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
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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.
Elizabeth- you have so much common sense! Good for you that people want to work with you.
I just looked at 4 houses this week- I knew one of the listing agents from here on AR. If I was going to write an offer on anyof these houses, I would hope it would be with the "regular agent" I knew.
Wish I could get short sales here or foreclosures. They all seem to go to just a few of the preferred agents- who you can never get in touch with as a buyers agent.
Have a great weekend!
Good post Elizabeth...I too price my short sale listings based on recent comparable sales and not artificially low. One point that I would like to add, is that I have found that loss mitigation reps respond well to some time on the market, and even a reduction in price after two weeks. You can show a good faith effort to TRY to get the bank a higher price, before having to reduce it.
My goal is to ultimately get a buyer who will stick out the lender's approval process - and not several buyers who all will be gone tomorrow because they are shotgunning offers on low priced property.
Keep fighting the good fight!
Erin
Pricing is key in Real Estate, now more than ever. You know what you are doing and it shows.
All the best!
Elizabeth: You are a good agent that runs an ethical business. You realize that other peoples (the bueyrs) lives on the line as well. No wonder you are such a successful agent!
Really great info. I just bookmarked it so I can come back to it later. And, I agree....pricing is everything. The lender doesn't want to see properties that are priced way too low out of the chute...try for the correct price, then reduce every couple of weeks until you get an offer. That's what works for me anyway.
You stated a fact that people are just not seeing in some cases. When you are working on a short sale you are working for the bank, not the home owner. I don't understand why everyone doesn't see that. Short sales are far from my "specialty", I really don't like them. But the condition in which I did one was when the home owner signed a document giving the lender permission to discuss matters with me from day 1... the listing day.
Hi Linda: Even the short sales? I can understand banks giving all their business to one agent, but short sales? Short sale sellers aren't any different than any other kind of seller.
Hi Erin: When I first started listing short sales, I used to think the same way -- that negotiators will pay attention to the days on market and price reductions. That it will show you have tried. Now, not so much. They are looking at the bottom line. They don't care if you bring them an offer at market value that's been on the market for a year or two days, just as long as it's at market value. So I've stopped listing them at higher prices, and now they are selling faster, plus they are getting accepted by the banks.
Hi Tammy: Absolutely. We're trying to appease the bank. That's the bottom line. The seller is the firecracker, but it's the bank who lights the fuse.
Elizabeth, I assume you approach the home owner, list the home below what they owe, tell everyone it is questionable whether a short sale will work, and wait for an offer? Then you approach the bank with the figures? We don't have many short sales here.
Elizabeth - I am convinced you must be one of the best "short sale" agents I know! You are one of the few that haven't thrown their arms in the air, and enrolled themselves into Primal Scream Therapy :-)
I agree we all need to know how to do our business and short salesare an area of expertise if you don't have the experience bring in an expert until you do.
Interesting...DOM played an important role in 3 of the 5 short sales I closed this year. These transactions are such a roller coaster, and each one so different, nothing surprises me anymore.
DOM has not had anything to do w/ the short sales I'm handling this year. It's all BPO (sometimes full appraisals) and active Buyer w/ contract. Every short sale I've dealt with this year is different. Condos seem to be more difficult to sell short than a Single Family Home. Sometimes getting the estoppel is murder. Selling a 1 BR condo is near-impossible in this market. But, off I go in a minute to go list a 1 BR condo b/c it CAN be done--you just have to be determined and understand that not all short sales will close but the squeaky wheel gets the oil. It pains me to see some listing agents that have short sales NOT keeping in close contact with the bank--that's a disservice to their Seller AND the bank. Anyway, great post--as always. :)
Hi Barbara: Short sales are complicated, and you are lucky not to have very many of them in Arkansas. I send the authorization letter to the bank long before an offer is received. Some banks require 48 hours' notice on the authorization letter, which is why that is sent immediately. You've got to get into their system before an offer is received. There is always a chance the bank won't accept the short sale, and everybody knows that going into the process. But most of mine get approved.
Say, I saw an article that said 30% of the agents in Arkansas have not renewed their license this year.
Hi Myrl: As you know, if you run into any short sales in Sacramento, toss them in my direction!
Hi Terry: Some of my coworkers have decided to start working short sales, and one of them approached my associate who is responsible for pounding the banks for me. She asked this agent to help her on a short sale and offered to name her co-listing agent. The agent asked me what she should do. Quite frankly, 50% of the commission on one deal isn't enough compensation, and you can't teach an agent how to do a short sale in one transaction anyway.
Hi Erin: Personally, I believe banks would rather do a short sale than a loan modification. Hmmm . . . get rid of the problem once and for all or put a Bandaid on it for five years and hope it improves? Most want the money now. Typically, it's the same price point.
Hi Lisa: I've been noticing full appraisals in-lieu-of BPOs in some situations as well. I have a couple now where the banks ordered the appraisal within days of receipt of the short-sale packages and then said, "We'll get back to you in 4 weeks." Even though the appraisals came in at the offering prices. But most of mine are closing within 6 to 8 weeks now, which is a huge improvement over 6 to 8 months!
I agree. Get it priced right and it will sell. Get it priced right and have a "selling" institution move quickly on an offer and it will close.
Elizabeth, what's an authorization letter? Does the bank give you permission to list it with that letter?
Hi Barbara: The authorization letter gives me permission to discuss the seller's loan and status with the bank. You can't just call up a bank and talk about a short sale without written permission from the seller. That's why buyer's agents can't talk to the bank. They don't have permission.
Elizabeth- fortunately here in the Raleigh area we aren't deluged with short sales. Our area didn't have the tremendous appreciation of home prices in the last few years as CA, NY, and FL, so consequently ws aren't seeing a huge decrease in prices now either.
We've run into some sellers who've called us about selling their homes just because they want to lower their mortgage payments, but they know the market is bad and when they realize that they'll have to take a hit, they decide to wait.
Maybe within a few months we'll be seeing more short sales, depending on how the economy is doing. Everyone here seems to want to "wait until spring".
Elizabeth, my questions point out how little some of our buyers and sellers know about our specialty. Short sales are a mystery in a way. Thanks for the explanation of an authorization letter.
Loved the agent's comment about working with a "normal Realtor". It makes all the difference in a transaction these days...whether the outcome is successful or NOT!