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How A Nationstar Short Sale with Freddie Mac Closed After 6 Months
Even small children are excited to close a Nationstar short sale © Big StockPhoto
You won’t find one Sacramento Realtor in town who wants to sell a short sale home three times, but every so often, despite precautionary measures on the part of the listing agent, it can happen, and definitely was the primary cause of yet another short sale home taking 6 months to close escrow. It’s generally not the short sale banks. It’s the crummy buyers and, yes, even their buyer’s agents are often to blame for failing to vet the buyers.
We put this Nationstar short sale home on the market in mid April, during the hottest time of the year in Sacramento that one can possibly sell a home. It still took 2 months to get a list-price offer. Idiots were submitting lowballs, pushing, demanding, when the comparable sales clearly supported a higher price. Finding the right buyer takes longer this year but eventually one shows up.
When we received a list-price offer, we discovered the mortgage had recently been sold to Freddie Mac, which meant we could no longer do a HAFA short sale, which was our first choice. But it was also good news in a way, because having Freddie Mac as the investor meant that this Nationstar short sale would not move to the auction process, which often can mess up things 10 ways from Sunday. We really dislike those Nationstar auction scenarios. Many delays and they never seem to work.
Freddie Mac asked for a slightly higher price and the buyer foolishly canceled. A month later, we found another buyer and went back into escrow. That buyer never deposited funds into escrow, for some reason. The seller gave the buyer a Notice to Perform and when the buyer failed to meet the terms, the seller canceled the buyer. It was during this negotiation with Freddie Mac when we discovered that although the sales price was fine, the net was not, which meant we had to reduce the amount the second lender would receive to meet the demand.
At this time, close to the end of September, we found our third buyer. This buyer was cash, fully vetted and invested in closing. The second lender let us know it needed to net more than our revised offer of $3,000. We added the small difference to the buyer’s contribution rather than raise the price, but the first lender rejected that idea, still we had to try to for the buyer’s sake. In the end, we added the difference to the sales price and everybody now seemed excited to close except, the day of closing, both banks rejected our final HUDs.
The new arm’s-length agreements that both banks produced allowed for a rent back from the seller, which is a new twist in short sales. Rent backs used to be prohibited. The sellers needed to rent for 30 days, had deposited funds into escrow and that’s what the banks objected to, primarily because the negotiators are not really trained in how to read HUDs. The Nationstar negotiator continued to insist that the rent was part of the proceeds, when it was a deposit from the seller.
Credits, debits, the process hurts their little heads.
Good thing this was a cash transaction, and we were not required to comply with RESPA, because we moved the rent deposit to a credit on the buyer’s side of the HUD. Both banks approved the HUD, with only 45 minutes left in the day to record. Which we met. Under the wire, successfully closed another Nationstar short sale.
Put Sacramento Short Sales on the Market Prior to Default Notice
A Notice of Default filing starts the clock ticking on Sacramento short sales. © big stock photo
Unlike the hey days of pre-2012 in Sacramento, we are not seeing a lot of short sales in the area anymore. About 4% of all the listings in Sacramento County at the moment are active short sales, as compared to about 75% a while back. Having a small percentage of homes for sale that are underwater is good news for just about everybody, though, except that short sale seller who needs to sell her home.
In case you’re wondering, and I suspect you probably are, my own caseload of short sales has dramatically decreased, but I still manage to sell and negotiate a large number of Sacramento short sales. I thought the number was much smaller than it is, but so far this year almost 1 out of every 4 sales I’ve closed has been a short sale. It means I am still pulling in a huge chunk of the short sale business and most likely continue to rank as the best Sacramento short sale agent in town.
Even though this month my closed sales for the month of July should top $6 million, only two of those homes were short sales, and they were small price tags. It is possible that July could be my biggest month this year. One of those two sales, though, was a real struggle in West Sacramento. The main problem was the dog urine smell in the back bedroom, compounded by additional problems: a rotting pergola that needed to be removed, additional pest work that was required and a broken HVAC. Not exactly every home buyer’s dream home.
On top of this, as expected, Bank of America had threatened to release the servicing, and the investor Fannie Mae demanded a higher sales price, which I challenged because it was incredibly out-of-line. It would not appraise for the buyer’s lender. Fannie Mae agreed to reduce the sales price but it was still higher than the buyer wanted to pay, but not so high another buyer wouldn’t pay it. That’s often the secret to these negotiations.
However, the sad news is other short sales are lingering, even priced way below the comparable sales, they sit. Buyers are passing by those listings in favor of fast closings and sellers who will make repairs. Some short sales take 3 months to sell today. That’s not good news if a seller has a Notice of Default filed already.
The Dangers of Hiring the Wrong Short Sale Agent in Sacramento
The best short sale agent in Sacramento is Elizabeth Weintraub.
Enjoying a reputation in the real estate industry as a Sacramento Realtor with integrity (and a person who gets the job done) has been very helpful for my clients because it means my listings carry weight. What do I mean by that? It means an agent doesn’t have to worry when he or she spots a listing with the name of Elizabeth Weintraub attached to it. By the very nature, Elizabeth Weintraub listings relatively assures buyer’s agents that their transaction will conclude without drama or a pile of complications. If that particular home is a short sale, all the better; no fear, it will likely close.
I received short sale approval on a fixer home in West Sacramento a few days ago, which I forwarded immediately to the seller. He was completely stunned that I had received the approval so quickly, within a few weeks — especially due to the fact that his short sale had been initially rejected only a few days ago. It needed one little tweak to qualify, and we submitted revised documentation that addressed the particular protocol demanded of us. Some other agent might have thrown in the towel after the rejection. I don’t take no for an answer.
The thing is some home owners are really suspicious about their lenders. They make up all sorts of stories to fit any given situation, perhaps to help them cope with the confusion and utter bewilderment often apparent at certain lending institutions. Some sellers are paranoid and believe their banks employ sabotage. Bank employees can be crafty but they’re no Robert Durst. If you haven’t seen that HBO 6-part Documentary, The Jinx, I encourage you to watch it because it will leave you feeling creepy for days, which is better than feeling your bank is out to get you.
My seller said that many agents were vying for his listing and calling him to list his home. He interviewed a handful of real estate agents but he kept coming back to my name as the best short sale agent in Sacramento. I’ve sold more short sales since 2006 than any other real estate agent in a seven-county area. This guy and his family needed a professional who would get the job done, and said he didn’t want to take any chances so he hired me, and I got his short sale approval. The seller said he did not think another agent could have done it. His situation was complicated.
Short sales are all a little complicated. Yesterday a fellow called to say he was parked outside his new home, which he found on Zillow. Well, that home is closing escrow in a few weeks, so it’s not his new home. We chatted for a while and discussed how he’s living in a rental that is a short sale and thinking about buying it. He wouldn’t tell me who listed that home but continued to insist the agent, a property manager, was a “very experienced short sale agent” because the agent, most likely, had told him that. There’s a sucker born every minute, according to PT Barnum.
Who is the lender, I asked. Did the agent tell him that with Nationstar as the lender, the home is going to an online auction where another buyer can swipe the home? Nationstar short sales are animals onto themselves. Unless the investor is Fannie Mae or Freddie Mac, that’s where Nationstar short sales go these days. Then, he admitted he had submitted an offer through the agent-slash-property manager, and was in escrow. He has a fiduciary, which means all further questions need to be directed to his agent. I can’t interfere. Our conversation ended. I doubt that guy is buying a house, though.
Ways to Know a Bank Will Approve the Short Sale
Buyers who plan to buy a short sale in Sacramento should receive some kind of assurance that the bank will approve the short sale. In other words, the odds should be in their favor, especially if they have to wait 6 months for an FHA short sale or 90 days for most other short sales. If a buyer is to invest that amount of time, wouldn’t it be nice to know whether the bank will approve the short sale?
For starters, a buyer can approve the odds by buying a short sale listed by an experienced Sacramento short sale REALTOR. By experienced, I mean the REALTOR has a long track record of closing many short sales, not just a handful. It seems that some agents close one or two short sales, and granted it can seem like a lifetime, but two short sales does not make an agent an experienced short sale agent. It makes the agent somebody who ventured into short sale waters and came out without drowning or getting shot, a note-worthy accomplishment but it doesn’t mean much.
Some agents will list a property as a short sale simply because the seller asked them to do it. They never ask the seller if there is genuine hardship or qualify the seller at all. Some agents don’t even negotiate their own short sales. Not really knocking the third-party negotiators, but they don’t seem motivated by the time is of essence urgency that listing agents tend to possess. It’s often just another file. But I think buyers would rather see the file with a third-party negotiator than with an agent who doesn’t know what he or she is doing. Still, all in all, buyers are typically better off if the listing agent negotiates the short sale, has experience and has qualified the seller.
I can say all of this because I’ve sold hundreds of short sales and negotiated tons, more than any other Realtor in a 7-County area in Sacramento Valley since 2006. When I spot a short sale in MLS that is pending short lender approval but is mispriced, that’s a pretty good sign the short sale will end up back on the market at a much higher price or simply rejected all together. The mispricing is typically too low. I don’t know where agents get some of these prices — I think they pluck numbers from thin air, hoping and praying in vain. Banks want market value. End of story.
If you’re searching for a Sacramento short sale agent, call Elizabeth Weintraub at 916.233.6759. If your short sale is doomed, you can trust that I won’t list it. My short sales close. Can’t recall that I have ever lately had a bank reject a short sale. You can put faith in the odds that the bank will approve the short sale when you’re buying a short sale listed by Weintraub.
The Sacramento Short Sale Closing Against the Odds
This was the Sacramento short sale that closed against the odds. If it wasn’t for the fact that I knew the buyer’s agent and had faith in her abilities, this particular short sale closing might never have happened. It’s almost as though we “willed it” to a conclusion, so closing occurred. Of course, having years of experience in closing hundreds of short sales helps — there is no denying that fact — but this particular short sale presented so many unique challenges. The sellers were very cooperative, too, which made the horribleness bearable.
The problem with this particular Sacramento short sale was not the fact there were two loans between Bank of America and Green Tree. I negotiate many short sales with two loans. Moreover, Green Tree is not a problem for me like it seems to be for other agents. After years of hammering, I’ve got the process down pat and know intimately how Green Tree operates. It also wasn’t the fact that there was a SMUD lien filed against the property. I know what to do with those, too. It was the condition of the home.
This is where many Sacramento short sale agents throw in the towel.
Half of the home was remodeled and the other half was not. Further, it needed a new roof because the existing roof was beyond its useful life. Did I mention the pest work? The conundrum: The seller is not responsible for the repairs. Buyers don’t want to do any work and they don’t have any money anyway. Toss into that mix the fact the bank wanted top dollar for this home — the same sales price as for a home in excellent condition — and couple that nonsense with there is really no arguing with the bank.
Unless there is strong argument, which is rare. Arguing with a short sale bank is usually a wasted effort because the banks just don’t care. The value banks typically want rarely reflect the BPO as much as it does the bottom-line net the bank could obtain through other financial options. The bank insisted on a crazy high list price, which I eventually convinced them to reduce. The buyers offered an even lower price, but they were willing to obtain an energy efficient mortgage (which involves a little known credit) and pay for other repairs.
I trusted the buyer’s agent to perform. This is where industry experience and networking pays off. We had the perfect match in this transaction. I had the sellers who needed to sell and she had the buyers who needed to buy. Challenges be damned.
The buyers didn’t have a lot of money, and we needed to rely on first-time home buyer loans and repair loans to help them to buy this house. Their agent is a pro at navigating the waters for first-time home buyers. Getting the approval from the bank for this Sacramento short sale was the first step. The second step was renegotiation with the bank. Yes, I know this goes against all that I preach about short sales and buying the home in AS IS condition without any further renegotiations but this was a special case. It wasn’t motivated by financial gain or greed.
I developed a strategy and presented a compelling case. We obtained the price reduction. The buyers got the home of their dreams. OK, maybe it’s not the home of their dreams right now, but it will be after the new roof is installed, the sewer lines are fixed, the pest work is completed and they eventually remodel the other half of the home. Sometimes, you’ve just got to have faith in the experience of your real estate agents to pull off what seems like an impossible transaction.
Oh, I almost forgot to mention. The sellers walked out of this with about $7,500 in cash from the bank. This was a sweet short sale, despite the additional work.
