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Not All Short Sale Homes in Elk Grove Should Sell as a Short Sale
The number of Elk Grove short sales are declining
Why would a homeowner in Sacramento or Elk Grove do a short sale if the homeowner didn’t have to? That’s a question that’s been plaguing me because from a logical point of view it just doesn’t make any sense. What kind of real estate agent would railroad a seller into short sale status if that seller could sell as a regular traditional sale and not take the hit to her credit report, much less her emotional state of mind? As a Sacramento REALTOR, we are all required by the Code of Ethics to do what is in the best interests of our sellers.
To be fair, railroad might be a strong word. An agent might be completely clueless, I suppose, or an agent might be tempted to take the path of least resistance, that which seems easiest to her. Selling a home on the edge of a short sale as a regular sale can be tricky and complicated, but it can be done because I do it. Fast appreciation from spring of 2013 has turned many would-be Sacramento short sales into equity sales. It makes my heart break when I see a home sold as a short sale within a few dollars of being a traditional equity sale. It makes me wonder why a little more money could not have been squeezed from the sale, and why nobody tried to do it. It is laziness? Ignorance? Or, does the term railroad apply?
Take this homeowner in Elk Grove, for example. This is a guy who wanted to put his home on the market last fall because his wife was losing her job — a typical story in today’s real estate market. They called because they wanted to hire the best Sacramento short sale agent they could find. The problem was the home was cluttered, not that it needed to sell as a short sale. OK, every room was filled to the brim just about. Bedrooms filled with boxes. It was like a person came home from the grocery store to unpack the bags and just never put anything away except stuff that needed refrigeration.
The sellers were told to move out and into their rental property. Once the home in Elk Grove was vacated and the carpets were shampooed, it would show very well. The sellers were fairly well positioned to salvage credit and make a tidy profit. Instead, shortly thereafter, the sellers hired a “friend of a friend” and sold the home as a short sale . . . and a fixer, to boot. Later, the sellers sheepishly apologized to their first real estate agent and admitted they had probably done the wrong thing; they had panicked.
What’s done is done. No need to say anything negative about their present real estate agent.
My mother always said if you can’t say anything nice, don’t say anything at all. Of course, our REALTOR Code of Ethics requires it, too.
Today’s Risk in a Sacramento Short Sale
This fact seemed to come as a shock to a buyer’s agent the other day, but home buyers who are buying a short sale in Sacramento and waiting for short sale approval don’t get Brownie points for acting like a buyer. Buuuut my buyer waited, and he put his money in escrow, and that should count for something, the agent lamented. The agent was upset because the bank updated its BPO and now wanted more money. Sorry, behaving like a home buyer doesn’t earn anybody special favors.
Besides, that’s the risk of a short sale. With rising homes prices in Sacramento this spring, it’s even more of a risk as we move into summer. There is no guarantee that the price a buyer enters escrow with will be the same price a buyer will close escrow at. In fact, with the way some agents price short sales in Sacramento, there is no guarantee that the bank will even take that price. Unless there are extenuating circumstances, short sales ought to be priced in line with the comparable sales or where the comparable sales will rise, not below the comps.
I had explained to the agent when we received the counter offer that there are no renegotiations with this particular investor. There rarely is negotiation because the banks write the rules; and I’ve sold hundreds of short sales over the past 9 years — I’ve learned a thing or two from my closed short sales. It eats up more time to run around in circles with the bank, escalate the price issues and then be informed that the price is firm, like it was in the first place, than it does to replace the buyer. I’ve been working on this particular short sale for 9 months as buyer after buyer bailed as we watched BPOs bounce around. The buyer’s agent, however, still expected negotiations and didn’t appreciate the fact when I pointed out my advice seemed to have landed on deaf ears.
Sometimes I feel like I’m talking to a wall when I warn: no renegotiations. I’ve been to hell and back with this investor. It’s best to just give the investor what that particular investor demands and then close the deal. If that means issuing a Notice to the Buyer to Perform to sign an addendum increasing the price, then that’s what we do because we work for the seller. We treat all parties fairly, but my loyalty, as long as it’s not dual agency, lies with the seller.
If the buyer refuses to meet the investor’s demands, then the seller will find a buyer who will. Because those buyers are there.
I’ll tell you this, if you’re in a short sale situation right now as a buyer, thank your lucky stars if you get approval at the price you offered. I just closed another Elk Grove short sale this week that had dragged on since last fall. It was priced way below today’s prices. The bank did not increase the price. This lucky buyer was buying a home in Elk Grove at September 2012 prices. Which means when the vacant home was vandalized, and the buyer demanded a reduction, we chuckled. Hey, go out and see what you can buy at this price today. Nothing? Right! Now, let’s get this closed and stop whining about it.
Two Sacramento Homes Closed on Tuesday
As good fortune has it, I managed to close two more escrows yesterday, which resulted in another two Sacramento homes closed. I’m on a streak this week. One closing was a home in Land Park, a cottage in Upper Land Park. We weren’t too certain that the buyers were closing when they signed the purchase contract. I’m not sure what the hesitation was about, but when I have that gut feeling, I listen to it. The sellers had made a deal with the buyers that we would not change the status in MLS from active to pending until the buyers removed their inspection contingencies. They had already been there and done that when a previous buyer had developed cold feet a few days into escrow. So, we left the listing as active, pending rescission, for a few weeks.
The strangest thing happens when a buyer spots pending rescission as a status modifier on an active listing. It’s like a switch goes off in their heads. Like, maybe they ate Chinese food and an hour later are starving. They might not ever want to look at this home, but the minute they see somebody else might want it, they are desperate to buy it, and it doesn’t seem to matter what it is or where it is located. As a result, we had a decent back-up offer within days, just in case the existing offer went sideways.
But the offer didn’t go sideways. The buyers removed their contingencies and we closed, just like clockwork. The sellers are ecstatic and so are the buyers.
In the second escrow, well, what can I say? It was an Elk Grove short sale that had emerged from bankruptcy. It was a short sale that should have closed last year. We received a perfect offer, after a few others blew up, and our new buyer was willing to mow the lawn, turn on the utilities, and even replace the electrical meter and A/C unit, which had been swiped. The only problem was we could not close because we did not have the final discharge from a previous bankruptcy. The bankruptcy was discharged two years ago, but it was never closed out in the court.
How much of a problem can that be? Huge.
The lawyer told us it would take 30 days. Every month, she was hopeful the file would close out. Except it did not close out. We finally tracked down the Trustee of the Court to get the straight scoop. The trustee had to send out notices, wait 3 months for checks to clear, along with a bunch of other court-related stuff. It took us 8 long months to close out the bankruptcy, which had already been discharged. If a lawyer tells you a bankruptcy will close out in 30 days, you might want to get a second opinion, just sayin.
The buyer was a trooper. He really wanted this house. So, did a bunch of other people who continually wrote and called and begged to be a back-up offer. We’ll pay cash, they cried. We’ll wash your car for a year. No, not really, but that was the unspoken sentiment. I waited for the chocolate-covered strawberries to arrive at my office, along with a bottle of champagne, but it never came.
I’m pretty lucky, when our buyers go into escrow, they tend to stay there.
Every Sacramento real estate closing is different. That’s what makes this business so much fun and exciting. Some closings you pull out your hair. Some, you don’t. But at least these two Sacramento homes closed without any further drama.
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Wells Fargo HAFA Short Sale Approved in 2 Weeks
The earth stood still for just a second last week after Wells Fargo approved a HAFA short sale for sellers in Elk Grove. We were expecting approval at earliest by the end of March but we instead received short sale approval on March 1. The usual 6 weeks that Wells Fargo typically takes to approve a HAFA had been shrunk to about 14 days. Completely incredible. I knew Wells Fargo could eventually shorten its timeframe for a HAFA short sale, and it has exceeded my expectations.
I listed this particular Elk Grove short sale in early February. We held off showings for at least a week to build momentum and pushed for multiple offers. From the half dozen offers, we chose the cleanest offer from the most qualified buyer and submitted it to Wells Fargo. Under Wells Fargo new guidelines, it has reduced tasks in Equator and now asks for limited documentation. We uploaded additional docs a week later and, 7 days from receipt, we were notified of approval for this Wells Fargo HAFA short sale.
The only little glitch is the bank set closing for 29 days from approval. This might not be enough time to get the buyer’s loan processed. Moreover, it’s difficult to find a rental that allows occupancy at the end of the month. Because Wells Fargo, like most short sale lenders, requires an arm’s length affidavit, the seller can’t rent back. But unlike some short sale lenders, oh, like Citi, for example, Wells Fargo doesn’t put up a big fight to issue an extension. Sometimes, getting a short sale extension from certain short sale lenders can be cause for handing over your first-born child. But not in a Wells Fargo short sale.
So, don’t believe all the crap you hear about short sales. I hear buyers say they wouldn’t touch a short sale if it was the only home for sale in Sacramento, and that’s not a fair attitude. If you choose a short sale listed by an agent who closes a lot of short sales and you get the right lender to work with, a short sale doesn’t have to be complicated or lengthy.
Wells Fargo gets 2 thumbs up from this Sacramento short sale agent. I’ll throw in a couple of toes, too.
How to Get $10 a Day for a B of A HAFA Short Sale
We just closed a Bank of America HAFA short sale yesterday that had started in January. This was my second Bank of America HAFA short sale closing this month. The one that closed last week was much worse by comparison. In this particular HAFA, I was fortunate to represent an extremely detail-oriented seller who had completed all of her paperwork immaculately and upon receipt. This escrow should have flowed just like clockwork, yet it took 10 months to close. Within 30 days of opening the file in Equator, we had approval from the second lender, Green Tree, and all documentation submitted and verified, including two completed BPOs. Still, it took 10 months.
By the time Bank of America gave us its first B of A HAFA short sale approval in May, the approval at Green Tree had expired. Despite our pleas, Green Tree closed the file. We reopened the file at Green Tree and started over. There were the usual battles at Green Tree: calling the seller at work, harassing the seller for payment, threats of short sale charge off, and finally we said: fine, send the file to charge off. See, this is the thing — Green Tree can reopen and re-approve a file in 2 to 3 weeks, what it takes Bank of America 3 to 4 months to do.
To add to the horrors, Bank of America then abruptly closed the file early July. It was a mistake. We had asked for an extension but no, they closed the file. We tried to reverse the soft decline, Tweeted the Social Media Team, escalated the file to the Executive Office, but to no avail. Of course, by this time, Green Tree approved the short sale a second time, while we started the process over with Bank of America.
Bank of America assigned an escalation specialist to the file. This negotiator managed to get approval two months later, insisting her performance was perfectly satisfactory. You’re telling me that a HAFA initiated in January and closing in October is perfectly satisfactory? This is why many sellers would rather poke out their eyeballs than do a Bank of America HAFA short sale. The only benefit to a seller is that $3,000 payment. Which worked out to a return of $10 a day.
I reflect on this and wonder what we could have possibly done differently. The answer I come up with is not to have applied for a B of A HAFA short sale at Bank of America. But when a seller insists on a HAFA, that’s what I do. It’s not my decision to make. This particular seller figured she had 10 months to wait, so it didn’t matter. As long as she closed by the end of the year, she was satisfied, but I wouldn’t go so far as to say she was happy about it.
The other element in this transaction was the buyer. The extremely patient, dedicated and committed buyer. We selected the right buyer, which is always key to a successful closing. It could have been much, much worse. I could have had to sell this Elk Grove short sale three times instead of only once.
As an experienced Sacramento short sale agent, I have been closing Bank of America HAFA short sales for a long time. I am Equator Platinum Certified and a Certified HAFA Specialist. If you absolutely want to do a HAFA short sale through Bank of America, I doubt there is much I haven’t seen, and I’ll be happy to help you close it. Just be forewarned.
