Email Elizabethsacramento short sale agent
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.
Adding Short Sale Buyers to the Deed After Approval
Requests to add or subtract individuals to a deed should never happen after short sale approval, yet it pops up more frequently than you might imagine. If you’re a short sale buyer, this advice is for you. People think because an idea occurred to them, they can make it happen at the last minute, and short sales are rarely in a position to accommodate these sudden changes. I know that short sale buyers don’t see the big deal. But it’s a huge deal. They don’t realize that the short sale bank probably approved only the individual(s) who signed the purchase contract with the seller. Do not try to add short sale buyers to the deed after approval.
The reason is if a short sale buyer wants to change the way she holds title on the deed, it’s almost impossible to do and still close within the required timeframe provided for in the short sale approval letter. One can’t just change from a corporation to husband and wife as joint tenants or from a couple to a sole individual without the short sale bank’s blessing. I had a short sale last month in which originally a husband and wife were holding title, then title changed to the wife as her sole and separate property and, after approval, financing restrictions required we revert. This was a Bank of America short sale and I suspect since the husband was originally noted on the paperwork, the bank was able to approve an additional name at closing without further ado. But this doesn’t happen very often. That was kind of a fluke.
Most of the time the approval letters contain the name of the buyers and, if the those names are altered, the short sale requires a new approval. Some banks make this Sacramento short sale agent start the process over. From the beginning. Because the bank did not approve John and Mary. The bank might have approved only Mary. It’s not as simple as you might think and short sales are not always logical. Not to mention, there is no guarantee that because a short sale was approved first time around that it will be approved a second time around or that the same lender will still be servicing the loan.
There are other complications to adding more short sale buyers to the deed at the last minute. It is possible that the buyer’s lender might not allow it. If Mary is taking title as her sole and separate property while obtaining a new first mortgage, her lender most likely will not let her add her son and daughter to the title without including them on the loan, which may mean they need to financially qualify. If she adds them to the loan after the transaction closes, she could be guilty of alienating title, which could be cause for acceleration: calling the loan due and payable. Moreover, the arms-length agreement Mary signs for the short sale lender might prohibit transfers within a certain numbers of days after closing.
For all of these reasons and more, the time to think about how you want to hold title when buying a short sale is when you sign the purchase contract. Don’t wait for short sale approval before you make up your mind or change it at the last minute because you could be asking for trouble. If you’re gonna do it, write up an addendum before approval is received and submit it with a new HUD during the short sale negotiation process. Please don’t try to add short sale buyers to the deed at the last minute.
Paperwork to Submit a Short Sale Offer
It’s not easy to get a short sale offer accepted in Sacramento. It’s the competition. Because the problem with changing MLS status from Active Short Sale to Active Short Contingent or Pending Short Lender Approval is a Sacramento short sale agent has one supremely ecstatic home buyer and probably 20+ or so disappointed and / or angry rejected buyers. People get mad when their offer is rejected. It’s not like your average home buyer in Sacramento is used to rejection, not like a real estate agent who deals with rejection as part of the job: like doors slammed in faces or buyer’s snorting, “I don’t want to talk to an agent; I was just looking,” click.
It occurred to me this morning that perhaps some buyers could increase their chances of short sale offer acceptance if all of the correct paperwork would be submitted with an offer. There are times I receive offers without the right documents, and sometimes I get offers with too much paperwork, and agents might toss in the kitchen sink with it.
Many agents have never written a short sale offer. I try to point agents in the right direction but not everybody appreciates my assistance for what it is, which is to try to help. I guess when faced with a made-up question such as is the listing agent helping us or trying to sabotage us, it’s easier to believe sabotage, but that’s the wrong default because the menu options are incorrect. There is no reason on God’s green earth for anybody to try to sabotage a buyer’s agent. None, whatsoever. If people think somebody is out to get them, I suggest they look in the mirror.
Here are the documents a buyer needs to submit with a short sale offer:
- The 10-page Residential Purchase Agreement, which includes the Buyer’s Inspection Advisory.
- The Short Sale Addendum. Without the short sale addendum, your offer is not a short sale offer.
- Agency disclosure.
- Proof of funds.
- Preapproval letter from lender.
- Copy of earnest money deposit.
You can squeeze by with items 1 to 3 and send items 4 to 6 at a later time, but it increases your odds of acceptance with all six items at inception. It is also helpful to send all documents in one PDF, not six separate files.
Paperwork we do not need at offer presentation are the disclosures. This includes the buyer and seller statewide advisory, lead-based paint, water-heater, and any of the other disclosures. Let’s save some trees. Let’s save a file to download, too. Some PDF files are so large they do not email. How would you feel if your agent sent all of that paperwork and it never arrived because the file was too big to transfer? I’d like to grab a megaphone and yell from the tallest hill here in Sacramento, where would that be, maybe out in Elk Grove? Stop sending these 95-page files, please.
Paying More Than Asking Price for the House
Before I talk about overpriced offers, let’s consider overpriced listings. Some home buyers in Sacramento complain about overpriced listings and wonder if they’ll offend the seller by submitting a lower offer, so they don’t even try. I tell buyers that if you’re not getting an offer accepted, maybe it’s because you’re an FHA buyer or a VA buyer and not conventional or cash, and you’re barking up the wrong trees. It’s the conventional and cash buyers that are sucking up much of the limited inventory in Sacramento. But another reason why buyers are not getting their offers accepted might be because they’re chasing after the wrong properties. They want what everybody else wants: those immaculate 3-bedroom, 2-bath, affordable homes. Maybe they should be looking at overpriced homes where there is no competition!
On the flip side, some buyers are writing overpriced offers. These buyers are desperate. Overpriced offers are almost as frustrating as an overpriced listing but few agents are talking about overpriced offers. That’s because buyers are sometimes short-sighted. They don’t know what else to do but offer a higher price, yet a higher price is actually working against them in most cases. You don’t know how many offers I receive in which I try to help buyer’s agents by explaining their offer appears too high. Why should those words have to come out of my mouth?
An overpriced offer is especially a huge problem on a Sacramento short sale. Let me illustrate for you. Say, a home is listed at $200,000, and the comparable sales over the past 3 months justify a price of $195,000. With the way the seller’s market is moving in Sacramento, $200,000 is a reasonable price 60 to 90 days later when the approval is likely to be received. Along comes Mary Home Buyer who offers $220,000. If the seller accepts that offer, it’s a long shot that it will appraise by Mary’s lender.
So, down the road, we get the approval letter from the bank at $220,000. Mary’s lender’s appraiser comes in at $200,000. We then go back to the bank, and maybe there are two lenders so now we have to ask 2 banks to adjust their approval letter. The primary lender refuses. Nope, that bank wants $220,000. The bank might feel we can put it back on the market and find a cash buyer for $220,000, some cash buyer who won’t rely on an appraisal. The deal blows up.
Thanks, Mary.
No other cash buyers step forward at that price and then the home goes to foreclosure. Because we’ve established the bank’s expectations at $220,000, we’re hosed. The seller is hosed, the agents are hosed and future buyers are hosed. Some buyer’s agents will say: But wait, my buyer will bridge the gap in the event of a low appraisal. They will pay the difference, if any, in cash. That’s all well and fine until push comes to shove and the buyer realizes she can cancel under the 17-day inspection contingency even without the appraisal contingency. Which makes a no-appraisal contingency pretty much worthless. Think about it.
On top of this, regardless of how this Sacramento short sale agent tries to nail buyers to the front door and, believe me, I have my methods, the odds are almost 3-to-1 that the buyer who goes into escrow on a short sale will somehow manage not to close escrow. And those are the good odds, the odds that an agent who knows how and has closed hundreds, gets. Buyers will lose their job, somebody will die, their FICOs will change, they find repairs they can’t afford, they blew the down payment on an emergency, the lender didn’t qualify them properly in the first place — there are dozens of reasons why buyers mess up. Once we start the short sale approval process, we can often easily slip in another buyer, but that offer needs to be at similar terms and sales price.
This means the first offer accepted will set the precedent for the second offer, should the first offer fail. And a smart Sacramento short sale agent realizes this and will advise her sellers to reject overpriced offers. There are so many ways a short sale can fail, let’s not increase the odds by encouraging buyers to submit overpriced offers, because that’s just sabotaging the buyer’s chances of buying a home.
Two Loans on a Sacramento Short Sale
One of the reasons I write a daily blog is to educate and share my real estate knowledge with other people, and I hope it’s entertaining along the way. My secret to being so successful at blogging is that I write about what I know; I don’t write about what I don’t know. I might not know how to keep a souffle from falling or a yogurt from curdling so I don’t write about cooking, but I do know how to negotiate and close a Sacramento short sale.
As such, I recognize those who do not. It’s like a secret club in Sacramento. Nobody wants to admit that they don’t really know much about short sales, but most agents rarely deal with a short sale. I wish they would just tell me they need help, and I’d gladly help them, but some of them don’t want anybody to know. It’s like a badge of shame or something, which is ridiculous. While I can understand that reluctance, they’re not doing anybody any favors.
For example, an agent who doesn’t know much about short sales might tell their buyer that the buyer should not write an offer on a short sale with two loans. The agent might erroneously believe that it won’t close or the odds are it will be more difficult, which isn’t necessarily true. Two loans on a short sale provide less excitement than, say, a Bank of America FHA short sale or certain lender’s HAFA short sales or even a Fannie Mae short sale. Sometimes the two loans are held by the same institution, in which case even if the second loan was hard money that loan is probably exempt from recourse in California, so the lenders are more likely to cooperate.
I just closed a short sale recently that had a loan for almost $500,000 and that bank accepted a $6,000 pay off from the first lender. Don’t let the fact that there are two loans on a short sale frighten you away. Of course, there is one exception that could cause difficulty, although I haven’t yet encountered it, but I see it out there on the horizon. That is when the first lender refuses to issue an approval until the second lender issues its approval, and the second lender refuses to issue its approval until the first lender issues its approval. Yeah, it’s a Catch 22, and I did not much care for the book, either. One bank eventually caves in.
The reason a first lender might not want to issue an approval letter is because of the new law that went into effect on January 1 of this year which says after an approval letter is issued, the lender must stop foreclosure: The Homeowner Bill of Rights. It’s the only way to stop dual tracking. But I have ways to work around it, so if you’re looking for an experienced Sacramento short sale agent, make sure you call an agent like me who has closed hundreds of short sales. Don’t draw the short straw when it comes to your very own short sale agent.
A guy told me yesterday he had been talking with his property management company about doing a short sale. The property management company admitted that it does not sell real estate, it only manages rentals, but offered to do the short sale for him. What? How insane is that? It’s bad enough to give your listing to an agent who doesn’t sell real estate, but give it to an agent who doesn’t do short sales? Why don’t you just cut off your head now and leave it rolling in the street?
