Many real estate agents in Sacramento these days are running around like a chicken with its head cut off. Blood everywhere -- frantic, can't see where they are going, stepping in crap. If this doesn't describe an agent you know, then that agent is not working as a Sacramento short sale agent. For us short sale agents, business is booming.
It's booming in part because interest rates are so low that many first-time home buyers can buy a home and pay less per month than it would cost to rent that home. This means the same home would give an investor a positive cash flow. So, investors are in the market and competing with home buyers. You would think that kind of activity would drive up prices, but it's not. It's simply making a bloody mess out of the very best homes in inventory, many of which are short sales. Home prices are still depressed.
On the short-sale end of it, though, often a home will be in foreclosure. To be in foreclosure means that a Notice of Default has been filed. If a Notice of Default has been filed, an investor needs to be very careful about the type of offer that investor presents to the seller. Agents are supposed to know whether a home is in foreclosure, but they sometimes don't check.
Failure to check could cause that agent to put her license on the line, her investor could be fined, and the seller could rescind the sale up to two years down the road. Sellers are ticked off enough about having to short sale. Do you want them to sue to take the home back when they bounce back on their feet two years down the road? Investors: make sure you are working with an experienced buyer's agent who understands the Home Equity Sales Act and takes steps to protect you.
As an investor, you cannot and should not sign a standard purchase agreement to buy a short sale if that home falls into all four of the following categories:
- The home qualifies as the seller's personal residence.
- The property is a single-family home or 2 to 4 units.
- A Notice of Default has been recorded in the public records.
- The investor will buy the home as a non-owner occupant.
Under the above circumstances, an investor needs to sign a Notice of Default Purchase Agreement. It's a C.A.R. form, NOPDA. It complies with the Home Equity Sales Act. Not only should an investor sign the NOPDA, but that offer needs to be prepared correctly. I see agents submit an NOPDA under duress and they often don't fill out the box giving the seller the right to cancel. California buyer's agents need to give the seller the right to cancel. Just signing the document doesn't cut it.
In fact, I would advise investors to get legal advice before trying to buy a short sale. You can't be certain that your agent will use the right purchase agreement or even if your agent will fill it out correctly. You also can't be certain that your agent will check to see if the home is in foreclosure. That's the unfortunate truth that nobody will tell you.
Photo: Adam Weintraub, California cowbird, who now made it back home.
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Certified HAFA Specialist
My Sacramento Real Estate Listings
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 the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
Lyon Real Estate is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
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.
