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It’s Just Business, Nothing Personal
I hear some agents grumble that Elizabeth Weintraub is one tough cookie, but I am actually an extremely happy-go-lucky Sacramento real estate agent. Even though every day selling short sales is a fresh new day in hell. I look forward to it. Bring it on. Hey, ask any of my clients. They’ll tell you I am cheery almost to a fault, always anxious to help or to explain something. I suspect agents equate my toughness with my non-tolerance for purchase contract violations. I practice zero tolerance for possible breaches of contract.
For example, our purchase contracts state by default that all earnest money deposits are to go into escrow within 72 hours of the sellers’ acceptance. It’s right there in paragraph 3A1 on the first page. That means we expect the deposit to be in escrow. It doesn’t matter if it’s a short sale or a regular sale for a seller with equity. You make an offer on a home, you put your money into escrow. No exceptions. After 35-some years in this business, it’s simple: you’re a buyer or you’re not.
An agent from the city of Davis objected to this a while back. He did not want his buyer to release his deposit. Or, maybe his buyer didn’t want to release. Said they don’t do that in Davis. What? They don’t close escrow in Davis? That hasn’t been my experience. In either case, that’s not an offer we considered. Because that’s not an offer. It’s just business, nothing personal.
I don’t enjoy advising sellers that we need to cancel buyers from a purchase contract. But, if a buyer does not perform, I will suggest that the seller submit a Notice to the Buyer to Perform, and follow that up with a cancellation. It makes no sense to be in escrow with an individual who is not acting like a buyer. Another buyer could not produce his updated proof of funds last week to buy a short sale. He could not produce the document because that document did not exist. He gave us all kinds of excuses and reasons and promises. It was noise. A buzzing in my ear. T’weren’t tinnitus.
This did not mean he could not close escrow, either. By the time we received short sale approval, he probably could have found the money somewhere. In his mattress. His wife’s checking account. A deal in the back alley, maybe. But we don’t operate on wouldja, couldja, didja. If you can’t show us the money, we will cancel your short sale. It’s just business, nothing personal.
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!
It Takes a Village to Close a Sacramento Escrow
Pia is stressed at the vet.
Welcome to home buying stress. Anybody who is buying a home in Sacramento today is stressed out. I don’t care who you are. There is no way to buy a home and not be stressed about it, so don’t feel alone. Even if you’re lucky enough to have beat out all of the competition and get your purchase offer accepted, you still need to get through underwriting. Lenders are much more strict than they were 5 years ago, more restrictive than a year ago or last month, it seems. Just because your lender says you’re fully approved does not mean you will get a loan.
I’m not trying to give you one more thing to worry about but getting approved by underwriting is a concern. I had one seller cancel an escrow a few months back because the buyer asked for too many extensions. It wasn’t even a short sale, it was a home with equity in Elk Grove. No matter what the buyer did, she could not close her loan. The reason she could not close her loan was because the IRS was backlogged. She needed her tax returns from the IRS. She couldn’t get them. My seller got tired of waiting and canceled. I didn’t blame her.
Another buyer in Lincoln could not close on her approved short sale. Something happened to her financial situation so the USDA loan she was trying to get was no longer a reality. She could not afford the FHA loan under its program terms, so she ended up losing the house. She lost her earnest money deposit, too, if I recall correctly, or maybe they are still fighting over it. My seller sold to another buyer who could perform.
Just last night, a Roseville buyer found out her “fully approved loan” did not pass underwriting. She needs to now haul in her parents to be cosigners, which means escrow will be delayed. All I can say is thank goodness this escrow is not a short sale and we don’t have to beg and plead with a short sale bank for a short sale extension that we may or may not receive. My seller expected to close this week, and now she will have to wait another couple of weeks or start with over with a new buyer. Oy.
My cat Pia is feeling very stressed. In fact, I had to rush her to Davis last night for an emergency vet visit. We are not ruling out a urinary tract infection but it could just be stress. She is stressed for a number of reasons. The vet says my work stress might affect my cat. Working as a Sacramento real estate agent can be stressful, even if it’s suppressed. Who knew stress could transfer to your pets? She is also very upset because I sold the dining room table, not to mention, her buddy, my husband, has been unavailable to her. Her environment has changed. Cats hate environmental changes.
The real estate environment has changed in Sacramento. This is not your mother’s residential resale market. It’s a world with wacky mortgage and appraisal guidelines, extreme competition, not only from other home buyers but from cash investors; and very few homes for sale. Better hope you have a good real estate team on your side. Believe me, it takes a village to close escrow these days. I won’t sugarcoat it for you. But the Elizabeth Weintraub Team will do everything in our power to get your escrow closed.
How a Home Buyer Can Kiss Her Earnest Money Deposit Goodbye
We had a banner day in Sacramento short sales on Monday. While last week was one of those rare oddities in which it seemed that every time I turned around I was stepping into a big ol’ pile of stinky dog poop, this week is definitely back on track. I am back to a relatively smooth running real estate business with little bumps in the road along the way but no major potholes. I received 4 short sale approval letters yesterday and 2 extensions.
One approval was for a pool home in Carmichael. Another was for a Bank of America Cooperative short sale in Sacramento; there was an approval for a short sale in Galt, and an all new approval for a popular Carmichael short sale. I received a much needed short sale extension for a short sale that could not close in Rosemont and another in Sacramento, both of which were caused by excessive (buyer) lender delays.
Receiving short sale approval letters is a good thing. Finding out a buyer is canceling a short sale is not a good thing. It’s doubly NOT a good thing when the buyer cancels after short sale approval. I hate it when that happens. Especially if my sellers have moved out and now have to move back.
As a Sacramento real estate agent, I take precautions on behalf of sellers. It’s my job. For example, I routinely ask the buyer to sign a contingency release by the termination date for contingencies. Many listing agents don’t demand a contingency release from buyers because they don’t want to rock the boat or they don’t think of it. What a contingency release does, providing all of the contingencies are released, is put the buyer’s earnest money deposit at risk. It basically says if the buyer later elects to cancel, the earnest money deposit belongs to the seller.
Of course, if the buyer wants to contest the release, the money is not automatically released. Escrow requires mutual consent. In that case, the seller can take the buyer to small claims court and fight for the deposit there. Either way, once contingencies are released, the seller is generally entitled to the earnest money deposit.
Now, a $1,000 deposit makes a very small dent in the expenses a seller might incur when a buyer selectively cancels. If I was a seller who had to go to small claims court to demand a deposit that I believed to be rightfully mine, I might also ask for other damages that either meet the limit for liquidated damages in the purchase contract (3% of the purchase price) or small claims court monetary limits. The California small claims court dollar-limit maximum was raised this year to $10,000.
Guess I’ll polish the back of my high heels and trudge on stepping over dog poop. I’ve got another short sale in Lincoln to sell for a second time.
