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Why Some Agents Hate Sacramento Short Sales
Agents are not always justified when they hate short sales.
Just because there is one bad apple in the bunch or an agent runs into a scheming short sale seller is no reason to decide that all Sacramento short sales are worthless and to not recommend short sales to their buyers — yet, there are many agents in Sacramento who do exactly that. There are agents who hate Sacramento short sales. An agent a while back told me he has listed 40 or 50 short sales. I thought, hmmm, I’ve never heard of him, and I looked up his production in MLS, which goes back to October of 2008. He’s listed and closed 24 short sales. At least I know what kind of agent I’m dealing with.
Some people do fuzzy math. Even so, that works out to about 3 1/2 short sales a year. Enough to know better. Not enough to know anything, though. His attitude seemed to be that short sale sellers are liars and cheats, and they try to squeeze every free day they can out of the lender without paying a mortgage. He tells his buyers to avoid short sales. I imagine lots of other agents tell their buyers the same untruths and perpetuate the same misperceptions. They harbor a lot of anger and they hate short sales.
My experience, on the other hand, has been incredibly the opposite. Since October of 2008, I’ve listed and closed 295 short sales. My total production exceeds 295 because I’ve been negotiating and closing short sales since late 2005. I have the dubious honor of being the top Sacramento short sale agent. But just to keep the numbers simple, let’s run with the 295, which is just my sellers, not my buyers. That breaks down to an average closing of almost one short sale a week for 7 years straight.
Never in all of my short sale experience have I had a seller refuse to cooperate. Only once did a seller elect to accept a bank’s offer of a loan modification (he later went to foreclosure). Yes, sometimes banks offer loan modifications when they realize the seller wants to short sale, but if that loan modification does not involve a principle reduction, it’s pretty much worthless, and most loan modifications do not.
Besides, I ask my sellers qualifying questions. We discuss what will happen during the short sale so there are no surprises. I generally collect all of my paperwork upfront, and we contact the bank at least twice a week. Nothing falls through the cracks. My sellers do not leave the home a giant mess when they move out. They clean it up. Because my sellers are conscientious, which is why they are doing a short sale in the first place and not walking away. There is no reason to hate Sacramento short sales.
A buyer’s agent needs to do a little homework on a short sale before suggesting the buyer write an offer. The agent should check out the track record of the listing agent. It’s easy to do, just put the agent’s ID into MLS, check the sold tab and click submit. Find out from the listing agent if the seller has some place to go, whether all the financials are collected, and exactly how long the negotiation might take. Don’t just throw your buyer into a situation that is likely to cause all of you heartache. True, not every short sale is a short sale. But the qualified short sales are and an agent should learn the difference.
If an agent tells a buyer to disregard a short sale that is perfect for that buyer and all but guaranteed to close, whose interest is that agent best serving? Some agents don’t want to wait for a paycheck. That’s the thing they don’t tell you. They want a 30-day closing so they can get paid in 30 days, and I say shame on those agents. That’s despicable.
Why a Lowball Offer on a Preapproved Short Sale Price is Silly
A preapproved short sale price means exactly what you think it does
Every so often I get phone calls from investors who ask if my sellers will consider submitting a lowball offer to the bank for a preapproved Sacramento short sale. They realize the bank has preapproved the price but they expect to negotiate with the bank. For a hamburger today I will gladly pay you on Tuesday. They don’t understand that a preapproved short sale price means the bank will agree to sell at that price, versus, let’s say, a much higher price.
These are the kind of yo-yos who are probably used to dealing with a list price on an REO and they have little working knowledge of a short sale. If I say we’ll sell a home to them for a $1.00, they want to pay 50 cents. It doesn’t matter what the price is, they don’t want to pay it. They are giant time sucks. If you don’t want to offer the preapproved short sale price, I say go make somebody else’s life miserable and leave us alone.
Some go so far as to complain about the days on market. It’s been for sale for months now so the bank will definitely take less now — it ain’t gonna happen that way. The bank doesn’t have the property for sale. It’s not the bank’s property. The bank is not required to agree to a short sale. If the bank is agreeable to the short sale, the bank expects a certain amount of money, and if takes months to get it, so what? The bank doesn’t have a timeframe unless there is Notice of Default filed and, in that event, sometimes the bank WANTS the home to go to foreclosure.
Buyers have no idea what goes through the minds of bankers nor the policy guidelines from certain lenders for preapproved short sale prices. If the home doesn’t sell, it might not be price. It could be marketing, it could be condition of the home, showing difficulties or a bad location, all sorts of reasons. A buyer should not automatically assume how a bank looks at the days on market.
But then I’m basically talking to the wall. Over my last decade of negotiating hundreds of short sales in Sacramento as a top short sale specialist, I’ve learned that no matter how long it takes, a buyer will pay what the bank wants. It’s easier to wait for the right buyer than to try to pound a square peg into a round hole. Besides, I don’t work for the buyer. It’s not my lot in life to try to do favors for a buyer who is not my client. And most of the time, the banks are very reasonable about the preapproved short sale price.
How Are These Sacramento Real Estate Things Still a Thing?
My experience of working with agents over the past 40 years shows that you can’t change a narcissistic real estate agent, no matter how much that agent might desire to change, if the agent is clueless. It’s generally cluelessness that causes a self-centered agent to say silly things. After all, agents are not immune to ignorance in any greater numbers than any other person in the world. It’s the bell curve distribution. You’ve got bad doctors, bad politicians, bad school teachers, bad law enforcement officials, and bad real estate agents, along with the good.
Some agent implied recently that she felt the REALTOR Code of Ethics is an over dramatization of the industry and appeared as though she preferred to pick and choose which Articles to adhere to and ignore the rest. Because this agent must operate in a vacuum, dancing alone to tunes in her head that only she can hear. Or, perhaps she is not a REALTOR because only REALTORS must adapt the REALTOR Code of Ethics. You can’t change agents like that. They don’t want education. How is it that some agents are not a REALTOR? How is that still a thing?
Earlier this week another agent said she was not submitting an offer for her buyers on a short sale listing because we would make her promise to stop writing offers for that buyer. Duh. It’s a good thing we avoided getting tangled up with that disaster, but how is this type of ignorance still a thing? After 10 years of Sacramento short sales, how are real estate agents still under the goofy impression that it’s a worthwhile endeavor to write a bunch of offers for a buyer when a buyer can purchase only one home? It’s a waste of time for everybody involved, including the buyer’s agent. And it’s considered against the law.
Let’s see, Ms. Shit for Brains . . . you want to write an offer on an Elk Grove short sale but you don’t want to commit to waiting for short sale approval? You want us to accept your buyer’s offer, remove the home from the market, submit the entire short sale package to the bank, advise you weekly on our activities, negotiate the short sale, resubmit endless financials and, after 8 to 12 weeks, while the foreclosure doomsday clock is still ticking for our sellers, finally produce a short sale approval letter only for your buyer to announce that she has purchased a different home?
You want to waste the time of all of these dedicated people: the Sacramento listing agent, her team members, transaction coordinator, escrow officer, title officer, the buyer’s lender and the sellers’ entire extended family on the off-chance that maybe your buyer will elect to perform at the 11th hour? What are you thinking? Where is your head? How is this still a thing?
Granted, some agents list short sales that they should not be listing because they did not qualify the sellers for the short sale or it’s priced inappropriately or they are using a third-party vendor for negotiation, but that’s not the case with this Sacramento Realtor. I have closed more short sales since 2006 than any other agent in a 7-county area. My short sales close. That’s because we choose to go into escrow with strong buyers who are committed to closing, and because it’s doubtful you will find a more qualified Realtor in Sacramento to negotiate your short sale.
But, seriously, after all these years, how is this attitude toward short sales still a thing?
The Secret Seedy Underbelly of Sacramento Foreclosures
Contrary to popular belief, sweeping California legislation that changed many of the laws about foreclosures and short sales a few years ago does not contain protection provisions that some people expect, probably due to political compromises. For example, did you know that a homeowner who is in default (behind on mortgage payments) and in escrow pursuing a short sale can be foreclosed upon by the bank? But if a homeowner is chasing down a loan modification, the bank is not allowed to continue with foreclosure proceedings.
A provision kicks in to protect short sale sellers against foreclosure but not until 2018. Today, the basic way to stop a foreclosure during a short sale is to receive the approval letter. Although most banks are certainly free to postpone the trustee auction, there are rules and restrictions, and having an offer on the table is no guarantee of a postponement.
I’m seeing new seediness creep into the foreclosure market, stuff that I haven’t seen for about 10 years is now popping up, and it’s across the board. Bank of America has mostly shutdown its short sale operations and sold off its bad debt. It’s rare to work on a Bank of America short sale these days. If it starts out as a Bank of America short sale, typically it doesn’t end that way as the bank scurries to drop at least the servicing of its underwater loans, if not to sell the mortgage outright.
FHA short sales fall under HUD (Housing and Urban Development), and I’ve recently watched HUD sell the loan to a third-party investment company that handles conventional financing, right in the middle of the short sale, and after it issued the Approval to Participate. I guess it forgot the Approval to Puke-atate. The investment company sent a so-called appraiser to the seller’s home to determine whether it would make more money to evict the seller through a foreclosure action. The guy was part of an investment group that buys homes in bulk through lenders and on the courthouse steps as Sacramento foreclosures.
It should be criminal that banks can own mortgage insurance companies that slap on its policies to insure worthless paper on underwater homes. Doesn’t that boggle your mind? There is a market for bad paper, and the banks profit from it, even after the mortgage insurer rejects the short sale and opts for foreclosure, stripping a homeowner of the option to short sale and without the owner’s permission to allow mortgage insurance. In some instances, owners were guaranteed upfront that an 80 / 20 combo loan meant no mortgage insurance, and once hard times hit, the bank attaches its own MI policy. What? How is that not fraudulent? Why doesn’t Kamala Harris investigate this sort of scam?
Even our own quasi-government entity Fannie Mae is not immune. It routinely pads the appraisals to demand more money than a Fannie Mae short sale would provide — since a short sale generally involves buyer financing and buyer financing is based on a valid appraisal. Foreclosures are profitable for Fannie Mae and for institutional banks as well. They get paid to do foreclosures and there are sometimes so many monetary incentives for a foreclosure that it’s the more attractive alternative.
You may hear a lot of lip service about loan modifications and short sales, but bottom line, even our own government is telling us there are more financial rewards in foreclosures. That’s like telling an expectant mother she can’t use a public restroom and needs to go crap in a ditch.
Losing the Attitude Helps to Keep it Real in Sacramento Real Estate
Ya gotta lose the attitude to keep it real in Sacramento real estate.
A home seller from Lincoln mentioned yesterday that he has sold a handful of homes over the past couple of years and bought a home about a year ago, and he has never had such a smooth and easy transaction as he did selling a short sale through me. I called to congratulate him on closing his short sale. I sold the home almost immediately, it comped by the bank at the sales price, and we received a very fast approval, within about 10 days. He sounded almost astonished that he could say that his short sale was so much smoother than compared to a regular transaction. I guess you could say he was very pleased with my performance as his short sale agent.
I try to let buyer’s agents know when they call me that I am very experienced with Sacramento short sales, because that fact will tend to put their minds at ease and calm any fears their buyers might have about buying a short sale. Because after all, why would you buy a short sale if you could buy a home that was NOT a short sale — as a regular home would close much sooner. And there aren’t as many short sales nowadays as there were a few years ago. People need reassurance, and I get that.
The words I never utter, under any circumstances, are: don’t you know who I am? Because that sounds so pretentious, self-absorbed and sorta cocky. That’s something that Reese Witherspoon would say and did, evidently, when pulled over by the cops for speeding. That’s something a mortgage lender asked the other day when he whipped off an email: Do you know who the clients are? Doesn’t he? I guess it’s not Reese Witherspoon. I offered to let my transaction coordinator look it up for him. Even though his boss earlier that day had admitted they were no longer the mortgage brokers on that particular transaction. Criminy, guys, let it go. Try losing the attitude.
I say to people I have a dubious honor — because I don’t really know if it’s an honor, it wasn’t something I set out to achieve — but when I looked at the numbers, they were staring me in the face. The numbers from Trendgraphics reflect that I have sold more total short sales in a 7-county area than any other Realtor in Sacramento, a record that has continued to grow since 2006. That’s in addition to my regular real estate business in Sacramento.
Still, it was nice to hear from my home seller in Lincoln that I had exceeded his expectations. It doesn’t matter to me who my clients are — short sales or million-dollar owners — I treat each and every one of their files as though it is the one project I’m working on. It’s just the way I’m wired.
