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Crazy Escrows in Sacramento Mean We Stay to the End
Crazy escrows are not uncommon in Sacramento short sales.
Of all the crazy things that could fan the flames in an escrow, this particular case I’m about to discuss was exceptional, but then many Sacramento short sales are unique. This was also a small transaction as compared to selling luxury homes in Sacramento or in Davis — but as a Sacramento Realtor, I really don’t look at the sales price and tally my potential commission or I’d never list and sell half of the properties that I do. Or, as my husband likes to point out, still much more than his paycheck.
The property itself was somewhat unusual in that deferred maintenance and dry rot was evident, among some nice upgrades. That makes it hard to appraise because some BPO agents struggle with repair issues. It’s easy when all the homes within a half mile are similar to each other like those homes in Elk Grove or Natomas, it’s quite another thing when the neighborhood is distressed and the homes are not so new.
We received a few offers during the first 2 1/2 months this home was for sale, but none at the price we needed to gain an approval from the bank. Agents seem to think we should be grateful for their buyer’s lowball offers and send them to the bank on the off chance they might get accepted, and I guess they seem to forget that we don’t work for their buyers. We work for the seller, and if we’re gonna work, by golly, we’d also like to get paid for it, however small that paycheck might be. We’re not interested in hearing why the buyers feel the home is worth less, in many cases we know what the bank expects. Meet it or you don’t go into escrow. Finally, a buyer who would occupy the home wrote an acceptable offer.
Wells Fargo sent us an approval within 8 weeks, which is a little bit longer for Wells Fargo than normal, but it was also a HAFA short sale. We still had the second lender to contend with, which wasn’t budging from its high demand and, on top of everything else and typically par for the course, vandals broke in to steal appliances and wreak havoc. The sellers handled much of the repair though their insurance company, thank goodness. Then we went through 4 or 5 rounds of proposed approvals from USAA until we were down to the last 400 bucks.
I pleaded, cried and practically wept out loud to the negotiator about the sellers’ particular medical condition. Think about the worst health thing that could possibly happen to a human being, apart from maybe cancer, and that’s what the seller was going through. Then February 1st rolled around and the 2015 HAFA short sale guidelines changed, so I resubmitted the package to Wells Fargo and requested a revised approval letter to include the $10,000 relocation incentive to the seller and to pay the second $12,000. It took Wells Fargo another month to release the revised approval letter, which was finally, finally followed by the approval from USAA.
The appraiser then requested a pest report and a pest completion. Fortunately, the buyers agents, super team that they were, stepped in to help the buyer handle it. We were all ready to fund and close when the appraiser went back to confirm the pest work was completed, and she decided, on a whim, to make the crazy escrow even crazier. She noted that the floors were buckling and presented a trip hazard. Bam, the buyer’s agent was over at the home on his knees with a belt sander, fuming and mentally cursing that appraiser, I’m sure. Who knew an appraiser was also a home inspector? There’s a special place in hell for those kinds of people. If the appraiser had a problem with the floors, why didn’t she note it in the first place instead of waiting for the funding and preventing a timely closing?
Yet, close we did. From start to finish on this short sale, over 8 long months, we dealt with hostility from other agents, rejections from the lender, vandalism, inept appraisers, repair requests for the buyer, and yet in the end we prevailed. I don’t give up. As the seller mentioned yesterday when I called to congratulate, that couple would hate to think what could have happened in some other agents’ hands.
The thing is this crazy escrow was gratifying in many ways to me. A first-time homebuyer got a great deal on her first home, and the sellers received their release of liability, plus $10,000 to help ease the transition into a new life elsewhere.
Allowing Your Sacramento Short Sale Home to Become a Dump is Stupid
The only thing worse than not being able to show a home, from a Sacramento Realtor point of view, is when a buyer’s agent opens the door with an eager buyer in tow to discover the occupants of the home are slumped toward the TV, half-dressed on the sofa, slurping Big Gulps and chomping on Cheez-Its, slopping orangey bits everywhere. The zombies don’t even look up nor acknowledge there is another presence in the room. Stuff scattered everywhere, dog poop on the floor, not to mention flies buzzing the stack of dishes dumped into the kitchen sink. Not a pretty sight. And not an easy way to sell a short sale home in Sacramento.
Yet, we deal with these situations every day. Sometimes, Sacramento short sale sellers will rationalize the condition of the home by nodding: “it’s a short sale,” as though that explains it, and it doesn’t. Just because a home is a short sale does not mean the condition can go to hell in a hand basket. Because the bank will definitely still demand market value. And a buyer won’t offer market value when the house is in a shambles. Big disconnect. Huge problem.
Where is the dignity? You can sell your home as a short sale and still maintain your dignity. In fact, that’s the reason most people want to do a Sacramento short sale, because they want to sell with integrity intact. They prefer to witness a final solution and know that they are selling the home, not abandoning it.
If you want to abandon your home, then you might want to consider doing what so many before you have chosen to do and walk away from your home. Just let the home go to foreclosure. Let the bank deal with the repercussions. That’s sticking it to the bank and ruining your credit as well, but that’s a choice some people make.
Just don’t ask an agent to sell your home as a short sale to a precious buyer who is willing to wait 2 to 3 months for the bank to approve your short sale at market value while maintaining the home in a condition unfit for human habitation. The only entity you’re sticking it to in that situation is yourself.
Why Buyers Waited 6 Months for a West Sacramento Short Sale
Here is an example of a short sale in West Sacramento that sold at the end of October and could not close until the middle of April. It certainly was not the buyer’s fault, even though that is usually the case. It was not the seller’s fault, either, nor either of the agent’s. It was due to the lovely combination of an Ocwen lender combined with Nationstar as the second lender with MI on top of the cake. Those Ocwen / Nationstar combo short sales can be complicated to bring the two sides together, but it is generally much easier when Ocwen is the first and Nationstar is the second than the other way around, let me tell you.
Plus, as some lenders do, and I’ve been gripping about this practice until the cows come home but no legislators seem to do anything about it, and nobody else seems to care, is the second recently attached mortgage insurance. They do it after the fact when they know the home is underwater. There are companies that ensure worthless paper, and they make a profit. Why isn’t this against the law? If for no other reason, notwithstanding the profit on another’s suffering, is that on a combo loan, a borrower is promised there will be no mortgage insurance, as an incentive to buy using a combo loan package. Then, when the borrower is hurting, underwater, and struggling, the second lender slaps on mortgage insurance, which can help to mess up their short sale?
We received approval from Ocwen on this West Sacramento short sale in December, but Nationstar held out for more money. They managed to string out the process until February, at which point I went back to Ocwen and asked them to revise the approval letter because the HAFA now fell under the new HAFA short sale guidelines. It meant that the seller would have received $3,000 as a relocation incentive under the previous guidelines, but as of February 1 is now entitled to receive up to $10,000.
To get the seller the additional $10,000, we had to go through another month or so of waiting for Ocwen to revise its approval letter. The difference of $7,000 might not seem like much in the overall scheme of things, but it makes a HUGE difference to a person trying to start over with her life.
Bottom line, in this West Sacramento short sale, I got the sellers the newly approved $10,000 incentive, Nationstar got its demands met, and we closed. We are very grateful to the buyers for their patience in this ordeal. Not every buyer will wait 6 months to buy a home. But think about the price increases during that period of time! The buyer got an excellent price and a beautiful home in West Sacramento. It can be worth it to wait for that short sale approval.
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.
When To Ask an Agent About the Real Estate Commission
When the first question out a potential seller’s mouth is how much is your commission, that sends an agent a subtle message that either the caller has never sold a home or thinks the only thing that matters, i.e. differentiates agents from one another, is commission. I deal with both of these issues in my own way. Which means I address it head on and early and first, because any misconceptions about how a Sacramento real estate agent operates needs to be cleaned up immediately if I am to proceed with the conversation. If the caller is searching solely for a discount agent, they have misdialed.
This is not to say there are not people who shop for a real estate agent the same way they shop for a new pair of shoes. They want to find those Tori Burch boots on sale, but that’s not gonna happen. If you want the hottest new boots from Tori Burch, you pay the price. If you want a knock-off, you go to Wal-Mart. When callers initiate a discussion about commission, they sometimes are very astonished at my take. I make them laugh, like this guy yesterday who chuckled: Well, you are persuasive.
Because I believe it. I believe my words because my experience backs them up. I do tend to get my clients more money, and they do tell me I don’t get paid enough when they pay full commissions. I keep them out of trouble. I don’t let buyer push them around and rob them of their hard-earned equity.
After I got this guy howling in fits of laughter yesterday, then he drops the bombshell to say he needs to do a short sale on both of his properties in Davis. Holy toledo. I exclaimed, You hit the jackpot with me. Because he did. There is not another real estate agent in a 7-county area in Sacramento who has sold more short sales than I have over the past 8 years. I am still the top Sacramento short sale agent, even though short sales are no longer in vogue. For the past few years, I have continued as a top producer who mostly sells regular listings. I’m about as well rounded as you will find for an agent who started in the business in 1974.
And the place for the discussion about real estate commission in a short sale is no place. There is no reason to highlight commission and argue ad nauseum. The bank will authorize the amount it will authorize and, in almost every instance, it is full commissions. Because our American banking institutions realize that a good real estate agent is worth a full commission. It’s not like the commission comes directly from the seller. It is paid from the proceeds of sale, and it is money the bank doesn’t receive. Banks care more than anybody about bottom-line profits, yet they authorize a full fee. Imagine that!
If our banks believe real estate agents are worth a full commission, why doesn’t everybody get with the program? Why are there still people out there who who are shopping for a discount agent when they really need a full-service agent to sell their home? It’s because they don’t know any better and nobody has ever shown them otherwise.
