You know how sometimes you think that things just can't get any worse and then suddenly they do? You'd think a rational person would stop thinking that way, but no, we are generally more optimistic than that, especially if we are a Sacramento real estate agent who works with short sales in any kind of meaningful way.
Take a transaction in which it's been almost a year. Say, the agent has gone through 3 or 4 sets of buyers, trying to satisfy the demands of Freddie Mac on a short sale. Buyers continually cancel. The agent escalates the file twice and then finally, finally, Freddie Mac says OK to the lower price. We get the approval from the second lender. The third lender says it will approve. We go to the first lender for the promised approval letter and the lender says wait a minute, I know we told you that the price could be lowered but we forgot about closing costs. Duh. Lender slaps forehead. We need the original price.
So, the agent goes back to the buyer and begs and pleads. Buyer wants to walk. Buyer almost does walk. Then buyer looks at what's available and says, no, I think I'll stay put.
Uh oh, lender forgot to mention that not only must the price change, but some of the customary closing costs that a seller in Sacramento would pay are not allowed. Things such as the title policy, of all things, Freddie Mac says the buyer must pay. Much resentment from buyer, but buyer relents.
Then, first lender refuses to issue the approval letter until the second and third lenders submit approval. The short sale agent goes back to the second lender, which has already approved once and extended once and requests a revised approval. Uh, oh, second lender elects to charge-off the short sale and assigns the second loan to its collection department.
The collection department wants more money than what was previously agreed to. Almost $10,000 more.
Is this where the short sale agent throws herself off the nearest bridge? No, this is where the short sale agent goes to the seller to explain, says the second wants a payment on the account. The third lender at this points submits its short sale approval letter. The short sale agent immediately approaches the third lender and asks the third lender to reduce its approved amount. She can't ask Freddie Mac to allocate more money to the junior lenders because Freddie Mac is at its legal maximum and under federal guidelines.
The short sale agent instead asks the second lender to accept $1,000 extra in-lieu-of $10,000. Eureka. The second lender agrees. The third lender in turn reduces its amount by $1,000. Everybody is in agreement. All three lenders are ready to close. The short sale agent then goes to the first lender and says, you've got the green light, please issue the approval letter.
Then, the seller files for bankruptcy.
That's the end of that Sacramento short sale. No short sale for that seller.
Pass the vodka.
You can read more in my personal blog today about 5 Things Your Bankruptcy Lawyer Won't Tell You About a Short Sale.
Certified HAFA Specialist
Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying expert for About.com, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area with an emphasis on Elk Grove. Call Elizabeth Weintraub at 916.233.6759. Put 40 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. BRE License # 00697006.
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Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.