Sacramento Real Estate Views

“The Negotiator Said We’d Have The Letter This Week…”

And Other Real Estate Market Nonsense!

I was thinking about what to write and decided that what I have going on in my transactions right now is post-worthy…some of this stuff is simply amazing, boring, frustrating and stressful all at the same time.  Well maybe not amazing!

The market for Realtors right now is about as hard as it can be.  While I know it’s the choice of everyone in it to be here, and I think making that choice makes it harder still, it could be easier.

Having banks involved in over 62% of all real estate transactions is the real challenge.  Anytime you add more fuel to a fire, it burns hotter.  Seems every transaction has unique challenges never seen by anyone.

In one way, this is the great thing about this business.  Every transaction is different.  Largely, they are the same but small nuances pop up to challenge you and force you to figure out ways to get things done.

I’m very proud to say that over the course of my career, I’ve had a 95% close ratio on both listings and sales.  In this market, where many decisions are made by someone who could care less about anyone involved, that’s pretty darn good.

The following are just some of the challenges I’ve run into lately.

“But We Didn’t Charge $13.73 At 7-11!”

I’ve been working with these folks for 14 months.  I absolutely love them and their family who I have sold homes to over the past year and a half.  Mom and dad are moving down from Redding for several reasons.  Family and work being primary.

We searched and searched for a home for them without much success.  They had specific needs and we needed to meet them.  We finally found them a home that would work in Lincoln, put in an offer, got it accepted and then we began “the wait”.

“The wait” is the short sale dance that we do.  It’s kind of like a bad Irish Jig and the Cossacks dance rolled into one.  Ick!

Getting the approval on this short sale took about 90 days.  While that isn’t unusual, once you have the approval the bank wants it closed right now.  On top of that, it’s a HAFA deal which means there is another party involved that wouldn’t normally be involved, the U.S. government.

The lender pulled their credit report for the pre-approval and they had 820 credit scores…just wrap that up in a pretty little bow and call it good!

We finally got the approval letter from the bank then got all the disclosures and inspections done.  The lender was ready to submit the loan packet to underwriting for final approval.

One glitch….the borrower had disputed a single charge on one of their credit cards in July.  A $13 charge that wasn’t theirs.  Instead of just wiping out the charge and calling it good, the credit card company put the entire account into dispute.

The entire account!  FHA guidelines say that you cannot have any accounts in dispute as accounts in dispute don’t get added into your credit score.  This means that you could have an account that drags your score down, put it in dispute and your score will automatically go up.  While that wasn’t the case here, it has happened that people do this to get raise their score to get a loan.

We’re a week from closing.  NOT SO FAST YOUNG MAN!!  Luckily, I have an awesome lender who got it straightened out in 5 days and now were very close to closing.

What’s the lesson??  If you’re in the middle of buying a home and you do ANYTHING with your credit, and you should be doing NOTHING with your credit, make sure to let your lender and your Realtor know about it.  In this case, no one had any prior knowledge that this would happen and it couldn’t be helped by the buyer, the lender or me.

“The Negotiator Says We’ll Have The Approval Letter This Week!”

I’ve got an old friend I’m helping purchase another rental for his empire over in Antelope.  This guy is awesome.  We’ve known of each other from mutual friends for quite a few years and over the last 8 months we’ve been looking around for another rental property for him.

We finally settled on a short sale in Antelope.  The agent is a nice guy and keeps in contact with me regularly unlike most agents these days.

On June 22, he contacted me saying that the buyer he had fell out of escrow and the if my buyer was interested it was his.  I said great, we went and looked at it, my buyer said it was perfect and we entered into an agreement.

With the previous buyer, the bank had already approved the sale and the listing agent was able to get the bank to just substitute the old offer for ours.  My thought was that we’d be well on our way to closing this relatively speaking.  HA! Surprise!!  Not so much!

On June 24th, he sent me an email that says he’s submitting the paperwork for the substitution and that he wanted to make sure my buyer was in cause this was going to go “quickly”.  I said send it and lets get this done.

On June 27th, they needed some information from us and we got it to them that day.  Still waiting but escrow is open!!

Still waiting…

On August 1st…yes August…I get an email from him saying that the bank has reevaluated and they need a slightly higher purchase price based on their appraisal.  My buyer said that was within his boundaries and we recreated the agreement.

Still waiting…

On August 1st, he said that the counter and agreement redeux had been accepted by the bank.  We should have the approval letter “very shortly”.  He was “pushing hard” for it.

Still waiting…

On August 11, he calls the manager of the department and complains the process should be done by now.  Still “pushing hard”!!  That same day, I got an email saying email had “worked” and management is now involved.  Should have the approval letter quickly now.

Still waiting…

On August 12, he gets an email saying the bank needs to do another appraisal and that the negotiator who had been working the file has been fired.

Chinese Fire Drill time!!

On August 18th, great news!  The appraisal came in at value!  So what!! Where is the freakin’ approval!!  Wasn’t this supposed to be a “pre approved” short sale??!!

Fast forward…cause I’m getting bored, AGAIN…we still don’t have the approval letter on September 9th.  The new negotiator had a death in the family, the earth is rotating differently and a butterfly flapped it’s wings in Mongolia somewhere blah, blah, blah.

Now the listing agent rarely communicates with me in a timely manner and I keep sending the same message to my client… ”hey buddy, I just wanted to update you and let you know I HAVE NO UPDATE!!!”

Just makes me want to put a gun to my head and…well I’m not that desperate.  Maybe I’ll just buy an ice cream stand and make kids smile.  Right now that seems like such a good idea!!

Federal Politicians Still Don’t Get It

In the “oh by the way” department, my parting comment on this post is that the speech made last night by our President suggesting that refinancing  every Freddie and Fannie underwater loan to the current interest rate of around 4% would actually make a difference is totally wrong.

This screws the middle class by saddling them with debt for the next 10 years or more and totally favors the banks by making sure they get their full principals on the underwater mortgages.

The only solution to the housing market is a principal loan amount reduction down to market value.  While it isn’t the best solution, it’s the only one that will make people feel like they have more money.  When people feel that way they spend more.  More pizza, more soda, more cars, more big screens, more entertainment, all the things that make us go.

That said, it favors the people rather than big business and that policy never works with politicians.

If they don’t do this my advice is this – underwater mortgage = walk away and start over.  You’ll be better off in the long run.  While this may not be the best advice for everyone or something you want to hear, it’s the truth.

That’s my take..what’s yours??

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Tags: short sales sacramento rocklin roseville

The Foreclosure Crisis Is Ending

Lenders Now Favor Short Sales

The housing crisis in our region and the rest of the nation is far from over but the market has been shifting from foreclosures to short sales over the last 8 months.  Lenders are now favoring short sales vs. foreclosure as an option for struggling homeowners.

Approval times have shortened and the banks are sending out notices to homeowners letting them know, if they are either in default or behind, that if they would like to sell short the bank will help facilitate that option.

HAMP Fails

The loan modification process has been a complete failure.  Lenders refuse to lower principal loan amounts in favor of modifying interest rates and terms.  The re-default numbers in this program are somewhere in the 60% to 75% range.  Anyone paying attention in the industry knows this to be the case.

Allowing the homeowners to sell short is the option that makes the investor back the most amount of money and helps the homeowner avoid the credit degradation of foreclosure. The HAFA program is designed with this in mind.

Selling short is the best option if the lender will not reduce the principal loan amount.  Lowering principal loan amounts is universally accepted as the only viable solution to keeping people in their homes.

( Incidentally, Bank of America has recently begun a program to reduce principal loan amounts but has only, to date, helped 45,000 or so of their mortgages in default )

It’s In The Numbers

This trend is evidenced by the number of homes for sale in the 3 county area of Placer, Sacramento and El Dorado counties.  As the graph shows, bank owned homes/foreclosed homes now occupy, as of this writing, only 16.9% of the available homes for sale, available short sale homes for sale occupy 29.6% of the market and all others occupying 54.5% of the available homes for sale.

If the banks were still foreclosing, trashing out homes and putting them on the market, we would see that the number of bank owned homes available for sale would be higher than 16.9%.  The percentage of bank owned homes on the market has steadily declined for the last year.

This information is directly from Metrolist Services, Inc., the listing service for Realtors in the region.

Selling Short Could Be The Best Option

If you need to sell your home and you owe more than your home is worth, short sale is the best option.  I’ve heard that short sales are being approved even if the seller barely has a legitimate reason to do so.  With so many mortgages underwater, I guess lenders are beginning to figure out that the stigma of walking away is all but gone and will work with seller’s to get them out of their homes.

This doesn’t come without consequences of course but with the prospect that appreciation in this region has “left the building”, it seems to make smart financial sense to move on, rent and start over when possible.  Click here for an appreciation scenario.

If you’re needing to make this financial decision and would like a confidential meeting to discuss your options with regarding to selling short, please feel free to contact us.  We have a professional negotiation team that handles that short sale process closing a very high percentage of short sales every month.  Fill out the form below and we’ll get back to you as promptly as possible.

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Tags: short sales sacramento rocklin roseville

Is It Available or Not!?

The Term “Active Short Sale Cont.”

There is some confusion in the market today with a relatively new term that relates to the market status of a home called “active short sale cont.”

Short sales are new for our market.  They have only been around in abundance for the last year and a half in this cycle and most buyers, first timers especially, aren’t familiar with the term.  It appears that the home is available because the word “active” is there but this is misleading.

In the process of a short sale, the seller/borrower must produce financial documents showing that there is a legitimate need to sell for less that what is owed on the home.  The lender doesn’t want to take a loss and won’t approve the short sale without good reason to do so.

Currently, this process takes forever due to the volume of short sales happening nationwide. Our economy and value losses in our region have taken their toll and some can no longer afford to stay in their homes.

Waiting On Lender Approval

After the seller/borrower of the home to be sold short has gathered together all of the financial information they need to submit to the lender, the listing agent packages those documents along with the listing agreement and the highest and best offer and sends it to the lender for their approval.

This is when the property goes into the status “active short sale cont.”.

Listing agents tend to submit only one offer to the lender so that the financial package is streamlined and efficient in the hope of getting a speedy approval.

This rarely happens as the volume of files the lender is  receiving requesting a short sale is just more than their loss mitigation departments can handle.

And More Waiting

After the package is submitted, the waiting game begins…and goes on and on and on.

While the short sales process has gotten quicker, in the Rocklin and Roseville real estate markets, the average days on the market for a short sale is 169 days. This is the average amount of time it takes for a short sale to go into “pending” status.

Then add 30 to 45 days in escrow and the average time for a home to be sold short in Rocklin and Roseville since August 1st of 2009 is roughly 209 days!

Sweet!

The days on market time stops when a home goes pending sale.

“Pending” status in a short sale is when the package has been approved by the lender and the offer has been accepted…if the buyer is still around to close!

Often, the original buyer disappears long before the short sale approval ever happens and then the seller/borrower starts over with a new buyer.  The process just takes too long.

With the new buyer, time frames are shortened as the short sale has already been approved and it’s then a matter of submitting a new offer and getting lender approval.

“Buyer disappeared, need offers!” is a common comment in the confidential agent remarks in the MLS.

All in all, and I’ve said this before far too many times, there is nothing short about a short sale.  If you’re in a hurry trying to take advantage of the first time home buyer tax credit..you won’t have enough time to get it closed before the expiration date.

Have questions?  Please feel free to call or email.

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Tags: short sales sacramento rocklin roseville