It happened again. This time to a different short sale and not in Sacramento. This short sale is in Roseville. High demand neighborhood -- such high demand that I received more than a dozen calls within 24 hours of putting this short sale on the market. Several months later, I'm still receiving phone calls and inquiries.
We received short sale approval for an all-cash offer and were headed for closing when a buyer's agent in Roseville called to put me on the alert. Even though this vacant home has been in active short contingent status for a while, agents still show it. I don't know why. But this particular agent noticed the air conditioning unit was missing. That huge component that sits on the side of most homes in the yard.
Turns out not only did thieves steal the A/C unit, but they ripped out the home's entire electrical panel as well. Then, I suspect they set the side yard on fire. The grass looked burned in the photos I received. Where are the neighbors when these things happen, I wonder?
I advised the seller to file a police report and notify his insurance company. However, in this particular instance, I believe that insurance will most likely not cover any damage because the home has been vacant for more than 30 days. So, that leaves me having to ask Bank of America for a price reduction.
Last month, thugs broke into a Natomas short sale and swiped the appliances. Fortunately, they didn't do further damage, and it was just the dishwasher and range that were stolen.
I tell all my short sale sellers to make sure they carry adequate insurance on a vacant home because their existing homeowner's insurance probably won't pay on a claim. But nobody ever thinks anything bad will happen to them. It's always the next guy or the next town over. Of course, the problem with this is rates to insure a vacant house are expensive. If a seller can't make a mortgage payment, a seller probably can't afford a special insurance policy, either.
Steve Poizner, insurance commissioner at the California Department of Insurance, released a statement last week warning homeowners to review their insurance policies and to consider vacancy protection options. Pretty timely advice, I'd say.
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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.
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Hi Elizabeth, thank you for posting the excellent advice on insurance! Nice post.
Great Advice Elizabeth!
Sometimes Insurance companies in Canada will give you a break on the Vacant insurance Rate if you have someone checking the house everyday and also have an alarm system installed and activated. (It's worthwhile asking anyway)
I have had many clients selling vacant homes - this is really important advice! It doesn't matter if it's a short sale, REO, or regular sale, thieves are out there looking to grab whatever they can.
Great advice, Elizabeth, and something that would be easy to overlook.
Excellent advice. In GA, they go after the copper pipes in addition to the heating and air units. Many people don't know the restrictions/limitations on their homeowner's insurance policies
Great reminder! I wonder how expensive that sort of insurance is. Some of these short sale clients are down to basic living income and no more ...
Many people are unaware of the vacancy permit requirement under most standard insurance policies.
It's really only when they have a claim that they discover the "issue".
We are not getting thefts like you described but we have had storm damage. Interestingly we had two with BOA, and another thing you need to do is call the lender about a n insurance claim on short sales because different divisions can be working at cross purposes. We ended up having two cliams monitored for repairs by BOA who was holding the check. One was for $17,000 and one was for $42,000. Both got done and that saved the short sales, but not without a REALTOR® intervention with the lender.
Elizabeth, excellent post and a good reminder for all agents representing Sellers on short sales to make sure insurance policy stays in effect throughout the entire short sale process to closing. It will save Sellers, agents and the banks a great deal of time, money and grief.
It's a good idea to advise home sellers to speak with their insurance professionals. Especially on properties that are likely to be vacant more than 30 days. In many cases Homeowner policies will be converted to Fire policies, which significantly reduces coverage.
With the amount of vacant properties out there, I suspect many of them are vulnerable to uncovered loss in the event of a catastrophe.
Great reminder, Elizabeth. I've had compressors ripped out of the AC systems at vacant properties before and you're right, insurance won't pay unless the seller has purchased expensive and hard-to-get vacant home policies. It's amazing what people will do to each other, isn't it?
Elizabeth,
This was a god reminder. I just had one of my short sale sellers move from her home and I am going to call her and check with her on the insurance.
Elizabeth, very good point about insurance covering these possible scenarios. So sad this kind of criminal activity goes on, over an air conditioner??
Wow- what a story. Knowing the banks, they will have to do another bpo and delay the process.
Elizabeth - I recently read another post where a/c units were being stolen. Just when I think I've heard everything. Good grief, as if things weren't bad enough already.
Elizabeth - thank you for sharing this sage advice! I just closed on a home that had been vacant for over a year and I'm just thankful that we didn't run into these problems. Such a shame that we even have to worry about it!
Wise advice Elizabeth. New challenges arise daily in this market. I will make sure to incorporate this advice into my conversations with short sellers.
thanks!
Leanna
Great advice. I have a short that sprung a leak and now has a mold issue. The bank is dragging their heals on renegotiating so the buyer walked. Overall the property in its current condtion is worth 25% less. What a wonderful market we have!
Elizabeth,
Good reminder; it's something I hadn't thought too much about.
Great point Elizabeth, I've had that conversation a few times with home owners. People tend to feel this short sale market is going away; I am sorry but I feel it will be here for years to come. Great Post!!
Hi Elizabeth,
This is very eye opening and great advice... not something that sellers and their agents would think much about.
~Lisa
I, too, was wondering about an alarm system. Seems like a house in that kind of neighborhood would have one.
Elizabeth - this is so true. Once you vacate, most policies then will lapse and are only applicable for occupied properties. So what is your recommendation? I haven't come up with one yet other than frequent visits to the property (done by me of course) to make sure it's not violated...
Wow, somehow I had no idea that a vacant house would not remain covered by the insurance policy! Thanks so much for sharing...
Great advice, but maybe not always solvable.
Good advice Eva. Looks like the theives who stole the electrical panel may have gotten burnt in the deal ;) Who doesn't notice a fire in their neighbour's yard?
You can never have enough insurance. And this is a great reminder about making sure you have insurance that covers a vacant home.
Sound advice, Elizabeth. I was recently involved in a short sale where my buyers walked because the home they were buying was broken into and the air conditioner and forced air unit stolen. The short sale lender was not willing to adjust their conditions of approval to compensate for the replacement of the stolen items, and the owner had no insurance.
Bank of America has crews of people out there checking to see if properties are vacant. They have also notified the insurance company that the property is vacant.
Great reminder & advice! Sure is a catch 22 though for folks that are already struggling financially.
Arrrgghhhh! Great advice that I wouldn't have thought of.
We used to have a HUGE problem with AC units walking away. Two years ago a state law was passed that requires an HVAC contractor's license to sell scrap AC coils and it seems to have actually done some good. Still happens occasionally since we are only a couple of miles from GA but it's much less widespread.
I once saw a historic home with enormous copper gutters just barely hanging on to the house. The AC had been stolen but the gutters were there in all their coppery glory. Thieves are stupid.
Good info. I gues the neighbors didn't see or hear anything huh?
These are all great points! You've obviously been through this wringer before, Elizabeth, because you're giving great advice here. (Good writing, too.)
Elizabeth, thanks for the post. I had not run into that.
Thanks for the good information in your post today.
Patricia
Major bummer about the insurance but this is really great advice. I have had a few similar situations that have caused the deals to almost implode in front of me.
I tell folks the same about insurance on their second homes... it's a different type policy than an owner occupied home owners and it's better to pay a little more now than PAY through the nose when your insurance claim is rejected.
There are a lot of vacant short sales, and this is important information for the sellers to have.
It's amazing at what people will do these days.. Calling your insurance company is great advice. Need to be sure what will or will not be covered.
Elizabeth, this is a good reminder for homeowners!
Looks like you hit a nerve. We have had good luck with Fannie owned homes to install a new a/c unit.
Oh my goodness, I have not had this happen (where's some wood to knock on?)......Very good advice. Thanks for posting this.
So why does the seller care if something that is part of the house goes missing? They are short selling and as long as there is no deficiency judgement scenario, they don't care what price the home sells for. So if the lender has to take less because the home's condition has worsened, it may lengthen the time to get the approval as you may lose a buyer, or wait for a new BPO, but what else is their loss?
I recently talked to a local Nationwide Insurance agent and he said it is best for sellers to contact them asap. This applues to any homeowner who will be gone for an extended period of time. Better safe that sorry
Absolutely!
I was going to recommed for a feature but saw it already was. LOL
Elizabeth, always an issue with Short Sales. HAFA requires the seller to still be living in the home and is one reason some cannot qualify for the HAFA. Staying in the home would be better than shutting everything off and risking vadalism. Distressed buyers need to deal with it in their own ways, however and sometimes that means moving on with their lives. We help as much as we can....great post. The insurance issue is addressed in my packet on short sales that I give my Sellers.
People don't realize that the Bank considers the Seller still responsible for the property and any damage that can happen. Turning over the home in decent condition is part of the negotiations for both Short Sales and deed-in-lieus. What would be the plural for deed-in-lieu....? Too much for my poor brain this morning.
Re: #45 So why does the seller care if something that is part of the house goes missing?
Because the home might never sell. In the Sacramento market, the bulk of home buyers are putting down 3.5% and asking the sellers / banks to pay their closing costs. They don't have extra cash lying around to buy appliances / AC units / replace electrical panels. And there are too many other homes to choose from that are not vandalized.
On top of which, some sellers own these homes as investments and therefore are not excluded from the 2007 Mortgage Forgiveness Debt Relief Act, meaning they might have to pay tax on the shortage. To these people, a higher price is very important.