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Wells Fargo HAFA Short Sale Approved in 2 Weeks
The earth stood still for just a second last week after Wells Fargo approved a HAFA short sale for sellers in Elk Grove. We were expecting approval at earliest by the end of March but we instead received short sale approval on March 1. The usual 6 weeks that Wells Fargo typically takes to approve a HAFA had been shrunk to about 14 days. Completely incredible. I knew Wells Fargo could eventually shorten its timeframe for a HAFA short sale, and it has exceeded my expectations.
I listed this particular Elk Grove short sale in early February. We held off showings for at least a week to build momentum and pushed for multiple offers. From the half dozen offers, we chose the cleanest offer from the most qualified buyer and submitted it to Wells Fargo. Under Wells Fargo new guidelines, it has reduced tasks in Equator and now asks for limited documentation. We uploaded additional docs a week later and, 7 days from receipt, we were notified of approval for this Wells Fargo HAFA short sale.
The only little glitch is the bank set closing for 29 days from approval. This might not be enough time to get the buyer’s loan processed. Moreover, it’s difficult to find a rental that allows occupancy at the end of the month. Because Wells Fargo, like most short sale lenders, requires an arm’s length affidavit, the seller can’t rent back. But unlike some short sale lenders, oh, like Citi, for example, Wells Fargo doesn’t put up a big fight to issue an extension. Sometimes, getting a short sale extension from certain short sale lenders can be cause for handing over your first-born child. But not in a Wells Fargo short sale.
So, don’t believe all the crap you hear about short sales. I hear buyers say they wouldn’t touch a short sale if it was the only home for sale in Sacramento, and that’s not a fair attitude. If you choose a short sale listed by an agent who closes a lot of short sales and you get the right lender to work with, a short sale doesn’t have to be complicated or lengthy.
Wells Fargo gets 2 thumbs up from this Sacramento short sale agent. I’ll throw in a couple of toes, too.
Another Bank of America FHA Short Sale
You can tell me the buyer is canceling the short sale, and when I’m looking out on this view, I’m only half as annoyed as I normally would be. This is the view from my balcony at the St. Regis in Bora Bora. They put up the orange cones to keep the drunken jet ski drivers from running over naked swimmers. Not that it does any good. When jet skiers get disoriented, there is no telling where they might end up. Just like buyers of short sales. Hard to say. They start out saying they want to buy a short sale but then when approval arrives, lots of them tend to freak out.
As though it’s all fun and games while they are waiting for short sale approval. They can run around and boast to friends: “Look at me, I am buying a short sale. Hey, I have a lampshade on my head.” But when it comes time to put pedal to the metal, some of them just can’t do it. Is it because they’ve had too long to think about it? In a regular escrow, they would be closed within 30 to 45 days, not sitting in limbo waiting for short sale approval. Is it because they forgot they were in escrow? It’s not like there is constant activity that they can see, unless they follow updates on my website.
In one escrow, the dreaded Bank of America FHA short sale escrow, we’ve been working on the file since April. That’s not unusual for a Bank of America FHA short sale. It’s par for the course. Other lenders can process FHA short sales in a normal time period, but that has not been the case with Bank of America. We closed 2 or 3 other B of A FHA short sales recently, and each was almost a year-long process. Because getting the approval from HUD is difficult for B of A. And by the time the bank analyzes the offer, another 4 months have passed and the ATP has expired. So, they start over. Those falling over “for sale” signs in people’s yards are due more to the lengthy process for a Bank of America FHA short sale than from buyers canceling.
Fortunately, Bank of America is moving its FHA short sales to Equator shortly. We hope this happens by its target date of February. It will be a joyful day to celebrate when that happens.
But in this particular Bank of America FHA short sale that we’ve been working on since April and just received approval on 5 days ago — well, the buyer up and canceled yesterday. The agent says it was due to the “whole house inspection” as though we need some kind of excuse. We don’t need no stinkin’ excuse. Just send the cancellation and muddle on with your life. We will sell this home again, and this time to a serious buyer. Or, so this Sacramento short sale agent continues to hope.
The Short Sale Law of Averages
I think the law of averages says that for every three good things that happen, something else awful will happen. So, no matter what, I’m always ahead, right? Like receiving 3 short sale approval letters on a Monday (of all days) for 3 Sacramento short sales leaves room for something else to explode. I didn’t know if I would be able to pull two of those short sales out the fire. We had a huge disagreement between the second lenders and the first lenders. It was the usual disagreement: The first lender wanted to pay less and the second lender wanted more.
But in the end, they met in the middle. There was a bit of compromise. Negotiating a short sale is not always about power plays. It’s about give and take and options. It’s about having a Plan B and a Plan C. It’s about about patience and not letting personal feelings about anything enter the equation. Mr. Spock would have made a good short sale negotiator. James T. Kirk, not so much.
In the second short sale, it had been a long battle between two lenders as well. The bank originally wanted to give the seller many, many thousands of dollars. But the second lender refused to approve that scenario, and that was understandable. I don’t know if it’s because we wore them out with our incredible staying power or because of our luck that HAFA regulations had changed in June so we could give the second more money, but we finally brought both parties to an agreement.
Just as we’re patting ourselves on the back for a job well done, a short sale set to close this week blew up. All of a sudden the buyer backed out. Oh, he gave some lame excuse like they all do when they cancel but bottom line is he bolted. After 11 months of waiting for HAFA short sale approval from Bank of America. That makes little sense. We were so close to closing. This is like crawling across the desert without water to find a mirage.
See, agents often ask why I ask so many questions, why I insist on commitment, and this is why. Because we want buyers to close the short sale after we obtain short sale approval.
Make a Commitment to Your Sacramento Short Sale
If you’re committed to doing a short sale in Sacramento, you should be committed to the long haul, just like your Sacramento short sale agent. It’s kind of a two-way street. A seller promises to provide financial documents over and over until her eyes spin, and an agent promises to submit those financials to the short sale bank while keeping her personal opinions to herself. OK, maybe not that last part. The point is nobody gives up and splits.
An agent called me yesterday to say she had received short sale approval for a seller on a file she started working on about a year ago. She had struggles like we all have struggles. It was tough to get the home in marketable condition, and one of the parties to the short sale was not exactly cooperable. The agent had put the home on the market but could not open the short sale with the bank because she was missing documents. Her solution was to cancel the listing.
This is the thing about short sales and life in general. You can learn from your own mistakes or you can learn from somebody else’s. It’s easier to learn from somebody else. My suggestion to the agent was to put the home into temporarily off the market status, but don’t give up on your seller. Don’t look at the seller who isn’t cooperating, focus on the seller who is agreeable and committed to the short sale process. The other guy will come around.
Sacramento short sale agents have a responsibility to many parties in the short sale. As a listing agent, we have a fiduciary responsibility to the sellers. If there are two sellers, that responsibility extends to both parties, even if those parties are divorced and not speaking to each other. As a short sale listing agent, we have a responsibility to the buyer’s agent and the buyer, too. If an agent has reason to believe the short sale will not happen, the agent should not list that short sale nor present it for sale to the marketplace. It’s not fair to a buyer to sit in escrow week after week waiting for approval when it’s not gonna happen.
The agent took the home off the market and put it into limbo status in MLS. She continued to work on the short sale. She didn’t throw in the towel and walk away. She honored her commitment to the Sacramento short sale. It took a year but both parties finally cooperated and she received short sale approval.
I keep telling people this secret but they don’t believe me. The secret to a successful short sale is commitment. Don’t give up. Not every short sale will close the first time around. You might have to submit that short sale for approval a second time or a third time or a fourth time. My longest short sale was almost three years but we closed. It doesn’t matter how long it takes to close a short sale; it matters whether one is made from the material to see it through to fruition.
Make a commitment to your Sacramento short sale.
