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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.
Closed a West Sacramento Short Sale With 2 Loans
One of the common questions I hear from buyer’s agents when calling about a short sale is they want to know how many loans are secured to the property. I don’t know why they ask this information because a) they don’t know what to do with the answer, and b) it is also online, if the agent would just click on the APN link in the MLS listing. I suspect they ask that question because they read it somewhere or heard in a short sale class that they should ask that question. They also might be misinformed about what happens in a short sale with 2 loans. The think it’s troublesome, for some reason.
The problem with handing out that information is some agents will mistakenly advise their buyers not to write an offer on a short sale with 2 loans. They do this because they don’t understand how short sales work, and have heard that junior loans can be a problem. Sometimes junior loans are a problem but certainly not all of the time.
I just closed a West Sacramento short sale with 2 loans. Like most short sales these days, it takes about 90 days to get approval and another 30 days to close. The first lender was Nationstar. I’ve also heard agents say they would not do a short sale with Nationstar. See, that’s the problem with blanket assumptions. They are not true. In fact, I have never had a problem with Nationstar and this Sacramento short sale agent has close hundreds of short sales. Maybe I’ve been lucky, and maybe my day will come, but the proof is in the pudding, as my mother used to say. I don’t know what that means, btw. What exactly is in the pudding?
In any case, this West Sacramento short sale also had a second loan with Webster Bank. No problem, there, either. We opened escrow on February 14th and received a counter offer on March 20th. Met the terms of the counter and received short sale approval on May 20th. Closed less than 30 days later.
So, please don’t avoid a short sale with Nationstar or even a short sale with two loans. Now, a hard-money second loan, well, that’s another story for another time. That success depends on several factors; also NOT impossible.
Another Amazing Bank of America Cooperative Short Sale
I closed another Bank of America cooperative short sale yesterday, this time in West Sacramento. The entire short sale was processed as smooth as silk. Our on market date to closing was fewer than 60 days, start to finish. This is because I prequalify my sellers whom I believe will be a good candidate for the Cooperative Short Sale. By the time we go on the market, we have the agreement in place to do a Cooperative and we have the preapproved price from Bank of America. Which in this case, was about $50,000 less than I anticipated.
There doesn’t seem to be a lot of rhyme nor reason to the valuations we receive from Bank of America. Most of the time, they are right on the nose, but sometimes the prices are too high and, every so often, they are a little too low. Even when they are low, though, it sets the stage for multiple offers, and multiple offers can push up that price.
When I sat at the dining room table with the sellers, I could see the little clouds of doubt lingering in their eyes. They were sharing with me their net worth and retirement plans, and I was explaining how Bank of America will most likely not request any financials, no tax returns, no bank statements; not even a hardship letter. It was clear that saying this was akin to telling them the Easter Bunny would hop into their yard in the early morning hours to hide Easter eggs. They nodded and looked thoughtful, but they had reservations, as any normal person would.
We went on the market, received several offers, and were in contract a few days later. The buyers absolutely loved the home. When Bank of America asked the sellers to submit a 4506T, that was the other shoe they had probably been waiting for to drop. But the 4506T was just a form, and whether the bank requested tax returns or didn’t, it had no bearing on the short sale.
The nicest part about the short sale is the fact the buyers gave the sellers permission to move at leisure, so there was no big rush at closing to get out. The sellers were able to stay current on their mortgage payments and were released from liability, plus the bank paid them a relocation incentive on top of an HIN incentive. Everybody got what they wanted, which makes for a very happy ending!
If you’re wondering whether you might qualify for a Cooperative Short Sale through Bank of America, call your Sacramento short sale agent, Elizabeth Weintraub, at 916 233 6759. I’ve closed many cooperative short sales; I know how everything works, and some sellers qualify for different types of programs. Don’t trust your future to some agent with an unproven track record. Get an expert.
Stay Away From the Sacramento Short Sale Crooks
The problem that arises sometimes when taking over a listing — especially a botched short sale listing — is gaining the seller’s trust. Some sellers have been scammed so much, they don’t know where to turn nor whom to trust, and that’s pathetic. There are so many crooks in the short sale business. The crooks aren’t just the real estate agents, although there seems to be more of them than you’d probably suspect. The crooks are also the short sale negotiators, known as third-party negotiators hired by the agent, many of whom are not even licensed to legally do the job, on top of the buyers riding around in the back pockets of some of these agents.
The alarming thing is if you ask these people why they are crooks, they will tell you they are not crooks. And they will believe it. That’s how they get to be crooks because they believe their own lies.
It’s no wonder the short sale banks are cautious and careful, expecting every piece of documentation to be perfect. Seeing what I’ve seen in the short sale business, if I were the CEO of a short sale bank, I’d be scared crapless to approve some of the short sales because you just never know. Buyers are in cahoots with agents who are in cahoots with the negotiators, and they’re all in bed together. The person who doesn’t see any of this is the poor sellers. And why would they? What do they have to compare anything to? They have probably never done a short sale before and will never do a short sale again.
The best advice that I can give to a seller is if something seems too good to be true, check it out. Verify it. Talk to a person of authority and get advice. The buyers should not have a pre-existing relationship with the listing agent. The buyers should not be trying to simultaneously sell the property when they are buying the property. There should be no monkey business going on. The home should be priced at market value, not way below market value and sold to the lowest bidder. Deposits should be released to escrow.
Ask your Sacramento short sale agent to give you references. Prospective sellers are free to check out my Weintraub reviews online — real letters from real sellers. Find out how many short sales your proposed agent closes per year. Last year, for example, I sold more than 100 short sales. Does your short sale agent measure up? Probably not, but then there aren’t very many individual agents in Sacramento who sell as many short sales as I do. If the agent has closed 15 to 20 short sales, that’s a good number, though. Maybe you should hire that agent. Everybody and their grandmother is claiming to be a short sale expert today. Make them prove it.
Your agent should collect documents from you upfront. A hardship letter is a must for just about every kind of short sale, with a few exceptions. Tax returns, bank statements, payroll stubs, financials, all of these documents should be in your agent’s possession. If your agent does not negotiate the short sale, consider hiring a different short sale agent — an agent who does her own negotiation. Don’t let your future fall into the hands of a third-party vendor who doesn’t know you nor your situation. That’s a recipe for failure.
And listen to your gut instincts. If your gut tells you something is wrong, it probably is wrong. Very wrong.
Beautiful Mansion Flats Fourplex Short Sale
When the seller first called to discuss selling her family’s fourplex in Mansion Flats, which is in downtown Sacramento, I could hear the emotion in her voice and suspected that selling was a difficult subject for her. I’ve had emotional attachments to properties myself and, even to this day, still ache for a home that fell into the ocean in Ventura, odd as that might sound. So, I understand sellers who have a hard time saying goodbye to their homes, even homes like this one, a place they did not live.
This is a beautiful time-standing-still Mansion Flats Victorian fourplex for sale as a short sale. Just walking around the building, you can see the love and care that went into maintaining the building over the years. The paint job still looks good. The stairs and railing are in pretty good condition. I did not go inside because we do not want to disturb the tenants until we receive final approval from Wells Fargo. We have preliminary approval on the price at $330,000.
There are two units up and two units down. The second-floor units are 748 square feet each and are 2 bedroom, 1 bath units, rented at $750 and $650. The first-floor units are 648 square feet, 1 bedroom, 1 bath units, rented at $700 each. The tenants pay electricity and gas. The seller pays for water, sewer and garbage, plus the seller gives one of the tenants a $50 a month allowance in exchange for maintaining the yard. There are no garages; the HVAC is window A/C units, and wall furnaces. Each unit has a washer and dryer. Three tenants are long-term.
There are no rent prorations / deposit credits through escrow as the buyer will be responsible for those, and the buyer will need to pay any overdue city utility bills. Call your downtown Sacramento listing agent for approximate numbers regarding this property in Mansion Flats.
DO NOT DISTURB THE TENANTS.
Inspection of units after final short sale approval from Wells Fargo. For more offer tips, call your downtown listing agent, Elizabeth Weintraub.
328 14th Street, Sacramento, CA 95814. Listed exclusively by Elizabeth Weintraub, Lyon Real Estate, as a short sale with a preapproved price by Wells Fargo of $330,000. Offers reviewed June 10th. 916.233.6759.
All information is deemed reliable but not guaranteed.
