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Buyers for Short Sales in Elk Grove Make or Break the Short Sale
About one out of every 3 homes in Elk Grove that I sell nowadays seem to be a short sale. How are short sales in Elk Grove still a thing, you might wonder. I mean, you read about the economic recovery, how much homes have appreciated, and it doesn’t seem to make sense that home sellers can still be underwater. Take 2012, when home prices, on average, shot up about 40% in Elk Grove. Then, along came 2013 and we witnessed another 25% bump. Last year was single digits and not as impressive, so the big increases are pretty much over.
I see the continuation of short sales in Elk Grove to be a mix of several factors. First, Elk Grove was named in 2006 the fastest growing city in the United States. Not in California, the United States. When the market collapsed, Elk Grove was hit very hard, and prices fell more than 50%. To put this into perspective, if a home was worth $500,000, after the crash it was worth maybe $225,000. When that same home appreciates by 40%, now it’s worth $315,000, and another 25% boost would push it to $393,750, which is not enough to pay off those dual mortgages of $500K.
Some people struggle with math. They might think 40% plus 25% equals equity, and I am showing you the numbers so you can see it doesn’t work that way.
Second, the homeowners who were underwater and did not do a short sale and did not elect to grab cash for keys in a foreclosure, often chose the less painful of those options and selected a loan modification. Loan modifications — unless the bank forgave a big chunk of the principal balance — are generally just a temporary BandAid. They also tend to adjust after 5 years and interest rates go up, which increases the mortgage payment, until the homeowner gets to a point where she just can’t take it anymore or perhaps something else horrible happens, something worse, like a death in the family or loss of income or limb.
Naturally, since I represent sellers, I feel an affinity toward my clients — as well as a fiduciary responsibility, which is required by law. I try to help my sellers to choose an appropriate buyer for the home, a buyer who will wait for the approval and has the qualifications to close escrow. We keep our buyers informed throughout the transaction with weekly updates, and they can check updates themselves on my website.
Almost invariably, without fail, the person in the short sale that causes the most problems, the biggest delays, and is the main reason short sales drag on and on and on, is the buyer. They are just some person or couple who want to buy a house, and often possess no feelings for anybody in the transaction, sometimes, not even their own real estate agent. Yesterday, after battling FHA and surviving a transfer to an institutional lender, dealing with partial demands for previous loan mods, paying off utilities and other outstanding liens, cleaning up the preliminary title report and being on the verge of approval from the negotiator, a shiny new listing came on the market across the street from this short sale in Elk Grove.
The buyers lost the faith, which, granted, was probably hanging by a thread in the first place. Because the buyers didn’t adhere to all of our requirements upfront, that was a red flag, and against better judgment we gave them a chance. It was a risk we were willing to take. A risk that at least I regret. Don’t deviate, is my motto. This is what happens with deviation.
At least, on the bright side, all of the really hard work has been done, and the road has been paved for the next buyer who truly deserves this magnificent pool home in Elk Grove. If you’re looking for a home with 5 bedrooms and a pool at an excellent price, you should call your Elk Grove agent, Elizabeth Weintraub, at 916.233.6759.
The Broken Sacramento Short Sale is Not a Real Listing
When the phone call starts out with the caller apologizing for not calling this Sacramento real estate agent earlier in the game, I tend to go on red alert. Because if they knew to call and didn’t, there might be something wrong that I can’t fix. But you never know. Particularly in a Sacramento short sale, sellers often end up listing with the wrong agents — those who don’t live up to their expectations — but sometimes the expectations themselves are out of line. I have to figure out which.
Real estate agents can end up as the punching bag simply because there’s generally nobody else around when things don’t pan out. That comes with the territory. Sometimes they deserve the fickle finger of blame pointed in their direction but not always; we’re all different. Here are two different types of situations. In this first transaction, a seller called to say he hadn’t heard from his agent in months, and didn’t know what was happening with the sale of his home. Wha?
There was no sign in the yard when I went over to the house. It was listed in MLS and this Sacramento short sale had expired in pending status, which is a status that can draw a fine from MLS because expired pending status listings are not allowed. Yet, there it was. Lonely and forlorn. Weeds overgrown. The lockbox was still on the gate with a key inside. The gate was unlatched, banging in the breeze on the fence. It’s hard to say what had transpired in that listing, but it’s now in escrow with me, sold again and pending.
Earlier last week a seller called to plead that I sell her home as a short sale because she discovered that I’ve closed hundreds of Sacramento short sales. I do hold the dubious honor of having sold more short sales in a 7-county area than any other agent for the past 8 years. She had a hard-money second with 21st Century, so I know the problems associated with that particular type of short sale and how to handle them. We talked for a while, and it was beginning to look like I could help her but it was bugging me that she had dinged around for more than a year and did not receive some type of approval or rejection letter. The facts just weren’t adding up.
Then I asked the important question. Was she living in the home? Nope, she had moved about a year ago. OK, second-most important question: Did she buy another home? Yes, she did. All right, third-most important question: In whose name? It was her name. Ding, ding, ding. Like I told her, she can easily find some agent to list it — many so-called short sale agents don’t understand short sales even though they may have a certified designation next to their name — and there’s a small chance, maybe a 10% chance that her Sacramento short sale might get approved, but those odds aren’t high enough for me to take that listing.
I prefer to take listings that close. Much of my successful career is due to the fact that?I inherently gravitate toward the 100% closings. Even an overpriced listing will eventually come down to a point where a buyer will want to buy it, but one can’t fix a broken short sale. Before any of my Team Weintraub members allow a buyer to sign a purchase offer for a short sale, we check it out to assess whether it will close. Not all of them will because not all of those short sale listings are a short sale to start with.
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.
Your Sacramento Home Might Be Worth More Than You Think
Talk about a home that might be worth more than you think. Although I sold a ton of short sales last year — more than 100 — I also sold a bunch of regular equity sales in Sacramento, too. This year, I am selling more equity sales, which is a good sign. It’s probably not so much that the homes are necessarily worth a lot more than they were last year as it is buyers are willing to pay more for them. You see, what a home is worth and what a buyer will pay are really two different things. A smart Sacramento real estate agent spots these opportunities and capitalizes on them.
Why, I just sold a home for $65,000 more than it would probably appraise for. This is just one example of a home that might be worth more than you think; I have plenty more. When I first talked to the sellers of this particular home, which we will leave unnamed, it was apparent they needed to do a short sale. I collected the usual paperwork, their tax returns, bank statements, payroll stubs and we worked on the hardship letter together. Tweaked it, refined it, cleaned it up a little bit until the hardship letter was perfect. They had the property management company send me the keys.
When they had initially called, they said they were undecided about either listing with me or perhaps listing with their property management company. Now, this property management had admitted it had little experience in real estate and none whatsoever in negotiating a short sale, but for some reason, perhaps loyalty, the sellers felt that they should consider listing with the property management company. I simply pointed out the error with that kind of thinking and showed them what life could be like if they listed with an experienced short sale agent. So, they chose me, and may I say they made a wise choice.
I figured the home was worth, maybe $130,000. I studied the comps within a 1/4 mile. The street was known as a busy street, so that suppressed the price a bit more as well. But when I got out to the house and looked at it, I could not believe that such a structure would be worth only $130,000. My gut said it didn’t seem right. I don’t care what the comps reflected; it wasn’t a true picture. We have a hot market, and a three bedroom, two bath, two story with all kinds of updates should not be selling for $130,000. Plus, the street was a lot quieter at that end of town. Why, an investor would pay a lot more than $130,000. In fact, an investor might pay, say, $195,000.
I looked at the payoff to the lender on the seller’s first mortgage. After paying all the costs of sale, including commission, plus late fees, several months of interest, the seller would net about $500. But it would mean no short sale. No ding on the credit from a short sale. The mortgage would be paid in full. I quickly called the seller and asked if they wanted to try it. I suspect they thought I was nuts, but they agreed and we listed the home at, say, $195,000.
It closed at $195,000. What a long shot that paid off.
This isn’t my only story like this in Sacramento. If you are wondering whether your home might be worth more than you think, and if you’d like to avoid a short sale, call me. Even if the sold comps don’t support your value, this Sacramento real estate agent might be able to sell it anyway without doing a short sale. Call Elizabeth Weintraub at 916.233.6759. Put almost 40 years of experience to work for you!
