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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.
Buyers for Short Sales in Elk Grove Make or Break the Short Sale
About one out of every 3 homes in Elk Grove that I sell nowadays seem to be a short sale. How are short sales in Elk Grove still a thing, you might wonder. I mean, you read about the economic recovery, how much homes have appreciated, and it doesn’t seem to make sense that home sellers can still be underwater. Take 2012, when home prices, on average, shot up about 40% in Elk Grove. Then, along came 2013 and we witnessed another 25% bump. Last year was single digits and not as impressive, so the big increases are pretty much over.
I see the continuation of short sales in Elk Grove to be a mix of several factors. First, Elk Grove was named in 2006 the fastest growing city in the United States. Not in California, the United States. When the market collapsed, Elk Grove was hit very hard, and prices fell more than 50%. To put this into perspective, if a home was worth $500,000, after the crash it was worth maybe $225,000. When that same home appreciates by 40%, now it’s worth $315,000, and another 25% boost would push it to $393,750, which is not enough to pay off those dual mortgages of $500K.
Some people struggle with math. They might think 40% plus 25% equals equity, and I am showing you the numbers so you can see it doesn’t work that way.
Second, the homeowners who were underwater and did not do a short sale and did not elect to grab cash for keys in a foreclosure, often chose the less painful of those options and selected a loan modification. Loan modifications — unless the bank forgave a big chunk of the principal balance — are generally just a temporary BandAid. They also tend to adjust after 5 years and interest rates go up, which increases the mortgage payment, until the homeowner gets to a point where she just can’t take it anymore or perhaps something else horrible happens, something worse, like a death in the family or loss of income or limb.
Naturally, since I represent sellers, I feel an affinity toward my clients — as well as a fiduciary responsibility, which is required by law. I try to help my sellers to choose an appropriate buyer for the home, a buyer who will wait for the approval and has the qualifications to close escrow. We keep our buyers informed throughout the transaction with weekly updates, and they can check updates themselves on my website.
Almost invariably, without fail, the person in the short sale that causes the most problems, the biggest delays, and is the main reason short sales drag on and on and on, is the buyer. They are just some person or couple who want to buy a house, and often possess no feelings for anybody in the transaction, sometimes, not even their own real estate agent. Yesterday, after battling FHA and surviving a transfer to an institutional lender, dealing with partial demands for previous loan mods, paying off utilities and other outstanding liens, cleaning up the preliminary title report and being on the verge of approval from the negotiator, a shiny new listing came on the market across the street from this short sale in Elk Grove.
The buyers lost the faith, which, granted, was probably hanging by a thread in the first place. Because the buyers didn’t adhere to all of our requirements upfront, that was a red flag, and against better judgment we gave them a chance. It was a risk we were willing to take. A risk that at least I regret. Don’t deviate, is my motto. This is what happens with deviation.
At least, on the bright side, all of the really hard work has been done, and the road has been paved for the next buyer who truly deserves this magnificent pool home in Elk Grove. If you’re looking for a home with 5 bedrooms and a pool at an excellent price, you should call your Elk Grove agent, Elizabeth Weintraub, at 916.233.6759.
