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Throw Back to the Days of Sacramento Short Sales
Tropical storm Olivia approaches eastern Kauai. by: Josh Amolsch
If I didn’t know this was 2018 and not 2008, I would pinch myself and be happy we are not dealing with the attitudes of Sacramento short sales. Although, I did receive a call about a property in Elk Grove that was listed a bit over $400K, which suddenly dropped to $330K. The caller asked me if I thought $340K would work as an offer, so we had to discuss how short sales work. Why a bank would accept an offer, and how banks look at their BPOs. Still, I could work the comparable sales to arrange for a pretty good value that we could substantiate, but then the buyer never called back.
Almost 70% of my listings have been sold more than once and are now back on the market. You know what that means, right? It means that buyers are acting like the days of Sacramento short sales, i.e., eager to get into escrow but reluctant to stay put. When I talk with the exclusive buyer’s agents on the Elizabeth Weintraub Team, they say it is not unusual for them to spend a lot of time on the basics. Such as going over the purchase contract in detail, discussing how individual properties would meet long-term goals. Managing expectations.
This helps to prevent cold feet. Counseling buyers, making sure their needs are met. Not dragging them kicking and crying into escrow. Not every buyer is cut out to buy a house.
It was very common during the heydays of Sacramento short sales to have buyers cancel. But today, there is no reason other than anxiety, I suppose. Example, a starter home near downtown Sacramento has been in escrow four times. There is nothing wrong with the house. It’s been babied like no tomorrow, and the seller has been on top of every maintenance issue. We have a clear pest. But buyers are afraid.
I hope this stream of flakey buyers is just a quick rash that has stopped spreading. At least one thing is certain. We will never go back to the days of Sacramento short sales. The market might come to a slow-as-molasses rolling stop before leveling off, but it will never be a bubble bursting. Conditions for that kind of storm are non existent.
Why the Buyer Matters for a Natomas Short Sale Offer
A good Natomas short sale offer involves a committed buyer.
Although it is rare nowadays to list a short sale because there are so few in Sacramento anymore, it doesn’t mean I change how we handle a Natomas short sale offer. The same rules apply, same principles and same practice. I know there are other listing agents who might grab the first Natomas short sale offer that comes along, but that’s not how I advise my sellers.
Having sold more short sales than any other agent in a 7-county area over the past 10 years, my experience as a top Sacramento short sale agent speaks volumes. We don’t want to drag the process out any longer than necessary. If the buyer refuses to conform to the practices we put into place, they are not a viable buyer for us. It blows my mind that buyer’s agents fight us, but they often do. They don’t think ahead, they don’t stop to consider the harm they cause, to the seller and the listing agent and everybody else in the transaction, when their buyer is not fully committed to the process.
But that’s true about a lot things. They want the world to conform to them and not the other way around. We don’t work with buyers like that. If they want to make unreasonable demands, submit lowball offers, fail to deposit earnest money, they can go make somebody else’s life miserable and not my seller’s.
We spent 8 days working with a buyer’s agent, who was wonderful, and her buyers, who were lovely and qualified, before going into contract. The buyers started out by asking for a shorter time period. We expect a commitment for 90 days and, if we get it done sooner, we look like heroes. But short sales can sometimes take 3 months. My experience has shown if a buyer won’t commit to 3 months, they are not candidates for a short sale. They are the type who might bail when the first shiny object diverts their attention.
They also thought the list price was negotiable. I am so freakin’ skilled at estimating market value and what a bank will take, that my sellers can rely on my estimate. If anything, prices could go up, not down. Eventually, though, after 8 days of negotiations, the buyers elected to accept our terms and our price. It was worth waiting for the buyers. It meant they were worth fighting for with the bank.
Sure enough, we got short sale approval for the parties within 6 weeks. We were also able to obtain a 10-day closing extension for the buyers since Trump’s FHA loan policy changes at the last minute messed this up. These buyers were a perfect match, and that’s what you need to close a Natomas short sale offer. We closed escrow yesterday, and the buyers now own a delightful home for $225,000 in Natomas. The most important component of many short sales is the buyer, next to choosing the right listing agent, of course.
What Sort of Terms Make a Good Sacramento Short Sale Offer?
A good Sacramento short sale offer meets bank requirements.
Because agents rarely write a Sacramento short sale offer nowadays, especially if there is a similar home that can close escrow sooner, it is not unusual for an agent to overlook how a seller and her listing agent may view the terms submitted. In fact, now that I think about it, many agents, it seems, tend to ignore the other side of the transaction. They don’t always think ahead or consider how the offer might be received, you know, they seem incapable of predicting how the seller may react. They just know what they hope to accomplish when they barrel forward, guns blazing, and then wonder why their offers are continually rejected. Must be somebody else’s problem, not theirs.
Usually there is a little bit of give and take when negotiating, except for short sales. A Sacramento short sale offer is a whole different animal, yet some agents treat it like a regular sale. It is not a regular sale. Everything is subject to bank approval. The biggest mistake that buyers and their agents make is to think the bank gives a crap about them, and they apply all sorts of weird thoughts to the process like the bank is desperate or their offer is in the bank’s best interest, both of which are crazy. They think like Donald Trump and assume the world revolves around them.
We analyze every Sacramento short sale offer to try to predict the likelihood of the transaction closing. I share with buyer’s agents the fact no agent over a 7-county area during the past 10 years has more closed short sales than Elizabeth Weintraub. Not to brag about my track record, no, my point is to set aside any fears that the short sale could blow up or somehow not close. When I accept a short sale listing, I take it because it fits criteria to close. When I discuss a Sacramento short sale offer with my seller, we examine the buyer’s ability to stick with the transaction, rise to the occasion (if required) and to close.
The types of terms that make a good purchase offer for a Sacramento short sale agent are the buyers’ strong commitment to the short sale process and amount of flexibility. This means being willing to wait for approval, even if that approval will take 3 months or longer. Our reasoning lies with the fact the clock for foreclosure is almost always ticking. If the short sale buyer skips out on us, we might not have enough time to sell to another buyer. Banks won’t always postpone a trustee’s sale.
We also prefer buyers who can close within 30 days. Buyers who are strapped for cash, need down-payment assistance or closing cost assistance are not always a good candidate for a short sale because:
a) short sales are sold AS IS, meaning any lender-required conditions are generally satisfied by the buyer, and
b) not every short sale bank will give away a big chunk of its profit to the buyer as a closing cost credit, and
c) there are a number of fees many banks refuse to authorize, which means the buyer must pay those fees.
No money? The short sale cancels. Further, if the sales price is the top sales price the buyer can qualify for, that buyer will be hosed if the bank demands a higher price. Our seller’s market in Sacramento is appreciating. Due to the time lag for short sale approval and due to some banks’ inabilities to hire credible BPO agents who turn in screwed-up values, that sales price could increase. If the buyer has zero flexibility, that’s not a gold-standard Sacramento short sale offer.
You might wrongly presume after all of this that we don’t accept VA offers, but we do. We love VA buyers and will work with VA loans all day long, providing the buyers are committed and meet the criteria of a good Sacramento short sale offer.
Why You Need a Short Sale Agent to Buy a Short Sale
Top Short Sale Agent in 7 Counties in Sacramento Valley over 10 years.
Home buyers absolutely should hire an experienced Sacramento short sale agent to buy a short sale, there is no doubt about this fact in my mind. I don’t say this simply because I have listed (and therefore sold) more short sales over 7 counties than any other agent, which makes me the top Sacramento short sale agent in this area. By a wide margin. I say this because agents who don’t deal much with short sale banks and are not on top of the new laws, are placing their buyers in a disadvantaged position.
There is a huge difference between an agent who has sold 5 short sales, one every other year, and a short sale specialist who has amassed almost 400 sales in this arena over the past 10 years. I am constantly amazed when talking to buyer’s agents about the intricacies of short sales how little agents know as opposed to how much they THINK they know. Just because one bank in one short sale handled a situation in X manner has no bearing on a different short sale.
Yet, that doesn’t stop these guys from claiming to be an expert in an area in which they have almost no expertise. I call that a distorted reality, like the state of mind where Donald Trump resides.
I can tell so much about a short sale just by analyzing public information. There are some short sales in Sacramento that are not short sales. Oh, yes, they might be listed in MLS as a short sale, but they are not, for a plethora of reasons. By calling the Elizabeth Weintraub Team, buyers can lessen the chances of going into escrow on a home that may not, under any circumstances, close.
In fact, just this morning a preapproved buyer called about a short sale in Sacramento after reading an article I wrote for The Balance about hiring a short sale agent to buy a short sale. I made excellent points about not hiring some Joe Schmo without short sale experience. And it’s a good thing he contacted me. The short sale he is considering has no photograph in MLS (which is a violation) no marketing comments, and the price is jacked up two hundred grand from last year’s canceled listing.
Which is only the tip of the iceberg. Without going into detail about the financing, and the subsequent short sale bank, we might very well save this buyer from disaster. It’s a good thing he called a short sale agent to buy a short sale. You can call, too; call Elizabeth Weintraub at 916.233.6759.
Chart: Trendgraphix, used with permission
Banks Do Not Care About Your Short Sale
Banks do not care about your short sale is the first truth for a Sacramento agent.
Even through our fast and furious Sacramento short sales over the past 10 years, banks still do not care about your short sale, and it amazes me that people expect a bank to care about individuals. It’s not just the buyers and sellers who want the banks to care about them, it’s their real estate agents, too. They search frantically for answers, for logic based on their limited experience, and they just want somebody to explain common sense to the bank. If only the bank knew . . . they cry.
It’s difficult, I know, to handle the bad news, but the first thing to realize is the bank doesn’t give a crap about you. Just get over that expectation. Banks do not care about our short sale sellers (their borrowers), the seller’s hardship or situation, and it doesn’t care how long the poor buyer has suffered during the process of the short sale. Banks do not care about your short sale. Hoping to make a bank care is like hoping Trump won’t win the Republican nomination.
You can read a pile of misinformation online about how banks spend more money to foreclose than to do a short sale, and much of that is garbage. Unless the writer handles the bank’s finances, the reader can’t know which is more profitable for the bank. Sometimes banks get paid more to do a foreclosure: from the government, from PSAs and from its own structured system. Hoping to explain to the Harvard- and Yale-educated asset managers why a short sale is more profitable than a foreclosure is pitiful, like supporting Ted Cruz.
Ditto with BPOs. The amount of money a bank asks for often has little bearing on market value, and yet agents often want to argue about the sales price of a short sale. Tell the bank how much work the home needs, a buyer’s agent will plead. Oh, please. Show the bank months of lowball offers, photos and estimates and one might make headway. Banks do not care about your short sale and they are not interested in opinions from those engaged.
Once you understand that banks do not care about your short sale, you can begin to move through the process. Just don’t expect to expedite through Equator since many of the major banks have now dropped that platform. I once handled 75 listings at a time but now you can count the short sales I sell today on one hand. Still, the attitude of bankers has not changed one iota over the past 10 years. And the veteran Sacramento short sale agents don’t expect it to.
