Club Chaos Agents - All Things Hollish, Wacked, and Jacked

I received an email yesterday from one of my short sale sellers who had closed an Elk Grove short sale on October 30th and bought a new home on December 30th, 2009. This was before FHA issued its new guidelines. The new FHA guidelines this year say FHA will approve a loan for a seller who sold on a short sale, providing the seller was not delinquent on the mortgage. I've been looking for a lender who will do this because none of my sources is funding such loans.

The client was excited to share the news, and added that he bought the home without an agent, using the help of a "sales associate." While I am not thrilled that the client was hoodwinked into believing he did not need to hire his own buyer's broker and therefore did not call me, I am super jazzed that he bought the home. His email made me realize that I need to be more diligent in letting my clients know that I can represent them if they want to buy a new home from a builder.

The last new home construction that I negotiated was a model home. Buying a model home from a builder is a bit complicated because those homes involve upgrades already in place. But builders in Sacramento are hurting financially and are willing to wheel and deal at the moment. Not only did this particular single woman home buyer get her model home at a terrific price, she also received all of the furniture for free. It pays to hire an agent, and it doesn't cost a buyer one thin dime.

The thing that struck a chord with me in my client's email was the fact a bank made him a loan 3 months after his short sale. This is what happened: Even though he was current on his payments to Wells Fargo, the bank made a notation on this client's credit report that the second loan was charged off. We tried to get that verbiage removed from the short sale approval letter, but Wells Fargo refused. After the short sale closed, Wells Fargo reported the loan as a charge off with a balance owing. The client called Wells Fargo and insisted that the loan should be reported with a zero balance because the debt was forgiven. So, Wells Fargo changed the reporting status to: Paid in Full for Less Than Agreed with a zero balance. After that adjustment, the client's FICO score jumped from 651 to 740.

This is why it's a good idea for sellers who do short sales to check their credit reports after closing. Another not-so-lucky client had Bank of America file a foreclosure against her after the loan was paid off as a short sale. And she was current on her mortgage payments when it closed. That was a real mess to untangle.

However, if you are thinking about buying a home after a short sale, and if your payments are current, you might want to contact Flagstar Bank and ask about an FHA loan. Flagstar is funding loans for buyers after selling as a short sale. The minimum FICO score required by Flagstar is 650.

Not every potential home buyer will buy a home in Sacramento this year, regardless of how much a buyer may yearn for a home. How do I know this? Because I speak with first-time home buyers who want to buy a home nearly every day. I listen to their wants and needs. From this information, I determine whether these buyers are realistic and motivated. See, a buyer can possess all the motivation and determination in the world, but if a buyer is stuck in fantasy land, the odds of buying a home are dramatically reduced.

I try to be non-judgmental. I know that buyers are not professional real estate agents and don't possess intimate knowledge of the market. Part of my job is to educate buyers. Especially those who rely on Zillow or other websites that provide inaccurate information. Armed with knowledge, a buyer is then able to make an informed decision.

A few weeks ago, a buyer called to say she was unhappy with her agent because she wasn't getting results. Since agents are generally in the real estate business to make a sale, it was entirely possible the problem wasn't the agent. The buyer asked if I would research a particular short sale home in Elk Grove. Her agent had shown her the property. She had not made an offer nor signed an exclusive buyer's broker with this agent.

I called the listing agent. The agent had 5 offers, several of which were all-cash offers, and those all-cash offers exceeded the list price of $400,000. As with many short sale listings, the price was artificial and below the comparable sales, priced to drive multiple offers. I know the main reason that some banks reject short sales is because many offers are too low, so a lowball offer was not going to fly. Not to mention, it makes little sense to compete in these types of situations if a buyer is unwilling to offer over the listed price.

The buyer asked if she could buy this $400,000 home for $300,000. I explained all of the reasons why this type of approach was not going to work. Even if all the other buyers vanished by the time of short sale approval, leaving this buyer in first-place position as the lone survivor, the bank would not take that type of offer. On top of which, this home was was highly desirable and unique -- which means those other buyers aren't going away.

A few days later, the buyer emailed me to confess that she had gone back to see that home again with her agent. She was so overwhelmed with desire that she wrote an offer on the spot for $300,000. She asked if I would still work with her and show her other homes while she waits for an answer from the seller. I know, beyond a shadow of a doubt, that the buyer is not buying this home.

Now, I am not in the business to swipe other agent's clients. There's enough business in Sacramento for everybody. I had explained earlier how real estate agents work and why this buyer should decide which buyer's agent she wants to hire. She told me she really liked her agent but did not feel her agent could perform.

I suggested she stick with her agent. I didn't drop this buyer simply because she wrote an offer with her agent, although loyalty is paramount. I also didn't drop the buyer solely because she promised to work with me and failed to live up to her promise; although, I prefer to work with buyers who keep their word. This buyer performed contrary to her own best interests. I was forced to turn her loose because she could not, would not, did not listen to my advice.

Even my cats would agree.

Photo: Elizabeth Weintraub, from left to right, Pia, Pica and Brandon

After trudging around in the rain yesterday from 9 AM to 6 PM showing property, it was a welcome relief to come home and change into dry shoes. Note to self: wear boots in this weather! Our Sacramento storms have not let up, and tomorrow is expected to be worse than today.

But the good news is one of my buyers wrote an offer last night, I received an acceptable cash offer on another Sacramento short sale, and one of my Bank of America short sales in Elk Grove received approval.

The incredibly patient buyers for this Elk Grove short sale signed an offer in early August. In all fairness, though, Bank of America was a little messed up last fall and has since straightened out those problems by hiring third-party vendors to handle the paperwork. Once we finally got a negotiator assigned in November, the file was processed pretty smoothly.

I've heard some agents say I am really hard on buyer's agents. I simply want the buyers to commit to the short sale process. If these buyers had not committed, instead of going into pending status today -- after 6 months of work -- this home would be going back on the market and my sellers would be back to square one.

My commitment to my short sale sellers is steadfast. I push hard for short sale approval. If the buyer really wants the home, I'll do everything within my power to see that the buyer gets it. Asking a buyer and the buyer's agent to wait for approval is not out of line nor unreasonable.

I know there are Sacramento short sale agents who won't touch a Bank of America short sale with a 10-foot pole, much less a Countrywide short sale. This Elk Grove home had 2 original Countrywide loans. It's what I call a double-Countrywide. But Bank of America is now streamlining its short sale process, so future transactions should not take as long. However, my sellers and I will still insist that buyers commit. That's never going to change.

But I do hope the weather changes. At the moment, it's very windy and still raining. And I'm off to Lincoln this morning to shoot interior photographs of another Lincoln Crossing short sale. I'm gonna wear boots.

Photo: Elizabeth Weintraub

I've said it before, but I'll say it again, I love working on Wachovia short sales. Give me nothing but Wachovia short sales in Sacramento and Elk Grove, and I'll be a happy, happy short sale agent.

A Wachovia short sale is like that lone flower growing out of a sun-drenched sidewalk crack. I work on enough short sales in Sacramento to thoroughly appreciate the no-nonsense way that Wachovia handles its portfolio of loans in default. Other banks pale in comparison to Wachovia. I'd say that Wachovia performs like a Gold Medal athlete at the Olympics while, let's say, Bank of America hobbles along like some old guy in a wheelchair with a flat tire.

I met with the manager of Wachovia's short sale department 6 days ago. We walked through one of my short sale listings in Elk Grove as I spoke with the relocated seller on my cell. The manager asked a handful of questions, the seller responded and, yesterday, we got short sale approval.

Not only did we receive approval, but Wachovia is paying the seller $3,500, providing we can close escrow in early December. The seller had gone into default after transferring out-of-state and tapped several credit cards to the tune of about $25,000 to try to keep the mortgage current -- a struggle that proved fruitless in the end.

But wait, the approval gets better; Wachovia is also paying a higher-than-traditional amount of commission. I charge more for my short sale negotiations than many other agents. I figure I'm worth it because I get results. Some buyer's agents snort when they hear about my listing agreement percentage because they don't believe that I'll get it; however, all commissions are negotiable and, on a short sale, subject to bank approval.

It's no secret that short sales are a lot more work than other transactions. I work extremely hard for the commissions I earn. I'm happy to report that Wachovia recognizes this and pays accordingly. As a Sacramento short sale agent, I've been doing them long enough to have established unparalleled systems, which handle the volume, and lets me give my clients the undivided attention they deserve. So, if you are contemplating a short sale in Sacramento, give me a ring. Call Elizabeth Weintraub at 916.233.6759.

And if you're a Sacramento Wachovia short sale seller, believe me, I'm rolling out the Red Carpet.

Short sale buyer's agents in Sacramento are wising up and asking more questions upfront about my listings before showing them to a buyer, but I still get the goofy questions about homes that are new to the market such as: Is this short sale approved by the bank? Some banks such as Wachovia and Wells Fargo are putting systems in place to preapprove the sales price but most banks do not. It takes an offer from a qualified buyer to get a response.

I've had only one bank this year tell me that the price on my Sacramento short sale wasn't satisfactory, and that same bank came back 3 months later to accept an offer at that price. That bank, of course, was Bank of America.

Banks are accepting the short sale offers I submit. However, the offers I submit are generally much higher than my list price. As a Sacramento short sale agent, I realize that the market generally supports 2 prices: the list price and the expected offer price.

Simply put, banks want market value. Depending on the bank, however, banks may accept an offer that is priced somewhere in the range of 5% to 12% below market. What is market value? Market value is based on the comparable sales.

When I list a Sacramento short sale, I always pull the comparable sales, and I consider the pending sales, too, because pending sales are indicative of which way the market is moving and will become the sold comps at closing. Most of my short sales are listed about 10% below market value. This tactic brings multiple offers, which tends to push up the offers closer to market value. I advise my short sale sellers to accept the offer from the most qualified and dedicated buyer at a price that is closest to market value.

The problem isn't whether the short sale bank will accept the price, it's whether the price will appraise by the buyer's lender. Sometimes, buyers write offers that are too high. In one instance, I had to tell a buyer's agent that she may want to submit an addendum at a lower price. She had offered, let's say, $350,000 on an Elk Grove short sale listing that was priced at $300,000. I suspected that the comparable sales would not support such a high price and we'd have a problem getting it appraised at that price. So, her buyer lowered the offer to $330,000.

Sure enough, the buyer's appraisal came in at $329,000, and the buyer coughed up the $1,000 difference in cash.

Tip: Before you sign a purchase offer for a Sacramento short sale, ask your agent to give you the comparable sales for that neighborhood and to interpret that data for you. Because often, the listed price means nothing. Some agents ask their sellers to sign listing agreements at prices far less than market value, hoping that the short sale bank will give away that home for free, when the bank will do no such thing.

Lots of home buyers don't understand this, and many can't wrap their heads around the fact that some prices are plucked from thin air. They see a home on the market at a certain price and wrongly assume that they can buy that short sale at that price, when they can't.

Wells Fargo approved another short sale yesterday for an Elk Grove seller. The negotiator was a chatty guy out of South Carolina who used to live in Sacramento -- on one of the "fish streets" in Rosemont. Very nice guy. I'd like to go on the record as saying that not every negotiator who works for a short sale bank is an evil troll.

In this situation, the seller had tried, unsuccessfully on two separate occasions -- one of which was in the middle of our active short contingent status -- to do a loan modification. He was current on his mortgage, borrowing money to make the payments. I can't blame the seller for trying to do a loan modification because all sellers are entitled to try to save their homes. But I know from my past experience that very few of them are granted. Many of my short sale clients are those who tried to do a loan modification and were denied.

People think that 3 ingredients are required to do a short sale, and these 3 do tend to create the perfect storm:

• The home is under water, meaning the sellers owe more than the home is worth
• The sellers have a bonafide hardship -- loss of job, divorce, illness
  
• The sellers are in default -- they have stopped making their mortgage payments

However, being in default is not necessarily a requirement. Whether a bank will issue short sale approval in a situation where the sellers are current on their mortgage depends entirely on the investors' demands.

I've worked with a handful of Sacramento sellers who were not in default and successfully closed their short sales. Believe it or not, a couple of them had loans with Bank of America. Other mortgages were held by Golden1 Credit Union and CitiMortgage. Given the choice, it's probably better for a short sale seller to continue to make the mortgage payments, but I let every seller make that decision and don't lean one way or the other.

It's the late pays that cause significant point drops on FICO scores. If the bank rejects the short sale because the seller is current -- and I've had that happen -- then we extend the short sale addendum, providing the seller elects to go into default, and simply wait out the required time period. Then we resubmit. Sure, under that turn of events, the short sale takes longer and the buyer could lose patience, but doing what is best for the sellers is an agent's job. If the buyer walks away, we'll just sell that home to another and start over.

If a Sacramento short sale agent tells a seller to stop making the payments, that agent could be in seriously hot water. Scalding water. Water above 212 Fahrenheit. For one thing, we can't give legal advice. Moreover, it might not be the best solution for the seller. We must, as short sale agents, put the needs of our sellers above our own. We have a fiduciary relationship to our clients. And some short sales work out for sellers who are not in default. It's worth the battle in my book.

If you're looking for a home with more than 3,600 square feet in Stonelake, this 4-bedroom, 3-bath Elk Grove short sale home might be the ticket for you. It is located in the affluent area of Laguna and was built in 2001. The entry is tiled with soaring ceilings and lots of windows. Definite curb appeal from the street with its arched windows on the second level. You'll also find a big bonus room upstairs that could be used for a children's playroom, work-out or hobby room.

The first floor has an open floor plan. The living room is open to the dining room, separated by walls on either side with cutouts. The kitchen is massive and overlooks the family room. Lots of stained cherrywood cabinets in the kitchen with white tile counters and an island. Much of the home has white carpeting, and a couple bedrooms have newer light beige carpeting.

It features a fireplace in the family room, which also has sliding doors to the landscaped back yard. The grand staircase winds to the second floor, with cherry-colored railings and spiral posts. Laundry is located on the second floor, too. There's one bedroom downstairs and the other 3 are upstairs.

Price is adjusted for cleaning of the carpets or replacement and painting. With a little TLC, this home could absolutely shine.

9772 Harrier Way, Elk Grove, CA 95757

For sale at $335,000, subject to lender approval.

Offered exclusively by Lyon Real Estate, Elizabeth Weintraub, 916.233.6759

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Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. DRE License # 00697006.

The Short Sale Savior, by Elizabeth Weintraub, available through bookstores everywhere and at Amazon.com.

Photos: Elizabeth Weintraub

By the time I speak with many upside-down sellers in Sacramento, they have already been turned down by their banks for a loan modification. In fact, in a few situations, the banks offered loan modifications that would ultimately increase the homeowners' mortgage payments, not reduce them. Other banks asked sellers to make reduced payments for a few months to demonstrate the sellers' ability to pay and then filed a notice of default anyway.

Yesterday a seller asked me to list his home in Elk Grove as a short sale. But when I arrived at the home, he told me he was undecided between attempting a short sale or pushing for the loan modification and asked which option he should choose. The home was already vacant. He and his wife had moved to another city.

He figured if he could do a loan modification, he could rent the home for at least $2,000 a month. He felt he was in the clear because he hasn't made any mortgage payments for more than a year, and the bank has yet to file a Notice of Default.

His solution was to list the home as a short sale while he continued to pressure the bank to do a loan modification. The problem with that scenario is I don't know of any banks that will process a file as a short sale while a loan modification is pending, and especially not his bank.

Quick math told me that he owes about $600,000 on 3 loans, part of which was a hard money loan that can carry its own set of complications, tax-wise. Even if the bank would give him a loan modification at 3% interest and grant him interest-only payments for a certain period of time, his PITI payment would still exceed his anticipated rental income. He'd still be taking money out of his pocket every month.

And what happens at the end of the interest-only grace period? He would still owe $600,000 on a home that today is worth about $250,000. Does he think that homes will magically appreciate enough over the next 3 to 5 years to put him in the black? Very unlikely.

My answer was the same that I tell every seller. The seller needs to decide whether to do a short sale or a loan modification, weigh the pros and cons. He should get legal and tax advice. I can't make that decision for anybody, nor would I even try. My job as a Sacramento short sale agent is to sell that short sale and get it closed. I'm not a lawyer nor an accountant. On top of which, I'm not in the business to push a seller into doing a short sale.

But I also know that banks want sellers to occupy the home as their personal residence before granting a loan modification. This seller is a non-owner occupant attempting to rent out the home as an investment. I put a lockbox on it.

Photo: Big Stock Photo

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Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. DRE License # 00697006.

The Short Sale Savior, by Elizabeth Weintraub, available through bookstores everywhere and at Amazon.com.

Beautiful palm trees flank this 4-bedroom, 3-bath Elk Grove home, offered as a short sale. The views from this home are stupendous. Behind the home, for as far as the eye can see, is a greenbelt area. It's nice to have no neighboring homes in your back yard. Plus, the view is particularly spectacular from the master suite. It's also within a few blocks of Miwok Park.

The living room has soaring ceilings and shares space with the dining room. You'll find arched doorways and a lot of windows throughout. The kitchen has tiled counters, oak cabinets and white appliances. Your kitchen is also open to the family room, which features a fireplace.

You enter through double doors to the master suite, which has a vaulted ceiling and ceiling fan. The master bath has dual sinks, a separate shower and a tub.

The back yard is very pretty. It has a concrete patio, a lush lawn, plus peach and pear trees. I can vouch that the peaches are delicious because I ate one. But the view is what will cement your decision to seal this deal. Check out the photos below.

8209 Oakbriar Circle, Elk Grove, CA 95758, priced at $190,000 as a short sale, subject to bank approval.

Offered exclusively by Lyon Real Estate, listing agent Elizabeth Weintraub, 916.233.6759

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Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. DRE License # 00697006.

The Short Sale Savior, by Elizabeth Weintraub, available through bookstores everywhere and at Amazon.com.

Photos: Elizabeth Weintraub

Yearning for a short sale home in Elk Grove? Perhaps a home with an open floor plan in Franklin Meadows? Look no further. This popular Primrose model built by Dunmore in 2005 is offered as an Elk Grove short sale.

The entry is huge; it makes you feel like you're walking into a dignitary's home. Once inside, you get a feeling of spaciousness. The family room is completely open to the kitchen and dining areas. You will marvel at the over-sized ceramic tiles that meet the family room carpeting and probably can't help but caress the black granite tiles gracing the kitchen island and counters. As a special touch, there are two small windows made from block glass built in the kitchen back-splash.

This home sports 3 bedrooms, one of which is a master suite, and 2 baths. Pretty landscaped back yard with an uncovered patio. Close to a nature preserve, too.

5601 Foxview Way, Elk Grove, CA 95757

Offered at $200,000, subject to the short sale bank's approval.

Elizabeth Weintraub

Lyon Real Estate

916.233.6759

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Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you.

The Short Sale Savior,by Elizabeth Weintraub, available through bookstores everywhere and at Amazon.com.

Sacramento Short Sale Agent, Elizabeth Weintraub, has the answers to your Sacramento short sale questions.

Photos: Elizabeth Weintraub