Everybody knows that short sales in Sacramento -- or anywhere in the country, for that matter -- can take a long time to close. That's happens mostly because some banks take forever to respond.
But most of my short sales get approval between 6 and 8 weeks. They all receive multiple offers. An unfortunate aspect for buyers, though, is when buyers have patiently waited for months to get approval on the short sale, some other buyer can sneak in and outbid them.
It happens. It just happened on one of my short sale listings. Now, you'll hear that all banks don't want multiple offers, but that's simply not true. You'll also hear that submitting more than one offer will hold up the short sale process, and that's a fallacy as well.
Here's a true story about how Sacramento Short Sale buyers lost their dream home at the 11th hour:
Let's say this Sacramento short sale home was listed for $300,000. We didn't receive a lot of offers, only two. One was, oh, $315,000 and the other, $318,000. We submitted both offers to the bank. Suddenly, after 3 months, we received another offer for $350,000 from a third buyer. This happened at the same time we received short sale approval on the $318,000 offer.
We sent the new offer to the seller and the bank. The bank ignored the offer. The seller was livid. Her rationale was why should she have to pay taxes to the state of California on a higher mortgage debt relief balance when she was offered a better price! I explained that the decision was hers, and if she wanted the bank to consider the other offer, she should call the negotiator, as would I.
Turned out the bank approved the $318,000 offer because the BPO was $295,000. The bank was worried the home would not appraise at $350,000. (Shows you how much those BPOs are worth, especially when calculated by an inexperienced appraiser.)
The question was did the seller want to take the short sale approval of $318,000 in hand or did she want the bank to reconsider the $350,000 offer? Time was of essence. We were scheduled to close in 4 weeks. A new approval could delay the process. The buyer's appraisal may be an issue.
In the end, the seller chose the higher offer and directed the bank to consider it. We resubmitted the higher offer to the bank on a Friday. Three days later we had the new short sale approval at the higher price.
During this time, I notified the agent who had submitted the offer for $318,000, to give her advance warning. I didn't want her to find out that her buyers were kicked out of the deal days or weeks later. That's not how I do business. The agent immediately submitted an addendum, increasing her buyer's price, but it wasn't enough to beat the other offer.
Sacramento short sale buyers, please be aware that this can happen to you. You can wait months and months for approval and, lacking specific language to the contrary in your contract, some other buyer can kick you out at the very last minute.
The Short Sale Savior, by Elizabeth Weintraub, now available at Amazon.com.
Photo: Big Stock Photo
If you're looking for a Sacramento short sale agent, call Elizabeth Weintraub at 916.233.6759.
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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.
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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.
Yep, happens all the time. Very frustrating for the buyers that have been waiting. Even more frustrating when it happens over and over.
Elizabeth
I always enjoy having the broker on the other end of my listing saying after three weeks "You didn't get the bank to approve it yet?" Not lots of multiple offers going on here but lots and lots of foreclosure and short sales.
Better for the bank and ultimately also better for the sellers usually to take the higher offer. It's a risk you take when you have a contract on a short sale. I'm sure your seller appreciate your expert guidance in getting them through the process smoothly.
It's great for the seller and it's great for the bank. It's horrible for the buyer. When it happened to an agent friend of mine on her transaction, it became reason for her to steer clear of ever showing any short-sale listings in the future.
I have a difficult time accepting the option for the bank to reconsider an offer after they have approved the first one. I guess if everyone is working with the same set of rules we just have to live with it.
In California, we have the option of using the short sale addendum for our buyers. Buyers think it protects them and, in some ways, it does. But it also gives sellers the right to continue marketing the home and sending all offers to the bank. When I am representing a buyer and the situation warrants, I include an addendum that removes that sellers' right, heh, heh. But when I represent the seller, whoa, you can bet we are going to continue marketing the property.
Elizabeth,
It is a tough situation, tough for the buyer who thought they would get the home. It would be an easier thing if not for the time it takes
We use a short sale addendum that goes with and offer also that basically is seller oriented. I would like to see the one you use when acting as a buyers agent.
Highest and best is always the rule...and the highest for one buyer is not always the best for the seller...blog on Lady....
Hi Glenn: I just use a standard addendum form issued by C.A.R. I check the box to make it an addendum to the short sale addendum, primarily because there is no extra line on the short sale addendum to let an agent modify it. I then exclude the paragraph I don't want from the SSA on the addendum. That's my personal secret trick. :)
Elizabeth: The Short Sale Addendum also gives the options of placing the initial deposit into escrow as per "the Agreement". Do you ever go that route?
Why would I advise a buyer to do that, Melissa? :) Given the option of putting a deposit into escrow or not cashing a deposit check, the buyer is better off holding on to that money until short sale approval. Although, when I represent the seller -- oops, change hats here -- I sometimes do demand that the buyers put their EMD into escrow. Just did one of those yesterday. A buyer's agent called to ask how he could sweeten his offer, and I suggested having his buyer immediately deposit his EMD.