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Same Fannie Mae Short Sale Wrinkle But Different Approach
In short sale forums across the country, agents are lamenting the problems associated with Fannie Mae short sales and Freddie Mac on short sales, but I suspect that many short sale agents in Sacramento never even bother to look up Fannie Mae loans nor Freddie Mac loans prior to commencing the short sale — because some of them are way too focused on themselves and the fact they got a listing instead of putting the focus where it belongs: on the client, on the transaction itself.
It’s true that Fannie Mae and Freddie Mac cause havoc in a short sale. What else is new? But at least they are trying to do something about their muddled mess, even if it’s fairly ineffective, they get a B-plus for effort. One of the newer components of these types of short sales is our ability as a Sacramento short sale agent to request a pre-approved sales price.
The sales price, I should note, is the list price, which is not necessarily the BPO value. Of course, that’s been the problem all along, the BPO has very little to do with the price that Fannie Mae and Freddie Mac demand. This is like trying to pat your head with one hand while rubbing a circle on your stomach with the other. Then there’s the question of whether the offer price needs to meet the list price because we still don’t really know how much Fannie Mae or Freddie Mac will accept.
So, far, list prices are still above market value.
This is different than when Fannie Mae or Freddie Mac, after 8 or more weeks of processing the short sale, notifies us of its demand for a higher price. This is often a strategy that means: the government wants to send the home to foreclosure, but we don’t want to come right out in the open and admit it. This is the strategy that has agents across the county up in arms and frustrated with our government sponsored enterprises (GSE). I don’t really know why the GSE’s adopt this strategy, but in my world, I’d rather get this information on the front end than the back end, and so would my sellers.
That brings to question the status in MLS after an offer has been received. Because even in its new practice, Fannie Mae and Freddie Mac cannot seem to get us the pre-approved value prior to an offer. If we change the status in MLS to Pending Short Lender Approval, it means we don’t want any more offers. If the offer we have received is not close to or above the pre-approved price, we could be hosed if the buyer won’t raise the price upon demand, and we won’t get that demand from the GSE until we are closer to closing.
My solution for these dilemmas is to leave the file in Active Short Contingent status and allow backup offers.
Short Contingent vs Pending Short Lender Approval
What’s the world coming to when you can’t make idle threats anymore? Like, you can’t tell a guy you’re gonna hit him in the head with a shovel and bury his body in the desert without some jury awarding him $20 million in punitive damages. Even if he is a porn guy, or soft porn or whatever. Criminy. And you can’t threaten to burn down somebody’s house at a City Council meeting, either. Whatever happened to freedom of expression? Huh? Why can’t you just talk off the top of your head? Vent a little? It’s like words have meaning or something, and people take you seriously.
We need to go back to the days of Joe and Curly and Moe. When you could just poke somebody in the eyes with two fingers and nobody cared. Maybe zing a pie of whipped cream in a face.
People get frustrated. That’s pretty much a given. It doesn’t take much sometimes. Take Sacramento short sales for example. Buyers are very frustrated when they read listings in MLS that are a short sale. MetroList has attempted to clear up the confusion by offering two status choices after an offer has been received. But the problem with MetroList is a buyer can’t see the change when it’s active short contingent. That status modifier is hidden in the bottom right corner of the listing the buyer receives.
Agents don’t much understand it either. I know because as a Sacramento short sale agent some of my listings are listed as “active short contingent” and some are listed as “pending short lender approval.” Short Contingent means we have an offer. It also means we are open to back-up offers, and we might already have a few. An inquiring mind should call and ask. Bear in mind that a true back-up offer incorporates a purchase agreement addendum. No PAA, no backup. And a seller is not required to sign a back-up offer. Pending Short Lender Approval means we don’t want any back-up offers, and there are no more showings.
If you’ve got a gripe with the way Active Short Contingent shows up in MLS for a buyer, take that gripe to MetroList. That’s who your beef is with. It’s not with this Sacramento short sale agent. And watch where you walk. There are banana peels on the ground.
