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Tips For Canceling a Short Sale Offer in Sacramento
Some buyer’s agents do not know that when a buyer and a seller sign a purchase offer for a short sale listing, they have entered into a binding contract to buy a home. I don’t really know why agents often treat a short sale like the red-haired stepchild, but it’s a real transaction just like any other real estate transaction. If you sign a short sale offer, you’re committed.
This means if the buyer elects to cancel after approval, a buyer can do so. The RPA contract put out by C.A.R. is written in favor of buyers. Probably because buyers sue more often than sellers. Sellers are typically happier after closing than buyers. It’s rare that a seller feels that he or she got the raw end of the stick. But buyers? Whole ‘nother story.
Some people believe that the only time a buyer cannot cancel is after all contingencies are removed, and that’s a myth. They can still cancel. Buyers can always cancel. But in that event, they could get sued because they don’t have a contractual right to cancel, although, that’s where they will argue.
If a seller does not sign a buyer’s cancellation simply out of spite, a seller can be facing a $1,000 fine. The seller has no right to ignore the cancellation, if the buyer is within the time period to cancel. But that’s after 30 days. So, you can’t really force sellers to immediately sign a cancellation for a short sale offer especially unless you’re standing over them with a sledge hammer, and no agent has the inclination to do that.
But what happens when it’s the other way around and the sellers want to dump a buyer? How is that handled? Before my sellers cancel buyers from a short sale transaction, we give them a chance. It’s the fair and equitable thing to do, even if they are not fair and equitable to us. Besides, contracts stipulate. We send them a Notice to Perform. We spell out what we want them to do, and if they don’t do it, we can unilaterally cancel that short sale offer.
However, if you as a buyer wants to cancel, you need to sign a cancellation of contract. Not a withdrawal of offer and not an addendum. Buyers sign the top and bottom portion and date it, along with escrow information to release the earnest money deposit. Buyers also need to state a reason for the cancellation. When buyers sign a short sale addendum, agreeing to wait for short sale approval, the buyer is supposed to wait during that period of time. But bottom line, if a buyer doesn’t want to buy, nobody can make ’em. I suppose it’s possible they could be sued for sending a seller to foreclosure, but that’s for lawyers to argue.
For more questions about a Sacramento short sale offer, call your Sacramento short sale agent, Elizabeth Weintraub, at 916 233 6759.
You Can Keep a Short Sale Off Your Credit Report
There are short sale sellers in Sacramento who do not know that if they fit the guidelines, it is possible to do a short sale, be current on your mortgage payments, and NOT have a short sale show up on your credit report after closing. In fact, there can be no ding to credit whatsoever and a seller can go out the next day and buy a new home, if she so desires. They don’t know this because a) their Sacramento short sale agent doesn’t know it, or b) their short sale agent doesn’t want to bother with it because the agent just wants to close the deal the fastest and easiest way possible.
Everybody knows that if a seller is in default, that short sale has a greater chance of being approved, even if there is no hardship. That’s the easy road for lots of agents with short vision. They tell their sellers to stop making mortgage payments so they can do the short sale, but that is not always necessary.
Granted, I don’t have a lot of sellers who fit the parameters to be current, but when it’s a possibility, it’s often worth it to give it a shot. I have to do what is best for my sellers — as hokey as that might sound to some of you, it’s the truth.
Sometimes, it doesn’t work out. When it doesn’t, then the alternative is to go into default. Of course, the bank won’t tell you that. The bank will almost always never directly say that a seller needs to stop making her mortgage payment. Think about being a shareholder of that bank. Do you want that bank telling customers to go into default? No, you don’t. A bank will instead say there is no hardship.
You will look at the hardship letter you wrote and say yes, there is a hardship. What is wrong? The key is the seller is not in default. Stop paying at that point and, when the seller is 30 to 60 days in arrears, that short sale will most likely get approved. But if you want to try to do a short sale while you are current, hire a smart Sacramento short sale agent who knows how to do it.
Ways to Spot a Sacramento Short Sale Scam
As a Sacramento real estate agent — and just a long-term participant / observer in the world of life on earth — I tend to notice Sacramento short sale scams, and scams in general. My radar is always on the alert. It’s pretty difficult to bamboozle this agent. While other agents laugh and scoff when I ask what if, it generally turns out that I am correct in my initial assessments.
First, I listen to my gut instincts. You know, people don’t pay enough attention to their gut instincts, and they tend to mistrust that instinct because it’s not always based on logic. It’s telling you something for a reason, is what I find. If you feel uneasy or uncertain, listen to your instincts. There could be a sign you’re just not picking up with the side of your brain that processes that kind of information but it’s still sending a signal to you, regardless.
The scam I see run in Sacramento short sales over and over is that of secret collaboration between the listing agent and the sellers. There is some kind of confidential arrangement going on. Maybe a family member or a friend wants to buy the home as a short sale and then either later live in it, rent it out or flip it. The parties involved might not even see it as a scam, but that doesn’t make it any less fraudulent.
Sacramento short sale scams are almost always mortgage fraud because the parties involved don’t fully disclose to the lender and, if the lender knew, the lender would not have approved that short sale. But there are most likely other laws and, if the agent is a REALTOR, various Code of Ethics that could be violated.
I just spotted a suspicious short sale in MLS today, because a buyer in San Jose called about it. There are 3 homes in a row on the same street owned by people with the same last name, all in various stages of foreclosure, one purchased less than a year ago. But the short sale stands out like a sore thumb.
Here are the things I see that buyers and their buyer’s agents might want to question. They result in downplaying the home and telling a buyer’s agent not to bother to write an offer. Let me say that any one or two of these alone is not a reason for suspicion but when they mostly all apply to your transaction, you could be in trouble:
- One photo in MLS, with a car in the driveway
- More than 30 days on the market with no history of pending status in a hot neighborhood
- Brief and odd marketing comments such as: 4 bedroom home on a public street needs TLC. (What kind of agent writes like that?)
- Out-of-area real estate agent
- Out-of-area real estate company
- Agent shares same last name as the sellers (relatives cannot sell a short sale)
- Commission offered is less than what short sales pay (no reason for that)
- Showing instructions state: call listing agent (who probably does not call back)
Be careful out there. There are the crooks who know they are crooks, and then you’ve got the ones who don’t know which end is up yet are still crooks. You can’t tell the difference. But you can stay clear if you smell trouble.
A Sacramento Short Sale Lifespan
For the first time in my life, which is almost since the dawn of humankind, MLS has not immediately loaded on my computer when accessed. I have an internet connection. MetroList is just not responding. It won’t open in Safari nor Firefox. It partially loaded in Firefox and then quit. There is no joy in Mudville; it’s trouble with a capital T that rhymes with P and stands for poop, and the Grinch has stolen Christmas.
We count on things in our life to always be there for us and never change. To work when we expect them to work. But that’s not how life works. Stuff goes wrong. People let us down; they die.
But Sacramento short sales can go on practically forever. I have a few I’ve been working on now for more than a year. A short sale doesn’t die. It doesn’t blow up. It doesn’t just go away and, in some cases, the short sale bank won’t even file a foreclosure notice. It’s not having the Notice of Default filed that can keep a short sale alive and pumping out blood long after the arteries have been sliced.
This is the little known secret that agents don’t realize. Once a bank says NO to an agent, many will give up. Not this Sacramento real estate agent. I keep on pushing until either the seller collapses from exhaustion or the bank says: All right, you got it. Here is your short sale approval. Few sellers are outright rejected in this day and age. This is not 2005, Dorothy.
If you want to work with a Sacramento short sale agent who has closed hundreds of short sales, call Elizabeth Weintraub at 916 233 6759. I really doubt you will find an agent in the Sacramento Valley who knows more about short sales.
Franchise Tax Board Exempts Short Sale Taxes in California
For those of you who follow my Sacramento real estate blog and listen to me blab, you already know that the IRS has issued its IRS mortgage debt relief letter that exempts certain California residents on a federal level from paying tax on the deficiency after a short sale. Everybody wants to know about short sale taxes in California, and now you can read the IRS response to short sale letter at Scribd. This isn’t much help to homeowners in other states, but I sell real estate in California, so I follow closely mostly what happens to short sale sellers in Sacramento.
This morning I feel like one of those Ron Popeil commercials, but wait, there is MORE! Not only are most short sale sellers in California exempt from paying tax on mortgage debt relief to the IRS, but the State of California has issued a letter ruling that Californians are exempt from state income tax liability for a short sale as well. Short sale taxes in California just headed south. The letter was issued by the California Franchise Tax Board and obtained by the California State Board of Equalization, as announced by the California Association of REALTORS, working with Senator Barbara Boxer.
What does all of this mean? It means while homeowners are left chewing on their fingernails about the 2007 Mortgage Forgiveness Debt Relief Act expiring at the end of 2013, coupled with the fact California still has not extended its own version of the act for 2012, that sellers can pretty much raise a middle finger and call it a day. Goodbye short sale taxes in California. Doesn’t seem to much matter what our legislators do, on a national or state level, because we now have letters of clarification that provide protection for the bulk of distressed sellers after a short sale.
George Runner, a member of the Board of Equalization, is in the spotlight for obtaining the letter. I can’t find the letter on his website, though. For the interim, those of you who would be exempt if our men and women in the legislature had ever gotten it together enough to rub two nickels and pass the darn exemption, can coast through this concern. Be sure to check with your accountant to ensure that and your short sale qualifies for the exemption from mortgage debt relief.
