It seems everywhere you look there is sobering news. For example, ZipRealty lost more than 1/4 of its agents this year as it reported a $4 million fourth-quarter loss, according to Inman News. I like working with ZipRealty agents as a Sacramento short sale agent, because they are generally fast on the turnaround and get me the documents I need from their buyers when I needed that paperwork yesterday. Not every buyer's agent in Sacramento offers that kind of service. So, I think it's sad that ZipRealty is shedding agents.
I also read that CoreLogic released a report yesterday that shows 43% of all homes in the Sacramento area are underwater homes. That's huge. The percentage statewide is 32%, meaning that one out of 3 homeowners in California owe more than their homes are worth. But don't feel so awful for Californians. In Nevada, that number is 65%. Short sales are pushing norms for the market.
Not a day goes by when somebody doesn't call me about doing a Sacramento short sale. Some of these calls are from sellers who are very unhappy with their existing short sale agent and want to know if they could list with me. Much of the time I send them right back to their agent. Because these are people who probably should not be trying to do a short sale as they either don't qualify or they refuse to comply.
What does it take to comply? In this market, it means probably making a seller contribution. Paying to close a short sale is becoming the norm in Sacramento short sales. I can say that because I close a lot of them, and that's what I see. The seller's financial situation is often immaterial. The bank might want $500 or $1,000, or more. Sellers who don't want to comply might not make a good candidate for a Sacramento short sale. That's the truth, plain and simple.
In essence, the way I see it, the banks are beginning to hold a seller's credit report hostage. They want sellers to pay. Something. Anything they can squeeze. It stinks, quite frankly. But that's the way it is. So, if you want to do a short sale and the bank settles on $500, that's what it will cost you. If keeping a foreclosure off your record isn't worth $500, then let your home go to foreclosure. In some circles, this is known as cutting off your nose to spite your face. But it's every sellers' choice to make.
Just don't shoot the messenger. I don't make the rules, and I'm not on the bank's side, for heaven's sake. I just report what's going on in Sacramento. If your Sacramento short sale agent isn't telling you to expect a bank demand, shame on that person. There's only one way to get around it: HAFA short sale. And, sadly, many sellers don't qualify for that program. See? Sobering news everywhere.
But the good news is short sales are closing. I closed a short sale in Natomas yesterday. I am closing a short sale in Rancho Cordova on Friday, and a Sacramento short sale is scheduled for Monday. And temperatures in Sacramento just might break 70 today!
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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.
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Elizabeth - 63% of Nevada homes are underwater according to the same report. It's amazing the number of short sales in the marketplace, but they are closing! We are seeing small cash contributions at closing as well, mostly to waive deficiency balances, as Nevada is a recourse state.
Elizabeth that percentage of homes under water in your area is so high, so much pain out there on the part of homeowners to deal with. Thanks for the reality look at your backyard.
Congratulations Elizabeth on your closings!!! You are awesome. The figure from Core Logic is scary! I can't help wonder when I see those figures how many are because people pulled the equity out when our prices were going up like crazy? It seems it was the thing to do then.
What a great, informative post! I continue to envy the way you write. And I wasn't aware that lenders want some kind of symbolic payola from Sellers these days. I usually represent the buyers on short sales-- and we don't have as many in SF, where fewer homes are underwater.
Hi Christianne, I cannot imagine working in an area with almost 3/4ths of the homes underwater. Oh, wait, I watch the SYFY channel.
Hi Gary: Sacramento is not going to recover until we get jobs back. Our unemployment rate in Sacramento is over 12%. We need JOBS!!! I talk with sellers who think it will turn around in a couple of years. I want to ask: what are you smokin and why the hell are ya bogarting?
Hi DeeDee: It's not just purchase money loans, of course. It's the cash-out refinances. If a seller has done a cash-out refinance, there is no free lunch. None. We can mitigate the damage somewhat through negotiation, but there is damage. Unless, of course, the seller is lucky and qualifies for HAFA. That's the only program to save those types of sellers.
Hi Cece: Symbolic payola. That's a great term. So apropos. Thanks for that. You City guys. Gotta hand it to ya.
I have a short sale listing in which the bank asked for a seller contribution of slightly more than $50K and also wanted the sellers to sign a note for $108K or so. (I wonder where they got their weird, odd numbers.)
So, you probably think the house is a multi-million (or at least million) dollar house. No! The bank accepted $505K as the sale price.
The sellers refused to agree to the contribution or sign the note. Bank approved anyway.
Hi John: Yes, that's the other thing the uninitiated don't realize. Banks will negotiate. What they say they want and what they will take are two different animals. Bank of America told me last month it wanted $15,000 in a prom note, $10,000 in cash and it would not release the seller from liability.
In the end, the bank released the seller and the seller gave them $1,000.
The entire key to a short sale -- more important than anything else -- is will the bank release the seller from liability. Agents who skip over this have 4 years to look over their shoulder.
Hey Elizabeth - Have you seen the 2010 documentary movie, titled, "Inside Job"? It is an amazing presentation, narrated by Matt Damon, that provides insight into the housing and economic meltdown. I watched it last night. I knew quite a bit about the topic before, but this film was absolutely rivoting. I got it via Netflix.
Hi Myrl: I asked my husband and he said it is on our wait list. The wait for this is pretty long.