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Breaking Bad Sacramento Short Sales
As AMC’s ground-breaking television drama Breaking Bad has done for science, short sales have done for certain Sacramento real estate agents. Given some of us sudden respect. Short sales have made other agents want to jump on the same bandwagon, but you know, the key to success in anything is thinking things through; yet, to accomplish that directive, one needs a solid basis, a foundation to process those thoughts, and therein lies the reason as to why some agents in the real estate business tend to struggle.
I recall when Breaking Bad first came on the air some 5 years ago. My husband, who is somewhat nerdy and OK with that trait, pointed out the numbers on the elements used in the beginning of the show were incorrect. Now, that is not something I would know. I barely recall the Periodic Table from school. Science was not my strong suit — my passion was English. Back then, we had attended an About.com conference held at the New York Times which, at the time, owned the company. I write the homebuying website for About.com in my spare time, apart from selling real estate in Sacramento. Writers from all over the country attended this particular conference, and we were excited to meet a science writer with whom we could discuss Breaking Bad and the mistake in the elements.
Except this person had not watched the show. He seemed a bit embarrassed to talk about it. Lots of people have never watched this show, until Netflix made previous episodes available. Last night was the final episode of Breaking Bad. Part II of Part 1 of the end. I stayed up past my bedtime to watch it, too. We usually record the show and watch it at a time that is more convenient for us, like before my bedtime. But sure enough, if we did that, somewhere along the line we would read about the finale. So, after much discussion, we concluded it was necessary to stay up and watch it.
In case you haven’t seen it, I’m not gonna spoil the ending for you. Except to say . . .
Hey, are you interested in another short sale near Elk Grove? I have a new listing coming on the market this morning. It’s a 4- to 5-bedroom, with 3 baths and a pool. List price is $279,000. The sellers are properly positioned for smooth short sale negotiation, and I anticipate a closing before the end of the year. Call your Sacramento real estate agent, Elizabeth Weintraub, at 916 233 6759.
The Rules for an FHA Short Sale
All short sale transactions in Sacramento, especially the FHA short sales, are handled from the perspective of the short sale agent and thus limited by that agent’s experience and education. The more an agent learns, the more an agent realizes in horror what the agent doesn’t know, or at least one would hope it works that way. But some agents take a 3-hour class and proclaim themselves to be certified short sale experts without closing any short sales.
Moreover, short sale seminar classes seem to be gearing up at the moment, even though short sales are on the decline. To sell those short sale classes, the promoters proclaim that banks want to hire short sale agents to move underwater inventory but that’s not entirely true. As long as homeowners are making payments and unlikely to default, the bank doesn’t care. Also, banks have no shortage of real estate agents at the bank’s disposal.
Agents can be such suckers. I know this because I worked in the real estate seminar business some 35 years back. That well known real estate guru is dead now.
I audited a short sale class a few days ago and was astonished at the crap thrown out. Some of the information touted as fact was completely wrong. I won’t name the class except to say that I understand agents have few places to go to get this information and, if one is starving to death, even a handful of sand tastes good.
A big deficiency exists in the FHA short sale field. I see this by the questions asked online from frightened buyers. An FHA short sale happens when the existing financing is an FHA loan and the sale at market value is underwater. HUD (Housing & Urban Development) has set forth very specific requirements and guidelines. The first is to obtain the Approval to Participate in the short sale program outlined by HUD. To get that ATP, homeowners must be first be examined and evaluated to see if they fit other foreclosure alternative programs offered through HUD.
This happens even if there are no other programs that fit that homeowner’s situation. This happens even if the homeowner can no longer live in the home because all of the interior walls have been ripped out and the plumbing stripped. After evaluation of such a situation, which sounds completely insane, then the servicer will request a variance. You just have to know the rules and follow them. The short sale guidelines make sense to HUD. The strict rules don’t have to make sense to anybody else.
FHA also offers loan modifications, for example, only to owner occupants. If a potential seller does not occupy the home, the loan modification will not be granted. No investor loan modifications. End of story.
Yet, that did not stop a homeowner who rented out his home in Sacramento from trying. Even after I sent him the particular HUD guidelines, he still hoped they might give him a loan modification. Who am I to stomp on a homeowner’s desperate attempts to keep a home? I won’t squash those dreams, even if the dream is impossible. It’s not my house. Besides, the owner, even though he was not an owner occupant and has long since moved away, still needs to be evaluated for other foreclosure alternatives.
In my most recent Bank of America FHA short sale, we waited to receive the go-ahead on the Approval to Participate before putting that Sacramento short sale on the market and obtaining a short sale offer. It is the sensible and smart way to do an FHA short sale with Bank of America. Even so, it still took another 90 days to obtain short sale approval. And I’ve been working on short sales since the market crashed in 2005. I’ve closed hundreds, more than a 120 short sales last year alone. This Sacramento short sale agent is always looking for ways to streamline the short sale process.
If you’re sitting in a FHA short sale in Sacramento that seems to be dragging out and going around in circles, you probably have a listing agent on the job who doesn’t close very many FHA short sales. Experience is everything in this business.
The Short Sale Market in Sacramento
April 2012 to June 2013 Sacramento Short Sales
At the beginning of spring, I wrote about how Sacramento short sales are slowing down and how the short sale market in Sacramento was pretty much over. I received some push-back on that statement, primarily from companies wanting to sell more short sale training programs and webinars to real estate agents. No, no, short sales are not over, they cried. Because they didn’t want it to be over.
After 8 years of the short sale business in Sacramento, some people are just waking up to the fact that it’s lucrative. Like with most things of this nature, once you figure it out, it’s gone. You’ve gotta be there when it’s happening.
It’s taken the federal government many years as well to straighten out its HAFA program. Just last month, the federal government extended the HAFA program to December of 2015, allowing closings to string out into September of 2016. The government has also decided in its June HAFA supplemental to remove the requirement of income / asset verification by the lender. When they do that, you know they’re scraping the bottom of the barrel to try to make sure every last short sale can squeak in. There will always be stragglers. But the big push for short sales is over.
You can see on the chart on this page that short sales have declined steadily since last year. In fact, when compared to the overall market in Sacramento, short sales make up about 10% of all homes for sale in June. Some of the short sales that are in MLS as a short sale are also not a short sale because some of those sellers don’t qualify. The sellers don’t qualify because they listed the home with an agent who doesn’t know how to qualify them.
I noticed the switch in my business this spring. As a Sacramento real estate agent, I list homes all over Sacramento. Much of my inventory is now traditional sales. When the top Sacramento short sale agent in Sacramento tells you that short sales are so Barry Manilow, you should believe it.
Chart: Trendgraphix
A Solution to the War Between Two Short Sale Banks
You’ve got life easy if you’ve never had to talk to short sale banks. Be thankful for that. Man, I used to see myself as a person with little patience. That’s one of the reasons why I tried back in my 20’s to learn how to sew. I was under the impression that sewing a dress would teach me patience. You know, you’ve got to trace the pattern on the cloth, carefully cut it out and figure out how to attach the pieces without sewing them inside out or upside down.
My dress ended up in the trash can. It wasn’t disappointing to me. It was satisfaction.
However, over the years, I seem to have acquired patience. I have no idea where it came from. One day it wasn’t there and the next it was. I toyed with the thought that it’s possible aliens have taken over my mind or maybe the 1960s had some sort of long-lasting effects like those flashbacks that never materialized. Hard to say, but patience is absolutely required if a Sacramento real estate agent needs to negotiate a short sale.
The latest irritation that popped up this year, part of the aftermath from passing the Homeowner Bill of Rights, is when the first lender and the second lender refuse to see eye-to-eye about issuing short sale approval. I’m not issuing approval first, says the first lender, arms folded, you issue it. So, we try to reason with the second lender. I’m not issuing approval first, says the second lender, let the first lender go first. What reminds me of being back in grade school has been going on all year long. It’s enough to make an agent with less patience smack ’em.
I understand the reasoning. If the second issues approval, it shows the hand of how much it will accept from the first. Some second lenders would rather let the first make an offer of compensation. On the other hand, if the first issues approval, not only does it set the stage for compensation to the second, because it does not want to revise the approval, but it is also obligated to stop all foreclosure action. Yeah, that’s the real reason. Now the first can’t move forward with foreclosure, especially if it can’t come to an agreement on compensation to the second.
Short sale approval is the only part of the Homeowner Bill of Rights that protects a seller in the event of a short sale. Applying for a short sale offers zero protection, none. Protection is afforded only after the short sale approval.
One solution to get around this stalemate is to have one of the lenders issue approval for a short time period. The letter can contain a short expiration date, like 7 days to 10 days out. And, that’s exactly what happened in a West Sacramento short sale today.
There are always ways around a problem. If you’re looking for a patient Sacramento real estate agent who finds solutions, call Elizabeth Weintraub at 916 233 6759.
Stay Away From the Sacramento Short Sale Crooks
The problem that arises sometimes when taking over a listing — especially a botched short sale listing — is gaining the seller’s trust. Some sellers have been scammed so much, they don’t know where to turn nor whom to trust, and that’s pathetic. There are so many crooks in the short sale business. The crooks aren’t just the real estate agents, although there seems to be more of them than you’d probably suspect. The crooks are also the short sale negotiators, known as third-party negotiators hired by the agent, many of whom are not even licensed to legally do the job, on top of the buyers riding around in the back pockets of some of these agents.
The alarming thing is if you ask these people why they are crooks, they will tell you they are not crooks. And they will believe it. That’s how they get to be crooks because they believe their own lies.
It’s no wonder the short sale banks are cautious and careful, expecting every piece of documentation to be perfect. Seeing what I’ve seen in the short sale business, if I were the CEO of a short sale bank, I’d be scared crapless to approve some of the short sales because you just never know. Buyers are in cahoots with agents who are in cahoots with the negotiators, and they’re all in bed together. The person who doesn’t see any of this is the poor sellers. And why would they? What do they have to compare anything to? They have probably never done a short sale before and will never do a short sale again.
The best advice that I can give to a seller is if something seems too good to be true, check it out. Verify it. Talk to a person of authority and get advice. The buyers should not have a pre-existing relationship with the listing agent. The buyers should not be trying to simultaneously sell the property when they are buying the property. There should be no monkey business going on. The home should be priced at market value, not way below market value and sold to the lowest bidder. Deposits should be released to escrow.
Ask your Sacramento short sale agent to give you references. Prospective sellers are free to check out my Weintraub reviews online — real letters from real sellers. Find out how many short sales your proposed agent closes per year. Last year, for example, I sold more than 100 short sales. Does your short sale agent measure up? Probably not, but then there aren’t very many individual agents in Sacramento who sell as many short sales as I do. If the agent has closed 15 to 20 short sales, that’s a good number, though. Maybe you should hire that agent. Everybody and their grandmother is claiming to be a short sale expert today. Make them prove it.
Your agent should collect documents from you upfront. A hardship letter is a must for just about every kind of short sale, with a few exceptions. Tax returns, bank statements, payroll stubs, financials, all of these documents should be in your agent’s possession. If your agent does not negotiate the short sale, consider hiring a different short sale agent — an agent who does her own negotiation. Don’t let your future fall into the hands of a third-party vendor who doesn’t know you nor your situation. That’s a recipe for failure.
And listen to your gut instincts. If your gut tells you something is wrong, it probably is wrong. Very wrong.
