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Selling a Probate Fixer Home in Sacramento
Not every fixer home in Sacramento much less a probate fixer home is priced in line with the amount a flipper investor wants to pay. Especially not my short sales, for example, because I want them to close. But in any perceived distressed situation, whether it’s a foreclosure, short sale, probate fixers, preforeclosure, what-have-you, investors crawl out of the woodwork looking for a “good deal.” Because it’s all about the spreadsheets to them, and there’s nothing inherently wrong with working with investors who are fueled by the greed of money unless they get in your face about it.
It can be trying at times to maintain composure as a listing agent when investors are swearing, in the literal sense, on the phone that they can buy a home for less in the same damn neighborhood, to which my reply is go ahead then and quit torturing me. Particularly when I am confident there are no other homes for sale at that price. They’ll use whatever tactics they can because it’s their business to buy low and sell high. I get it.
That doesn’t exactly fit well with my business of representing the seller to the best of my ability who wants to obtain the highest price. Therein lies the sticky wicket. I just closed a probate fixer last week that was that kind of sale that generated a ton of calls from investors, all demanding that we slash the price. First, it’s not my call. Second, the seller understands there are two basic types of pricing: that which attracts homeowner occupants who will pay market and that which will attract the flippers.
Perhaps this home is not priced for a flipper investor? But that does not occur to them.
People in general are under the impression that banks give away homes because they ran out of toasters, but it doesn’t work that way. Banks want market value just like regular sellers with equity want market value. It’s a tough market for a flipper. But they are better off finding their own homes to buy than trying to squeeze the integrity out of a Sacramento listing agent.
That probate fixer sale sold at list price. Just like the seller, the executor of the estate, expected. As Is condition, no repairs and all cash.
Closing a Short Sale with USAA
Closing a short sale with USAA when the loan is in second position and a hard-money loan is a lot different than closing a short sale with USAA when the loan is a first mortgage with this lender. If you don’t care about reading the particulars, then you might want to click the back arrow on my blog to read a more amusing piece because this one will give you nightmares.
I met with the sellers in February at their beautiful home in Natomas. They were the last holdouts of that community. Everybody else who bought when they did has since sold that underwater home and moved away. The neighbors who paid half a million are gone and replaced by college kids who party on rent free in the rentals recently purchased by their parents for about half that price. The demographics are remarkably changed.
They recalled our conversation later, the images and words still vivid in their minds. This would not be an easy short sale. It would involve stress. It might be tough. I gave it to them straight. But I believed it would close. I have not lost a short sale for a long, long time. It’s why people know me as the best Sacramento short sale agent in town.
The first lender was Green Tree and the investor Fannie Mae, easy to work with for a first mortgage. But the second lender, USAA, was much more difficult. I am used to the way lenders submit demand letters for much more than they are willing settle for, as that’s often a normal method of operandi. We negotiate a bit and they settle. But not USAA. They asked for an astounding amount of money, and issued an approval letter based on that amount, which is basically worthless.
Because the investor was Fannie Mae, the maximum they could receive was $6,000. California Civil Code 580e prevents the sellers from making a contribution or being required to pay anything extra above the proceeds of sale for the short sale. We argued. Eventually, we had received what amounted to as 4 rejections from USAA, each asking for a ridiculous amount of money to settle.
By that point, even my faith was beginning to tremble. I had to wrestle with do I tell the sellers or don’t I? I finally concluded they should know that we had a good chance it might not close. That was not a piece of information I should shelter them from because it was not my place to withhold those pertinent facts. It didn’t mean I was giving up by any stretch, but they needed to be prepared, just in case. They deserved to know my thoughts. Everything I had read about USAA indicated that USAA would not bend, but you can’t always believe online crap, especially from agents who don’t close very many short sales.
I pushed forward though. I sent a 5th request for short sale approval and explained all of the reasons why. Then, it was like an awakening in the Biblical sense. Trumpets playing. Clouds parted. And angels appeared. OK, I overslept. But the fact remains that USAA approved the short sale and accepted the $6,000 payoff. They just needed to deny it 4 times first, most likely in accordance with guidelines. We closed last week.
Your Real Estate Problem is This Sacramento Agent’s Challenge
If you’ve got a problem with a home in Sacramento, come on over here and sit down next to me; I’m happy to talk about it. This is what I do all day long. As a busy Sacramento agent, I solve real estate puzzles and problems. I get to hear about some of the wildest situations, and I find a way to put the pieces together and close escrow.
It doesn’t matter what the problem is or the perception of that problem. I’m a good Sacramento agent to take care of it. Not every problem a seller perceives is actually a problem. Moreover, there is not much I haven’t run across or had to deal with in some form over the years, knock on wood. OK, I’ve never had to supervise the digging up of a grave in the front yard, so I suppose my time is coming. I’ve never had to drink milk directly from a pail toward which a cow’s udder was recently directed; oh, ick, I am such a city girl. There are few things, though, I have not done.
A few weeks ago I listed a home in Sacramento County that was pretty much trashed from one end to the other, and it was a big surprise for the sellers when they saw it. The tenant died in the house. But you know, the dude was watching one of his favorite programs on the TV Land channel: Bonanza, and he died peacefully in an overstuffed lounge chair. That’s not a bad a way to go; especially with everything being all right with Joe and Hoss on the Ponderosa. There were no cliff hangers on Bonanza. Every show neatly tidied up its drama. When I bite the dust, perhaps I’ll be watching Tattoo screaming: the plane, boss, the plane.
Another seller has a home with orange walls that I’m looking at later on this afternoon. My recommendation will be to paint the walls a light beige. Paint is kind of expensive when you figure it’s about $25 a can, and you need at least 2 cans of paint per room, but it’s the cheapest way to improve a home and get top dollar. You can also hire a pro for $300 to $500 per room.
There is the seller who had to turn off the water in his vacant home due to plumbing problems he couldn’t afford to fix, not to mention, the roof is beyond its end of life, and the payments are in arrears, have been in arrears for several years, but still, this might not be a short sale, and I am hopeful that I’ll find a first-time home buyer for this home in Elk Grove. I know other agents probably would not touch this listing with a 10-foot pole, but not me. I’ll take on the challenges.
The more challenges I solve and close, the better Sacramento agent I become. I’m still selling millions per month on average, even in today’s slower real estate market. You need a listing agent? You call Elizabeth Weintraub at 916 233 6759. I’ll be there.
Selling a Sacramento Home as a Short Sale After Bankruptcy
There is only one way to sell an underwater home in Sacramento after a bankruptcy has been discharged and finally dismissed, and that method is through a short sale. Doing a short sale after bankruptcy is a greater challenge than doing a short sale before bankruptcy. A short sale after bankruptcy is not a slam dunk, like your lawyer might have promised (lawyers don’t sell homes nor typically negotiate short sales). Sometimes, people think these abandoned homes are great bargains, but generally the banks still insist on receiving market value, and market value is subjective — especially when the home sits in ruins as compared to the surrounding homes and the bank won’t take that condition into consideration when determining value.
See, that’s the thing. People erroneously believe that a bank cares about the condition of a home, and that belief is a foolish assumption. Yes, it makes logical sense that a bank would care, so I understand why you might have formed that assumption because to presume otherwise goes against all that is sane and objective, but let’s remember, we’re talking about our financial banking institutions in the United States. Let’s get real. Banks don’t care.
I closed yesterday another Sacramento home as a short sale after bankruptcy. Bankruptcy does not release the home from the seller’s name. That title and mortgage lien(s) remain. I’m not sure why homeowners sometimes do not understand that they still need to get rid of the house after bankruptcy is over, and that the house is generally not very desirable at that point. Squatters break in. Water leaks develop. Mold can happen. Stuff breaks. And it’s generally been vacant for 6 months to a couple of years, depending on how long the bankruptcy took, and lawyers don’t enjoy a reputation for fast service.
After a home has been discharged in a bankruptcy, the lenders cannot ask a seller for financial records such as bank statements, tax returns and payroll stubs. However, that did not stop Bank of America nor Green Tree from demanding those documents, even after I informed them they are quite possibly breaking federal law. Sometimes, you have to decide on which hill you want to die, and the sellers did not want to die on the paperwork hill, so they submitted the demanded paperwork in protest.
Service Link, representing Bank of America, managed to mangle the HUD 12 ways from Sunday. We submitted various adaptions and argued and argued until Service Link finally accepted the fact that certain customary expenses are seller-paid fees in a short sale transaction. You can’t really blame them because these third-party vendors work on short sales in many other states and customs vary, although it doesn’t explain why they operate unsupervised.
Later, Green Tree came back just prior to closing and insisted that the sellers sign a letter stating they do not have to submit their paperwork because this was a short sale after bankruptcy. Of course, by then it was water under the bridge, and I honestly don’t know how this company stays in business, apart from the Peter Principle that plagues many corporate entities. Oh, wait, I hear Green Tree is under investigation by the FTC.
Fortunately, I managed to sidestep a big fight with Green Tree on the payoff. That’s another thing people don’t understand after a bankruptcy, they think the banks will rollover because the liens are worthless. I’m telling ya the banks won’t. They fully realize the fresh start sellers still require the bank’s cooperation.
Then, several months into the short sale, Bank of America — as has been its policy lately with these underwater mortgages — elected to sell the mortgage to another company, in this case, Bayview. Just as Bank of America was ready to issue the approval, whammo, it forced us to start the process over with Bayview. Did I mention I only get paid once and I get paid the same whether it’s a short sale or a regular equity sale?
Bayview then conducted its own BPO and decided the price needed to be about $25,000 higher, which it may as well have offered to burn down the house, that demand made about as much sense. Part of the “price valuations” is they have often little to do with actual value and are more about how much the bank needs to net. This is akin to a seller telling me she needs to sell at $500,000 because she needs the cash when her home is worth $300,000. Her needs in that case are not relevant and completely unobtainable.
The demand for a higher price from Bayview happened right after thugs broke into the garage, and they also swiped the AC unit, including the lockbox off the front door, along with the front door handle. There was no compensation to the buyer for that, of course, and that was a delicate situation to overcome.
The good news is we closed escrow yesterday, about 6 months after I listed this home. This was actually a fairly fast short sale after a bankruptcy. The types of problems I’ve shared with you concerning bankruptcy and short sales are very common as well. If you need an agent to sell your home after a bankruptcy, you should call your Sacramento short sale agent Elizabeth Weintraub at 916 233 6759. There is no reason to list your home until the bankruptcy has been fully completed. An order to discharge does not count; you need the case closed.
Do You Need a Lawyer for a Sacramento Short Sale?
You may not need a lawyer in Sacramento to short sale a single family home.
Because of the liability that can befall a Sacramento real estate agent who does not tell a client to get legal advice when the client asks legal questions, every smart real estate agent will advise a client, especially a short sale client, to get legal advice — even if the client doesn’t really need a lawyer. Knowing this, a client might ask whether legal advice is necessary and, again, that is a tricky situation because we’re damned if we tell them no and we’re damned if we tell them yes. Besides, we’re not lawyers.
If a seller who is contemplating a short sale hires a lawyer, that seller will most likely pay the lawyer somewhere between $3,000 and $6,000. Out of pocket. Once — out of all the $65 million in short sales that I have negotiated over the past 8 years — I can recall only one time in which a negotiator agreed to pay a small portion of the lawyer’s fees. So, while a lawyer might tell a seller that they will ask to be paid from the proceeds of sale, it doesn’t really happen very often and, when it does, that payment is probably not in full.
If a seller who is contemplating a short sale hires a Sacramento short sale agent to handle the short sale, the commissions paid to the agent are paid from the proceeds of sale. There is no arguing with the negotiator about paying the agents because the commissions and all of the ordinary closing costs are paid from the proceeds of sale. Nothing out of pocket for the seller to pay, not to mention, a bank cannot under CA Civil Code 580e force a seller contribution; it’s against the law. A seller who hires a competent short sale agent basically gets the short sale completed for free.
Every so often, I might run across a situation in which the seller could use a lawyer’s assistance. It’s not to get a release of liability because you don’t need a lawyer for that. It’s not to avoid a deficiency judgment, because you don’t need a lawyer for that, as long as you’re doing a short sale. It’s not to advise whether the seller should do a short sale because short sales trump foreclosures. Short sales win hands down.
When I first started to do short sales, often I would refer the difficult cases to a lawyer, but I have discovered that I can handle them with ease (not to mention, laws favor the sellers now), so why not save the seller some money? Today, I might advise that a seller should hire a lawyer if the bank continually rejects the short sale for one reason and one reason only: because banks typically don’t want to mess with lawyers. Agents? Pfff.
I closed a short sale this week that I’ve been working on for almost 18 months, which is an unusually long period of time. We had received 3 or 4 rejections. I suggested that the seller hire a lawyer during the last go-around, but the seller said she could not afford it, and besides, she had “faith” in me. OK, I don’t give up — I have a ton of perseverance, and I am analytical. She begged me to re-submit one more time. I repackaged the short sale and resubmitted, and was accepted! Maybe short sale sellers don’t need a lawyer? Maybe sellers need only a top notch short sale agent who stays up to date on all of the changes in short sales?
Many lawyers hand over the package to paralegals or assistants and they don’t personally negotiate the file anyway. They also might not know much about real estate or have extensive experience in real estate. I’ve talked with lawyers who did not know how to fill out a HUD for Bank of America. The bell curve applies to just about any profession. You’ll find bankruptcy lawyers who offer to negotiate short sales because it’s another avenue of revenue for them. When short sales go away, they will go back to bankruptcy cases. Some will suggest bankruptcy alongside a short sale, which doesn’t make a lot of sense to me. You can’t do both simultaneously.
But people are afraid when it comes time to do a short sale and they don’t know where to turn. They think they need a lawyer to do a short sale. They are worried about consequences and liability and taxes when laws mostly remove those concerns. Will a lawyer tell a potential client that they don’t need a lawyer to do a short sale? If you ask a real estate agent if this is a good time to go on the market, what would an agent say? Same deal. Except most people in California do not need a lawyer to do a short sale.
