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Personal Property is Not Free for the Taking in a Short Sale
A client described what it felt like to show his home in Sacramento as a short sale to buyers. It wasn’t pretty. He said he felt like he was standing up, trying to balance in a canoe, as he beat circling buyers with an oar to stop them from climbing into the boat. On the one hand, it’s nice that somebody wants to buy his home. On the other, it’s like a feeding frenzy.
For some sellers, it is painful to sell their home as a short sale. It’s not always a choice they come to make easily. After years of struggling, some reach the end of their rope and realize it’s a necessity. These sellers have often struggled through failed loan modifications, struggled with other family members and even struggled with their own conscience because a short sale doesn’t always feel “right” to everybody. When they finally make the decision to give up their home — and giving it up can feel like personal failure to some homeowners — they don’t need a buyer to come along and kick them in the gut.
What am I talking about? These are the buyers who feel it’s OK to ask the seller to leave behind personal items. Things like the refrigerator or washer and dryer, which are not fixtures. Maybe they want the dining room table or bedroom furniture. The sellers personal belongings are not part of the short sale. Non-fixtures do not remain with the home. If you spot a 1965 Mustang in the garage, don’t wet your lips and demand the keys. Don’t assume the sellers are vulnerable and will cave in to unreasonable demands. A Sacramento short sale is not a flea market. Everything you can see with a naked eye is not negotiable. Personal property is not free for the taking in a short sale.
Make a Commitment to Your Sacramento Short Sale
If you’re committed to doing a short sale in Sacramento, you should be committed to the long haul, just like your Sacramento short sale agent. It’s kind of a two-way street. A seller promises to provide financial documents over and over until her eyes spin, and an agent promises to submit those financials to the short sale bank while keeping her personal opinions to herself. OK, maybe not that last part. The point is nobody gives up and splits.
An agent called me yesterday to say she had received short sale approval for a seller on a file she started working on about a year ago. She had struggles like we all have struggles. It was tough to get the home in marketable condition, and one of the parties to the short sale was not exactly cooperable. The agent had put the home on the market but could not open the short sale with the bank because she was missing documents. Her solution was to cancel the listing.
This is the thing about short sales and life in general. You can learn from your own mistakes or you can learn from somebody else’s. It’s easier to learn from somebody else. My suggestion to the agent was to put the home into temporarily off the market status, but don’t give up on your seller. Don’t look at the seller who isn’t cooperating, focus on the seller who is agreeable and committed to the short sale process. The other guy will come around.
Sacramento short sale agents have a responsibility to many parties in the short sale. As a listing agent, we have a fiduciary responsibility to the sellers. If there are two sellers, that responsibility extends to both parties, even if those parties are divorced and not speaking to each other. As a short sale listing agent, we have a responsibility to the buyer’s agent and the buyer, too. If an agent has reason to believe the short sale will not happen, the agent should not list that short sale nor present it for sale to the marketplace. It’s not fair to a buyer to sit in escrow week after week waiting for approval when it’s not gonna happen.
The agent took the home off the market and put it into limbo status in MLS. She continued to work on the short sale. She didn’t throw in the towel and walk away. She honored her commitment to the Sacramento short sale. It took a year but both parties finally cooperated and she received short sale approval.
I keep telling people this secret but they don’t believe me. The secret to a successful short sale is commitment. Don’t give up. Not every short sale will close the first time around. You might have to submit that short sale for approval a second time or a third time or a fourth time. My longest short sale was almost three years but we closed. It doesn’t matter how long it takes to close a short sale; it matters whether one is made from the material to see it through to fruition.
Make a commitment to your Sacramento short sale.
How to Time Your Sacramento Short Sale
Two things potential sellers tend to ask this Sacramento short sale agent. The first is whether the bank will do a short sale. The answer to that is generally yes, unless you just bought a new home in your name. If you’ve just bought a new home in your name, unfortunately, you’re pretty much hosed and you should probably talk to a lawyer about that bad advice. The second question is how long does it take to close a short sale? What a seller is really asking is not how long it takes to close but when the seller must move.
Closing hundreds of short sales give this Sacramento real estate agent a unique perspective. Based on a seller’s individual situation, I can pretty much predict when the seller will have to move out. In some short sales, a seller should not move out at all until closing. A little known and recent supplemental twist to the HAFA short sale, for example, withholds the $3,000 payment to the seller if the property is unoccupied.
I also ask sellers why are they in a rush to move out? If they are not making a mortgage payment, and most of them are not making a payment, it’s free rent to stay in the home. Why move elsewhere and pay two sets of utility bills? Plus, moving out leaves the home vulnerable to vandals. There are good reasons to stay put.
Timing the short sale is important. A seller’s convenience is the most important. A potential seller from Granite Bay called me last week. He wanted to know if he could rent back and close his short sale. I’m glad he called me and not somebody else because the answer to his situation is no. He needs to delay his short sale until he’s ready to move. His short sale will take 120 days and he needs 6 months. On top of this, few short sale banks will grant a short sale to a seller who intends to rent back. In fact, one of my team members brought a short listing in MLS to my attention last week. The listing agent had noted in the confidential remarks the seller would sell only to an investor who would let the seller rent back. The lender was Wells Fargo. Lottsa luck there, buddy.
In a Wells Fargo short sale, all parties sign an arm’s length. No exceptions. See, the thing is if a seller and listing agent commit mortgage fraud — and violating an arm’s length could be considered mortgage fraud — a seller has given the bank a potentially legal reason to set aside the deficiency waiver. That means the seller could end up owing the bank the difference between the sales price and the mortgage payoff after the short sale closed. Simply because the agent gave the seller bad advice. Legal advice, on top of it, which an agent is not allowed to do.
My time frame for closing a short sale is my seller’s time frame. I am in no rush. I won’t push a seller to put her home on the market. To do a short sale, a seller must be ready to move forward. I advise my sellers along the way and help them to adjust their moving plans depending on their particular short sale circumstances. Stuff happens. Are you ready to do a short sale? Timing that short sale is everything. Hiring the right Sacramento short sale agent is a close second. It’s OK to ask your agent if it’s time to put your home on the market based on your own personal situation. In fact, I insist.
The Perfect Sacramento Short Sale Buyer
Is there such a thing as the perfect Sacramento short sale buyer? At the risk of sounding like I was raised where I was: you betcha! A seller asked yesterday — how do I know which offer to pick? She asked if she should read every offer she receives or if she should leave it up to me, her Sacramento short sale agent. First, let me say that decision always lies directly with the seller — never with the agent — but I do offer suggestions, and I do guide my sellers to help them to make the right decision. And yes, making the right decision involves reading every offer.
The right decision is choosing the buyer who will perform. What does it mean to perform? It means the buyer who will pay what the bank wants and will close escrow. That premise may sound on the surface overly simplified but those two things are the qualifications of the perfect Sacramento short sale buyer. Of course, there are other things that come into play but performance and adaptability are the most important.
I’ll tell you what you don’t do as a Sacramento short sale buyer. You don’t let your buyer’s agent become combative with the the seller. Because that kind of behavior is just stupid and it backfires. If your agent is ticked off about something, your agent should keep those feelings to himself. Nobody needs to hear it. Earth to buyer’s agent, hello . . . Sacramento is in the middle of a super hot seller’s market right now. You also don’t disclose to the seller that your buyers trespassed, walked around the property without permission and peeked in the windows of an owner-occupied property.
I just closed a short sale in a gated community in the Pocket. This home was situated on 2 parcels along the river. We had received several offers when it came on the market, but the offer the sellers selected was from the buyer who agreed in advance to step up to the plate, if it was required. This particular buyer was represented by an agent who had closed other short sales. Because of that experience, the agent prepared the buyer for the unexpected. Sure enough, the unexpected happened. As anticipated, the buyer performed.
A seller might think she is choosing the buyer who loves her home as much as she did when she first laid eyes on it, and that could very well be true. It’s nice if a seller likes the buyer and knows the buyer appreciates and values the same things in her home. But as her Sacramento short sale agent, who must put the seller’s interests first and foremost, I’m looking for the buyer who will close.
What’s Wrong With the California Homeowner Bill of Rights
How will the California Homeowner Bill of Rights affect short sale sellers in Sacramento? Despite all of the hoopla over it, not much. Probably the most important aspect of the Bill of Rights as it relates to short sales is the stopping of dual tracking — but that only goes into place after short sale approval, not prior to short sale approval, which is when a homeowner needs it.
Dual tracking happens when a foreclosure has been initiated. This means a Notice of Default has been filed in the public records despite a homeowner’s good faith effort to find a solution. Here’s the way it works before and after the California Homeowner Bill of Rights:
- Homeowner falls behind and stops making mortgage payments.
- Homeowner pursues a short sale.
- Lender files for foreclosure.
- Trustee’s Auction date is set.
- Despite a pending offer for a short sale, home can go to foreclosure.
I can only begin to imagine the trepidation felt by homeowners facing an impending trustee’s auction. The problem is most banks will refuse to review a request to postpone a trustee’s auction until the auction date is 3 to 7 days away. It’s not as simple as asking the bank to permanently stop foreclosure action. Certainly not a month or more in advance. Nope, the banks make homeowners chew on their fingernails wondering if the homeowners will be tossed into the street almost all the way to the 11th hour. It’s as though they get some kind of perverse pleasure out of this type of torture. Why can’t a bank postpone a trustee’s auction when it’s 30 or 60 days away? Why make homeowners wait?
One of the services I provide as a Sacramento short sale agent is requesting the postponement of a trustee’s auction. This service, far as I am concerned, falls outside of the scope of selling real estate and dangles dangerously into the realm of practicing law. Sometimes I can’t sleep at night, worrying if a sale will get postponed. A bank is not required to postpone an auction. In fact, if the investor for that loan is Fannie Mae, you can bet your bottom dollar the auction won’t get postponed. That’s why some short sale agents refuse to work on Fannie Mae short sales.
If the California legislature really wanted to pass a Homeowner Bill of Rights, they’d stop dual tracking after a short sale is initiated and verified. Not after short sale approval. Because after the short sale is approved, there is little reason for the bank to initiate a Notice of Default.
