is absolutely positive her loan is not held by Fannie Mae, I can find proof that Fannie Mae holds her loan.
It’s important to know whether the short sale bank has delegated authority or if the investor will be required to approve the short sale. All of these things are taken into consideration when giving a seller an estimated time frame to complete the short sale process. I’ve worked with so many banks that I’m often right on the nose with the amount of time it will take to do the short sale. I can look up my closings over the past year — I average about 10 short sale closings a month, more than 100 a year — and give my best guess based on how long it took me to do those short sales.
There is no reason for a bank to take longer than 10 days to approve a short sale. Seriously. But some banks routinely take 3 to 4 months. Some 6 to 8 weeks. And God forbid should a buyer walk away, many start over even though they swear it’s a soft decline, it’s not. It’s a do-over. Which is the dumbest thing ever. That’s ranks right up there with walking through an unmarked intersection blindfolded. It’s just stupid.
Here is a partial list of the banks / lenders this Sacramento short sale agent has closed short sales with, and I’m sure there are more that have slipped my mind. Some, perhaps, on purpose:
- Aurora Loan Services
- Bank of America
- Bayview Financial
- Carrington Financial
- CCO Mortgage
- Citimortgage, now One Main Financial
- Colonial National
- EMC Mortgage
- Flagstar
- First Horizon
- GMAC
- The Golden1 Credit Union
- Green Tree Financial
- Home Eq
- Horizon Bank
- HSBC
- IBM Lender Business Processing (LBPS)
- IndyMac
- JP Morgan Chase
- LCS
- Litton Loan Servicing
- M&T Bank
- Met Life
- National City Bank
- Nationstar
- Navy Federal Credit Union
- Ocwen Financial
- OneWest Bank
- PNC Bank
- Paleco Credit Union
- Saxon Mortgage
- Select Servicing Portfolio
- Seterus
- Specialized Loan Servicing
- Sun Trust
- US Bank
- United Bank
- United Guaranty
- Wachovia
- Wells Fargo Bank
Are You Ready to Do a Short Sale?
Not every seller is ready to do a short sale. You would think that by the time a seller puts her home on the market that she’s thought through the process, but sometimes not. Sellers can get cold feet or have a change of heart; it’s known as seller’s remorse and it’s not always the seller’s fault. Sometimes, it takes listing a home as a Sacramento short sale before a family member will offer to help.
The trouble with that is sometimes the help offered by family is not much more than a BandAid. The help can be temporary assistance or it can mask the present situation without offering a long-term solution. A permanent solution is to reduce your principal balance. If a financial alternative doesn’t accomplish that, it’s not really an alternative. In those types of situations, a seller is often putting the gun to her head — just not pulling the trigger until later.
As a Sacramento short sale agent, I’ve represented sellers who have changed their minds about selling as a short sale. It can happen within minutes of going on the market, all the way to short sale approval and beyond. That’s why it’s important to talk through a short sale with a seller. Still, even then, a seller can do a 180. Selling is an emotional business. Any agent who has been in real estate for a decade or two can attest to that. Making sure a seller understands that doing a short sale involves selling the home is one of my first qualifiers when a potential client calls me.
A few weeks back a seller told me her parents offered her financial help. They were willing to supplement her mortgage payment and give her money to help pay that mortgage payment every month. She asked if she could cancel her short sale. I looked at her file. She had originally paid, oh, let’s say $700,000. She had put down $300,000 in cash. The problem was her mortgage balance was about $400,000 and her home was worth about $200,000.
I asked if she wanted to throw good money after bad. She had already lost $300,000. If her parents were willing to help her make mortgage payments, why didn’t she let them help her buy a new house worth $200,000, and she could make her own mortgage payments? Because she can afford payments on a $200,000 home. She can’t afford payments on a $400,000 home. Her home is not worth $400,000. It’s worth $200,000. So why doesn’t she just buy a $200,000 home?
This had never occurred to her. It hadn’t occurred to her parents, either. But that sounded like an excellent idea. That’s because it is an excellent idea. Buying a home in a down market makes sense. Interest rates are exceptionally low as well, we’re at historic 60-year lows right now, less than 4%. You don’t just have to sell your home as a short sale, you can buy a new home as well if somebody else can qualify for your loan. You might not have to wait to buy a home.
Photo: Shutterstock
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