Yet Another Low Appraisal on a Sacramento Short Sale

Elizabeth, how do you do it? That’s what a seller asked me yesterday. She was very ecstatic that her short sale closed but it wasn’t an easy road. She thanked me for making the process less painful than it could have been. For many Sacramento short sale sellers, I am their rock. I’m not just a Sacramento short sale agent. I am the individual these people rely on to help them through the emotional upheaval. Don’t let anybody kid you, surviving a short sale can be like crawling naked through shattered glass.

Here’s a better example. Short sales are like driving down the road, la-dee-da, and all of a sudden, whammo. You’ve got a deer’s antlers blasting through your windshield, stuck in your steering wheel, inches away from your face. There were no deer-crossing signs on the road. It wasn’t dusk or dark outside. Nothing could have prepared you for that deer who suddenly leaped across the highway. People think that all short sales are the same and they aren’t. Even though I’ve closed hundreds of short sales, I still can’t always predict with pinpoint accuracy what will happen.

Take low appraisals for example. Generally, when the buyer’s appraisal comes in low, the short sale bank will issue a revised approval letter at the appraisal’s price point. Especially when it’s an FHA appraisal. FHA appraisals are assigned a case number. So, if the bank rejects the lower appraisal and the home goes back on the market, the next FHA buyer will get the same appraisal. I hear conventional appraisals are positioned to be assigned case numbers as well.

That didn’t happen in this particular client’s short sale. Her lender was Citimortgage, now One Main Financial. Her buyer obtained 2 appraisals. The first appraisal was conventional and was, oh, say, $200,000. Good thing because that was the sales price and also the amount approved in the short sale approval letter. But wait. Somebody at U. S. Bank ordered the wrong appraisal. It was supposed to be an FHA appraisal. The buyer then paid for an FHA appraisal. That appraisal was, oh, say, $180,000. We were suddenly $20,000 apart.

We signed an addendum lowering the price and sent the FHA appraisal to Citimortgage. Much to our astonishment, Citi said your mother is a hamster and your father smells like elderberries. We argued. Citi refused to accept the appraisal. I sent my own opinion of value and CMA. Finally, I was able to move Citi up to oh, say, $195,000, but we were still apart $5,000. Now, in some other universe, this transaction would have probably blown up at that point. However, the buyer really really wanted this home. So, she borrowed $5,000 from her parents to pay the difference.

This is why selecting the right buyer is key to the successful outcome of a short sale. But the suspense wasn’t over yet. Remember, this poor unfortunate buyer had chosen U. S. Bank as her lender. The bank’s representatives performed poorly, to say the least. U. S. Bank managed to mess up the closing six ways from Sunday, especially funding. It was so bad at closing that the escrow company had to bitchslap them. A quiet, mind-your-own-business escrow assistant really laid into them. But we finally prevailed and escrow closed. Another happy ending in Sacramento!

The way that I do my job as Lyon Real Estate’s #1 short sale agent is I keep my eyes on the horizon, my hands on the wheel. And I hope to god I don’t meet some deer hopping across the road.

Photo: Elizabeth Weintraub