Elizabeth Weintraub • Sacramento Short Sale Agent • Land Park

One of the things I look for when I take a short sale listing in Sacramento is whether the home will qualify for an FHA loan. Because if the home will meet minimum FHA requirements, that means an FHA buyer can buy it. I care whether an FHA buyer can buy that home because FHA buyers make up the majority of the home buyers in Sacramento today. Ten years ago, it would be odd to get an FHA buyer. Not so today.

I don't know the exact numbers but I would estimate 5% were FHA buyers 10 years ago. Today, it is closer to 70%. That's because requirements for a conventional loan have become so stringent. Not necessarily because FHA is so great. You can still get a conventional loan with 5% down, but you will also pay for mortgage insurance. You must have a higher FICO score (by almost 100 points) to get an attractive rate. Not every first-time home buyer enjoys a high FICO.

So, if you want to knock out 7 of every 10 potential buyers for your home, then don't offer FHA financing terms. You can pick the type of offers you will accept. As a Sacramento short sale agent, I would prefer that my sellers have unlimited options and open their homes to every type of buyer who would like to buy it. Because not every buyer wants to buy a short sale.

I particularly like to encourage my sellers to accept offers from buyers getting a VA loan. That's because VA buyers get shot down almost every time they turn around. Few sellers want to accept a VA offer because they don't understand them. Their agents probably don't understand how they work, either. They hear "VA" and think "funding conditions" or "too many repairs," which isn't necessarily true.

With a VA buyer, I know that buyer probably won't be tempted to cancel escrow and buy a different home because there are few and far between offering VA financing for them to buy. They're committed to the short sale transaction. They will do whatever it take to get it closed. You VA buyers? You give me a ring.

Sometimes there are repairs required, but they're generally simple. If I know that the seller is incapable or unwilling, I'll arrange for the buyers to do the work. There are sellers who will say, when I ask where their gas meter is located so I can put the lockbox there, "Gas meter? Do I have a gas meter?" And I know these people are not very handy around the house.

You would be amazed at what FHA and VA will let pass in a home. For example, a home can have an exposed concrete slab floor and the appraiser won't care. But if you don't paint your rain gutters, you're in big trouble. If you want to know whether your home qualifies for an FHA or VA buyer, give me a jingle. I'll explore all of your selling options with you before listing and selling that short sale.

As a Sacramento short sale agent, I list and sell short sales in Sacramento County, El Dorado County, Placer County and Yolo County.

There is a lot of anger in short sales. Sellers can get stuck in any one of the 5 stages of a short sale, but I see a lot of them who struggle to push past the anger stage. It festers and churns, like a supervolcano underground, and it might never erupt. Unresolved anger can eat away at a seller's inner core. That anger needs to be released, and hopefully not directed at their Sacramento short sale agent. Sometimes, I gotta duck to move out of the way of that flying fry pan.

The anger manifests itself in subtle ways that is apparent to me when I walk through their homes. I spot it in the ripped out speakers from the ceiling, the missing light pendants over the kitchen counter, the big hole in the front yard where a tree once stood. People who are not angry do not remove fixtures from a home. Fixtures don't belong to the homeowner, they are part of the lender's security for the loan. I also see anger in the dirt and debris left behind. Some sellers don't even vacuum.

Why are short sale sellers so mad? They are mad because they have to do a short sale. Unfortunately, people who are this angry come to a short sale often as a last resort and not as their first option. They are mad at their boss for letting them go. They are mad at their spouse and children because they are there. They are mad at their new employer for not paying them a higher salary. They are mad at politicians, the newscasters on TV, and Chevron, Safeway, VISA and Wall Street. But most of all, they are mad at their bank.

The 5 Stages of a short sale are the same as the 5 stages of grief:

• Denial: They don't open mail from the bank, and they ignore the late notices.
  
• Anger: They don't want to live in the home anymore, just hearing their bank's name makes them cringe.
  
• Negotiation: They write a hardship letter to the bank, asking for a short sale.
  
• Depression: They feel hopeless and helpless and out of control while waiting for short sale approval.
  
• Acceptance: They find a place to move into, and begin to heal after the short sale is granted.

The sellers who never move past the anger stage are often the sellers the banks reject for a short sale. They are the sellers who blame the bank for the mess they are in. If the bank never made them the loan, they wouldn't be underwater, so it must be the fault of the bank. (It IS certainly the bank's fault for not granting a loan modification and taking forever to eventually reject them.) If the bank requests a seller contribution, they absolutely will not do it, even if it means the home will go to foreclosure, and their credit rating will tank for the next 10 years.

These are not really homeowners who should be applying for a short sale. These are homeowners who are simply stretching out the inevitable. Which is foreclosure. Deep down, they know it. And that makes them even madder.

Photo: Big Stock Photo

An agent called me last night on one of my short sale listings to say he wanted to write an offer. His reason for calling was to say he could not believe his lucky stars when he ran across one of my short sale listings in Sacramento to discover it was listed by a "regular real estate agent."

I'd like to think my short sale listings get offers because I have priced them appropriately and marketed them well -- little did I know that sometimes it can be name recognition. But I see his point. I don't want to deal with a mortgage broker-slash-real estate agent any more than the next guy out there, but sometimes we have to deal with the cards we are dealt.

I firmly believe it is pricing that makes the difference. Unlike some agents, I don't make up prices, and I don't deliberately price them so low as to attract offers from lowballers who don't stand a snowball's chance in you know where of getting them accepted by the bank.

Instead, I examine the comparable sales in many formats. I look at a radius within a 1/4 mile. Again at a 1/2 mile. Over a year ago, within the past six months, within the past three months. I run a separate search on the subdivision. I study the Active Short Sales versus the Short Contingent; the Active listings versus the Sold and Pending comparables. I apply a ratio regarding price declines over the past 12 to 24 months. I look up the history of pendings and solds versus last sales history. And within all those figures, I pluck a number that I think the bank will agree with.

If the short-sale lender doesn't agree, you don't have a sale.

Now, some people might say, hey, you're supposed to be getting the highest and best price for the seller, and with that sentiment, I disagree. The ultimate seller is not the home owner, it's the bank. I'm supposed to get the home SOLD. The only way to get a short sale sold is to get a buyer, that buyer's agent and the bank to agree. So, I'm working a three-sided coin.

Maybe I'm just lucky. What the heck do I know? But I do know 3 new short sale listings from last week all have multiple offers. Two of those have the BPO completed already, both of which support the sales price. I know that 90% of my last three year's worth of short sale listings have closed escrow.

What I really love about listing short sales is there is no argument from the owner over price. The second loan (if there is one) is almost always wiped out, especially in Sacramento, so you know the price is going to be less than 80% of what the sellers paid. There is no deficiency judgment in California on a first mortgage (regardless of whether it's purchase money or hard money) under a trustee's sale, which means it's no skin off the seller's teeth whether the home sells at 80% or 40% of that mortgage.

Unlike many hissing agents who cross forefingers and back away from short sales, I'm not afraid of them. I love short sales. If you need to sell your Sacramento home on a short sale, call me at 916.233.6759. I'll get it sold for you.

The Short Sale, by Elizabeth Weintraub, coming from Archer Ellison in January 2009.

Photo: Big Stock Photo

If it's not enough that the population of hard-nosed print journalists is being thinned out, and newspaper publishers seem eager to replace veteran reporters with inexperienced and (dare I say) often less dedicated reporters, some days the news just isn't uplifting -- fires, homicides, bankruptcies, foreclosures, bank failures, you name it. As a result, some reporters are looking for more upbeat stories, I suspect.

I belong to a public relations site that releases queries from reporters who are looking for interview subjects, and thought you might like to read some of the queries they send, and why I don't respond. Can't tell you which newspaper, magazine or web site, unfortunately.

Query: "Looking for an Expert on How to Behave at Holiday Parties -- What NOT to Do."

Elizabeth Weintraub's tips:

• Don't show up naked, wear clothing.
• Don't engage in intimate relations in the coat closet.
• Don't do shots of Tequila and dance with a lampshade on your head.

Query: "Looking for Seattleites to Talk About the Ups and Downs of Umbrellas."

Elizabeth Weintraub's tips:

• Point umbrellas away from your face upon opening.
• Stand under an umbrella to stay dry.
• If it's not raining, close your umbrella.

Query: "We Can't Afford That -- Explaining Budget Concerns to Your Children"

Elizabeth Weintraub's tips:

• Show them photos of starving children in China.
• Teach them to panhandle.
• Make them walk to school, uphill in the snow and barefoot.

You can see how easy it is to be an expert. Piece of cake. But if you're looking for a Sacramento short sale / foreclosure expert, call Elizabeth Weintraub, who always has an opinion or advice on just about anything.

One of the longest short sales I have ever worked on involved a horse property in Sacramento. The poor sellers were originally pushed into the transaction by an agent who promised them prices would never fall. I wish they had obtained legal advice before ever buying that rental property. They paid about $650,000 two years ago for a 3 bedroom home on 3 acres, using 100% financing, an 80/20 combo loan. All this time they had been making interest only payments and paying a negative cash flow to stay afloat, until push came to shove and they could no longer afford to borrow from VISA or MasterCard to make ends meet. By the time I met these sellers, they were on the brink of insolvency.

Enter the short sale. We sold the home for around $350,000 to a buyer who owned horses. What happens in a short sale when you have two loans? We negotiated the payoffs with both lenders. The second lender finally agreed to take $1,000 from the first mortgage holder and release the loan. However, the buyer's mortgage broker messed up and was unable to fund on time. That meant both short sale demand letters had expired, and we had to go back to the bank to obtain new letters.

The second time around, the second lender's investors decided $1,000 wasn't enough to satisfy them. They demanded $5,000. The first lender refused to give it them. We were 4 days away from closing on a transaction that had been in escrow for 9 months!

My associate at Lyon, a fabulous agent who had graduated from law school and handles the negotiations for me, was obviously distressed. It wasn't our fault the escrow didn't close on time. It wasn't the buyer's agent fault, either. So, guess who paid the additional $4,000?

Photo: Big Stock Photo