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Why Some Agents Hate Sacramento Short Sales
Agents are not always justified when they hate short sales.
Just because there is one bad apple in the bunch or an agent runs into a scheming short sale seller is no reason to decide that all Sacramento short sales are worthless and to not recommend short sales to their buyers — yet, there are many agents in Sacramento who do exactly that. There are agents who hate Sacramento short sales. An agent a while back told me he has listed 40 or 50 short sales. I thought, hmmm, I’ve never heard of him, and I looked up his production in MLS, which goes back to October of 2008. He’s listed and closed 24 short sales. At least I know what kind of agent I’m dealing with.
Some people do fuzzy math. Even so, that works out to about 3 1/2 short sales a year. Enough to know better. Not enough to know anything, though. His attitude seemed to be that short sale sellers are liars and cheats, and they try to squeeze every free day they can out of the lender without paying a mortgage. He tells his buyers to avoid short sales. I imagine lots of other agents tell their buyers the same untruths and perpetuate the same misperceptions. They harbor a lot of anger and they hate short sales.
My experience, on the other hand, has been incredibly the opposite. Since October of 2008, I’ve listed and closed 295 short sales. My total production exceeds 295 because I’ve been negotiating and closing short sales since late 2005. I have the dubious honor of being the top Sacramento short sale agent. But just to keep the numbers simple, let’s run with the 295, which is just my sellers, not my buyers. That breaks down to an average closing of almost one short sale a week for 7 years straight.
Never in all of my short sale experience have I had a seller refuse to cooperate. Only once did a seller elect to accept a bank’s offer of a loan modification (he later went to foreclosure). Yes, sometimes banks offer loan modifications when they realize the seller wants to short sale, but if that loan modification does not involve a principle reduction, it’s pretty much worthless, and most loan modifications do not.
Besides, I ask my sellers qualifying questions. We discuss what will happen during the short sale so there are no surprises. I generally collect all of my paperwork upfront, and we contact the bank at least twice a week. Nothing falls through the cracks. My sellers do not leave the home a giant mess when they move out. They clean it up. Because my sellers are conscientious, which is why they are doing a short sale in the first place and not walking away. There is no reason to hate Sacramento short sales.
A buyer’s agent needs to do a little homework on a short sale before suggesting the buyer write an offer. The agent should check out the track record of the listing agent. It’s easy to do, just put the agent’s ID into MLS, check the sold tab and click submit. Find out from the listing agent if the seller has some place to go, whether all the financials are collected, and exactly how long the negotiation might take. Don’t just throw your buyer into a situation that is likely to cause all of you heartache. True, not every short sale is a short sale. But the qualified short sales are and an agent should learn the difference.
If an agent tells a buyer to disregard a short sale that is perfect for that buyer and all but guaranteed to close, whose interest is that agent best serving? Some agents don’t want to wait for a paycheck. That’s the thing they don’t tell you. They want a 30-day closing so they can get paid in 30 days, and I say shame on those agents. That’s despicable.
Should a Sacramento Home Buyer Cancel Escrow?
A home buyer called yesterday to ask if she could cancel her escrow, dump her buyer’s agent and become a client with the Elizabeth Weintraub Team. She was very unhappy with her present real estate agent’s performance, but I suspect that unhappiness was due more to miscommunication than inability or inexperience or monkey business. And, like many first-time home buyers in Sacramento, her escrow was a short sale. See, unless you’re a listing agent who sells hundreds of short sales — and there aren’t very many of us in Sacramento — an agent probably won’t have the answer to every single piece of drama that can pop up in a short sale. No answers = client confusion.
This buyer was concerned because HSBC had twice increased the sales price. Is this normal, you might wonder? Yes, it is. There are many reasons for a price increase during short sale negotiations. There could be several BPOs. The servicer might establish a market value that is different from the price point determined by the investor. Not to mention, prices are inching upwards in Sacramento. I closed a Roseville short sale last week that had 3 price increases during processing, and the last adjustment exceeded 10%. A short sale condo in Rancho Cordova was bumped more than 20% when a buyer balked and walked and a new buyer stepped in.
Her suspicions were aroused because the price increases were not presented to her in a formal manner — via a worksheet or letter from the bank. Instead, the listing agent had called the buyer’s agent to provide the verbal communication. The buyer felt this procedure was unprofessional. Yet, that is the procedure for most short sales. I don’t blame a buyer for being wary. I wouldn’t like it if I was simply informed that I needed to pay $10,000 more without proof from the bank nor an appraisal to justify, but that’s how short sales work.
The thing is if a buyer doesn’t want to pay it, another buyer will pay it. That’s what the bank is banking on. And the bank doesn’t care. You might think the bank cares that the home needs paint, new carpeting, the roof leaks, but I’m telling ya, the bank doesn’t give a crap.
In this particular instance, the buyer disclosed she was FHA and applying for the CHDAP program. Holy toledo, the only thing more problematic than that would be a VA buyer and, even then, it would be a tight race. In fact, a VA buyer might have an edge over a CHDAP. The basic way to close a CHDAP in a short sale is to get a short sale extension. A short sale extension is not always possible.
My advice to this buyer — after telling her I can’t give her advice because she’s in contract and under agency with another agent? My solicited advice was to stay in escrow. For heaven’s sakes, don’t cancel. She does not realize how lucky she is to be in escrow and be buying a home in Sacramento. For every buyer who wants to buy an entry-level home in Sacramento, there are 9 more who won’t be able to buy. They will get beat time and time again by cash investors or conventional buyers. Buyers would give up their eye teeth to trade places.
Welcome to our Sacramento housing market in the spring of 2013. If you’re in escrow, stay put and don’t whine.
