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.